EconPapers    
Economics at your fingertips  
 

The economy impacts of Korean ETS with an emphasis on sectoral coverage based on a CGE approach

Yongrok Choi, Yu Liu and Hyoungseok Lee

Energy Policy, 2017, vol. 109, issue C, 835-844

Abstract: South Korea initiated an emissions trading scheme (ETS) on January 1, 2015. Based on this environmental policy, at the 21st Conference of Parties (COP) meeting, the Korean government announced that it would decrease carbon emissions 37% from business as usual (BAU) levels by 2030. Since this target is too ambitious for the Korean economy, a number of studies have analyzed the economic impacts of emissions trading in Korea, but few have distinguished between industries covered and not covered by the ETS, notwithstanding the lack of industry-level data on quotas and emissions. This study overcomes such shortcomings by converting a dataset of 525 firms covered by the South Korea ETS (SK-ETS) into a 28-sector database consistent with the Global Trade Analysis Project (GTAP) classifications. We implement a simulation of the SK-ETS with a computational general equilibrium (CGE) model. Simulation results suggest that while SK-ETS has significant abatement effects (−2.56% from the base case), it only has mild negative impacts on GDP (0.41%) and household consumption (0.11%). Industry output on average falls by 0.54%, with the gas and air transport sectors most adversely affected. The most noticeable price changes are from the electricity sector, whose output price goes up by 3.75%. It is noteworthy that because of the export-oriented economy, many global business leaders and politicians have argued that the ETS will disadvantage exporting companies, while the simulation results showed a higher trade surplus based on enhanced competitiveness.

Keywords: Emissions trading scheme (ETS); Computable general equilibrium (CGE); Sectoral coverage; Governance (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421517303968
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:109:y:2017:i:c:p:835-844

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-10-28
Handle: RePEc:eee:enepol:v:109:y:2017:i:c:p:835-844