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The economic value of South Korea׳s renewable energy policies (RPS, RFS, and RHO): A contingent valuation study

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  • Huh, Sung-Yoon
  • Lee, Jongsu
  • Shin, Jungwoo

Abstract

Amid growing environmental awareness, the diffusion of renewable energy has attracted greater attention from both the public and policymakers. To respond to global environmental concerns, the Korean government implemented a renewable portfolio standard (RPS) in the electric power sector in 2012; it plans to introduce a renewable fuel standard (RFS) and a renewable heat obligation (RHO) in the transportation and heating sectors in 2015 and 2016, respectively. As such, this study applies the contingent valuation method to elicit the willingness of Korean households to pay more for their energy bills in order to support enforcement of these three policies. The analysis considers the economic values of each individual policy as well as the aggregate value at the national level. Respondents׳ mean willingness to pay for RPS, RFS, and RHO are estimated as 3287.5, 4432.9, and 3971.1 Korean Won per month, respectively. These are equivalent to 5.8%, 1.5%, and 2.0%, respectively, of current average monthly electricity, transportation, and heating expenses. Although all three policies appear highly feasible, a cautious approach is necessary, given the large proportion of respondents with zero willingness to pay. Furthermore, although the level of willingness to pay for renewable electricity in Korea has increased in recent years, it remains low when compared to other leading countries, such as Japan.

Suggested Citation

  • Huh, Sung-Yoon & Lee, Jongsu & Shin, Jungwoo, 2015. "The economic value of South Korea׳s renewable energy policies (RPS, RFS, and RHO): A contingent valuation study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 64-72.
    • Handle: RePEc:eee:rensus:v:50:y:2015:i:c:p:64-72
    DOI: 10.1016/j.rser.2015.04.107
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