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The Economic, Energy, and Emissions Impacts of Climate Policy in South Korea

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  • Winchester, Niven
  • Reilly, John M.

Abstract

Using an economy-wide model, we evaluate the impact of policies to meet South Korea’s Paris pledge to reduce greenhouse gas (GHG) emissions by 37% relative those under business as usual (BAU) in 2030. Simulated BAU emissions in 2030 are 840.8 million metric tons (Mt) of carbon dioxide equivalent (CO2e), indicating that economy-wide emissions should be constrained to 529.7 MtCO2e. Under South Korea’s Emissions Trading System (KETS) and fuel economy standards, a 2030 carbon price of $89/tCO2e is needed to meet this goal. Without considering benefits from avoided climate damages, these policies reduce 2030 GDP by $20.6 billion (1.0%) and consumer welfare by 7.9 billion (0.7%). Comparing this scenario to one where South Korea’s Paris pledge is met solely by an ETS, indicates that adding a fuel economy standard reduces GDP and welfare by, respectively, $4.2 billion and $1.1 billion. Declines in sectoral production are largest for fossil-based energy sectors and the chemical, rubber and plastic products, and iron and steel sectors. Key words: Emissions trading system; Paris Agreement; Fuel economy standard.

Suggested Citation

  • Winchester, Niven & Reilly, John M., 2018. "The Economic, Energy, and Emissions Impacts of Climate Policy in South Korea," Conference papers 333012, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333012
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    Cited by:

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    2. Inha Oh & Wang-Jin Yoo & Kihwan Kim, 2020. "Economic Effects of Renewable Energy Expansion Policy: Computable General Equilibrium Analysis for Korea," IJERPH, MDPI, vol. 17(13), pages 1-21, July.
    3. Siriwardana, Mahinda & Nong, Duy, 2021. "Nationally Determined Contributions (NDCs) to decarbonise the world: A transitional impact evaluation," Energy Economics, Elsevier, vol. 97(C).

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