SEOUL-- Major South Korean utilities firms and manufacturers have urged the government to take measures to stabilize the carbon market, as supply shortages are driving up the price of emissions credits, industry officials said Wednesday.

The Korea Chamber of Commerce and Industry (KCCI) has delivered a petition by 21 companies, including the state-run Korea Electric Power Corp, Hyundai Steel co. and LG Chem Ltd., to the ministries of environment, finance and energy, to address their concerns regarding the carbon trading system.

Under the country's greenhouse gas emissions trading system (ETS) launched in January 2015, 600 local companies are given Korean allowance units (KAUs) to buy extra emissions rights when they surpass their own quota.

In order to facilitate the ETS market, the government allows other businesses that are not subject to the cap-and-trade scheme to sell their extra emissions rights on the exchange if they win approval.

The price of carbon credits per ton has risen from 16,600 won (US$15.3) in June 2016 to 24,500 won earlier this month, a rise of 47.6 percent. The price shot up to a record high of 28,000 won per ton on Nov. 24.

The utilities companies and petrochemical companies said lack of credits traded on the carbon market could hurt their net income in the short term and cloud their business prospects.

"Companies with extra carbon credits are not selling them, as the government is set to strengthen environmental regulations and prices are expected to rise further," they said.

The trading volume of carbon credits remained at 3 million tons in the latter half of this year, far lower than the 225.87 million tons of credits allocated to utilities companies this year.

"As the carbon trading system is an artificial market created by the government and a key trading platform that decides a nation's industrial competitiveness, the government should actively step in to resolve the imbalance between supply and demand," the petition said.

Companies that fail to meet the emissions target are subject to fines of up to triple the ETS market price.

South Korea is planning to curb greenhouse gas emissions by 37 percent from 2030 business-as-usual levels.

Source: Yonhap News Agency