Progress and effectiveness of Korea's emissions trading system: insights from the manufacturing sector

Nayoung Lee, Sunhee Suk and Yongsung Cho

Chapter 11 in Handbook on Economic Growth and the Environment, 2026, pp 262-285 from Edward Elgar Publishing

Abstract: This chapter examines the effectiveness of Korea's greenhouse gas Emissions Trading System (ETS) in the manufacturing sector. Using data from 2012 to 2020, it analyzes both direct and indirect emissions across the top 15 industries by emission volume. Employing panel data analysis and Tapio's Decoupling Index, this research explores the relationships among sales, energy consumption, and emission trends. The findings reveal that while energy consumption consistently increases both direct and indirect emissions, higher sales tend to reduce direct emissions but increase indirect emissions. This suggests that industries are shifting away from fossil fuel combustion and relying more on electricity. While this shift helps lower emissions at the plant level, it will not necessarily reduce total emissions unless Korea's electricity grid becomes greener. Meanwhile, industries that consistently participate in the ETS show significant progress in decoupling economic growth from emissions, highlighting the critical role of policy frameworks in driving industrial decarbonization.

Keywords: Decarbonization; Decoupling Index; Indirect Emissions; Korean Emission Trading System; Manufacturing Sector; Panel Analysis (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035322589
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