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Willingness to Pay for Substituting Coal with Natural Gas-Based Combined Heat and Power in South Korea: A View from Air Pollutants Emissions Mitigation

Ga-Eun Kim (), Hye-Jeong Lee () and Seung-Hoon Yoo ()
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Ga-Eun Kim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea
Hye-Jeong Lee: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea

Sustainability, 2018, vol. 10, issue 5, 1-12

Abstract: As of 2017, coal-fired generation is responsible for about half of electricity generation in South Korea. This causes a serious problem of emitting air pollutants such as particulate matters, sulfur oxides, and nitrogen oxides. Thus, the South Korean government is seeking to substitute a part of coal-fired generation with natural gas (NG)-based combined heat and power (CHP) generation for the purpose of mitigating air pollutants emissions. This article tries to assess the public willingness to pay (WTP) for the substitution adopting contingent valuation (CV). The data on the additional WTP for consuming 1 kWh of electricity produced from NG-based CHP generation over coal-fired generation were gathered from a CV survey of 1000 interviewees. The mean additional WTP estimate for the substitution is obtained as KRW 28.08 (USD 0.025) per kWh of electricity use. This is equivalent to 25.9% of the average price of electricity, KRW 108.50 (USD 0.098) per kWh in 2017. It is obvious that the South Korean public has a significant WTP for substituting coal with NG in electricity generation to mitigate air pollutants emissions. The government needs to gradually push for the substitution.

Keywords: coal; natural gas; air pollutants emissions; willingness to pay; contingent valuation (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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