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A dynamic general equilibrium analysis on fostering a hydrogen economy in Korea

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  • Bae, Jeong Hwan
  • Cho, Gyeong-Lyeob

Abstract

Hydrogen is anticipated to become one of the major alternative energy technologies for a sustainable energy system. This study analyzes the dynamic economic impacts of building a hydrogen economy in Korea employing a dynamic Computable General Equilibrium (CGE) model. As a frontier technology, hydrogen is featured as having a slow diffusion rate due to option value, positive externality, resistance of old technology, and complementary vintages. Without government intervention, hydrogen-derived energy will supply up to 6.5% of final energy demand by 2040. Simulation outcomes show that as price subsidy rates increase by 10%, 20%, and 30%, hydrogen demand will increase by 9.2%, 15.2%, and 37.7%, respectively, of final energy demand by 2040. The output of the transportation sector will increase significantly, while demands for oil and electricity will decline. Demands for coal and LNG will experience little change. Household consumption will decline because of the increase of income taxes. Overall GDP will increase because of the increase in exports and investments. CO2 emission will decline for medium and high subsidy rate cases, but increase for low subsidy cases. Ultimately, subsidy policy on hydrogen will not be an effective measure for mitigating CO2 emission in Korea when considering dynamic general equilibrium effects.

Suggested Citation

  • Bae, Jeong Hwan & Cho, Gyeong-Lyeob, 2010. "A dynamic general equilibrium analysis on fostering a hydrogen economy in Korea," Energy Economics, Elsevier, vol. 32(Supplemen), pages 57-66, September.
    • Handle: RePEc:eee:eneeco:v:32:y:2010:i:supplement1:p:s57-s66
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    Citations

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    Cited by:

    1. Elorri Igos & Benedetto Rugani & Sameer Rege & Enrico Benetto & Laurent Drouet & Dan Zachary & Tom Hass, 2015. "Implications of Weak Near-term Climate Policies on Long-term Mitigation Pathways," Working Papers 2015.09, Fondazione Eni Enrico Mattei.
    2. Igos, Elorri & Rugani, Benedetto & Rege, Sameer & Benetto, Enrico & Drouet, Laurent & Zachary, Daniel S., 2015. "Combination of equilibrium models and hybrid life cycle-input–output analysis to predict the environmental impacts of energy policy scenarios," Applied Energy, Elsevier, vol. 145(C), pages 234-245.
    3. Tobias Mueller & Steven Gronau, 2023. "Fostering Macroeconomic Research on Hydrogen-Powered Aviation: A Systematic Literature Review on General Equilibrium Models," Energies, MDPI, vol. 16(3), pages 1-33, February.
    4. Hwang Won-Sik & Oh Inha & Lee Jeong-Dong, 2014. "The Impact of Korea’s Green Growth Policies on the National Economy and Environment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(4), pages 1-30, October.
    5. Zhao, Tian & Liu, Zhixin & Jamasb, Tooraj, 2022. "Developing hydrogen refueling stations: An evolutionary game approach and the case of China," Energy Economics, Elsevier, vol. 115(C).
    6. Jeong Hwan Bae, 2014. "Supply Portfolio of Bioethanol in the Republic of Korea," Korean Economic Review, Korean Economic Association, vol. 30, pages 133-161.
    7. Lee, Duk Hee & Park, Sang Yong & Hong, Jong Chul & Choi, Sang Jin & Kim, Jong Wook, 2013. "Analysis of the energy and environmental effects of green car deployment by an integrating energy system model with a forecasting model," Applied Energy, Elsevier, vol. 103(C), pages 306-316.

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