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The Marginal Value of Heat in the Korean Manufacturing Industry

Hyo-Jin Kim (), Hee-Hoon Kim () and Seung-Hoon Yoo ()
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Hyo-Jin Kim: Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea
Hee-Hoon Kim: 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 6, 1-6

Abstract: Thirty industrial heat (IH) providers in Korea have better energy efficiency and emit lower air pollutants than individual companies that produce and consume heat for their industrial production. Because these providers collect waste heat from garbage incineration plants, power plants, or industrial processes of steel and chemical companies, as well as heat generated through combined heat and power plants and boilers. IH is an important input, used in industrial production as a form of hot water or steam. This note tries to assess the marginal value (MV) of IH in the manufacturing industry, using the specific case of Korea. To this end, a trans-log production function is estimated using the data gathered from a survey of 256 manufacturing firms in Korea. The MV of IH is estimated to be KRW 203,696 (USD 175.40) per tonne. This estimate is statistically significant at the 1% level. The average price of IH, defined as total expenditure on IH purchased in 2016 divided by total amount of IH purchased in 2016, is KRW 39,455 (USD 34.00) per tonne. Therefore, the MV of IH is about five times as large as the average price of IH.

Keywords: industrial heat; industrial production; marginal value; trans-log production function (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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