IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i12p9281-d1166646.html
   My bibliography  Save this article

Impacts of Green Energy Expansion and Gas Import Reduction on South Korea’s Economic Growth: A System Dynamics Approach

Author

Listed:
  • Azam Ghezelbash

    (Institute of Cleaner Production Technology, Pukyong National University, Busan 48547, Republic of Korea)

  • Mitra Seyedzadeh

    (Department of Economic and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad 9177948978, Iran)

  • Vahid Khaligh

    (Institute of Cleaner Production Technology, Pukyong National University, Busan 48547, Republic of Korea)

  • Jay Liu

    (Institute of Cleaner Production Technology, Pukyong National University, Busan 48547, Republic of Korea
    Department of Chemical Engineering, Pukyong National University, Busan 48547, Republic of Korea)

Abstract

South Korea, ranking ninth among the largest energy consumers and seventh in carbon dioxide emissions from 2016 to 2021, faces challenges in energy security and climate change mitigation. The primary challenge lies in transitioning from fossil fuel dependency to a more sustainable and diversified energy portfolio while meeting the growing energy demand for continued economic growth. This necessitates fostering innovation and investment in the green energy sector. This study examines the potential impact of green energy expansion (through integrating renewable energy and hydrogen production) and gas import reduction on South Korea’s economic growth using a system dynamics approach. The findings indicate that increasing investment in green energy can result in significant growth rates ranging from 7% to 35% between 2025 and 2040. Under the expansion, renewable energy scenario (A) suggests steady but sustainable economic growth in the long term, while the gas import reduction scenario (B) displays a potential for rapid economic growth in the short term with possible instability in the long term. The total production in Scenario B is USD 2.7 trillion in 2025 and will increase to USD 4.8 trillion by 2040. Scenario C, which combines the effects of both Scenarios A and B, results in consistently high economic growth rates over time and a substantial increase in total production by 2035–2040, from 20% to 46%. These findings are critical for policymakers in South Korea as they strive for sustainable economic growth and transition to renewable energy.

Suggested Citation

  • Azam Ghezelbash & Mitra Seyedzadeh & Vahid Khaligh & Jay Liu, 2023. "Impacts of Green Energy Expansion and Gas Import Reduction on South Korea’s Economic Growth: A System Dynamics Approach," Sustainability, MDPI, vol. 15(12), pages 1-18, June.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:12:p:9281-:d:1166646
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/12/9281/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/12/9281/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shahbaz, Muhammad & Raghutla, Chandrashekar & Chittedi, Krishna Reddy & Jiao, Zhilun & Vo, Xuan Vinh, 2020. "The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index," Energy, Elsevier, vol. 207(C).
    2. World Bank, 2020. "Poverty and Shared Prosperity 2020," World Bank Publications - Books, The World Bank Group, number 34496, December.
    3. Baz, Khan & Cheng, Jinhua & Xu, Deyi & Abbas, Khizar & Ali, Imad & Ali, Hashmat & Fang, Chuandi, 2021. "Asymmetric impact of fossil fuel and renewable energy consumption on economic growth: A nonlinear technique," Energy, Elsevier, vol. 226(C).
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Bilgili, Faik & Kuşkaya, Sevda & Toğuç, Nurhan & Muğaloğlu, Erhan & Koçak, Emrah & Bulut, Ümit & Bağlıtaş, H. Hilal, 2019. "A revisited renewable consumption-growth nexus: A continuous wavelet approach through disaggregated data," Renewable and Sustainable Energy Reviews, Elsevier, vol. 107(C), pages 1-19.
    6. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    7. Jun Maekawa & Bui Hien Hai & Sarana Shinkuma & Koji Shimada, 2018. "The Effect of Renewable Energy Generation on the Electric Power Spot Price of the Japan Electric Power Exchange," Energies, MDPI, vol. 11(9), pages 1-16, August.
    8. Ousama Ben-Salha & Abdelaziz Hakimi & Taha Zaghdoudi & Hassan Soltani & Mariem Nsaibi, 2022. "Assessing the Impact of Fossil Fuel Prices on Renewable Energy in China Using the Novel Dynamic ARDL Simulations Approach," Sustainability, MDPI, vol. 14(16), pages 1-17, August.
    9. Lund, Henrik & Andersen, Anders N. & Østergaard, Poul Alberg & Mathiesen, Brian Vad & Connolly, David, 2012. "From electricity smart grids to smart energy systems – A market operation based approach and understanding," Energy, Elsevier, vol. 42(1), pages 96-102.
    10. Latif, Khalid & Raza, Muhammad Yousaf & Shahid Adil & Rehana Kouser, 2020. "Nexus between Economy, Agriculture, Population, Renewable Energy and CO2 Emissions: Evidence from Asia-Pacific Countries," Journal of Business and Social Review in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 6(1), pages 261-276, March.
    11. Yang, Hao-Yen, 2000. "A note on the causal relationship between energy and GDP in Taiwan," Energy Economics, Elsevier, vol. 22(3), pages 309-317, June.
    12. Jerry L. Holechek & Hatim M. E. Geli & Mohammed N. Sawalhah & Raul Valdez, 2022. "A Global Assessment: Can Renewable Energy Replace Fossil Fuels by 2050?," Sustainability, MDPI, vol. 14(8), pages 1-22, April.
    13. Hasani-Marzooni, Masoud & Hosseini, Seyed Hamid, 2011. "Dynamic model for market-based capacity investment decision considering stochastic characteristic of wind power," Renewable Energy, Elsevier, vol. 36(8), pages 2205-2219.
    14. N. Gregory Mankiw & David Romer & David Weil, 1990. "A Contribution to the Empirics of Economic Growth," Working Papers 1990-24, Brown University, Department of Economics.
    15. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 445-502.
    16. Chien, Taichen & Hu, Jin-Li, 2008. "Renewable energy: An efficient mechanism to improve GDP," Energy Policy, Elsevier, vol. 36(8), pages 3035-3042, August.
    17. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    18. Zbysław Dobrowolski & Grzegorz Drozdowski, 2022. "Does the Net Present Value as a Financial Metric Fit Investment in Green Energy Security?," Energies, MDPI, vol. 15(1), pages 1-16, January.
    19. Llera, E. & Scarpellini, S. & Aranda, A. & Zabalza, I., 2013. "Forecasting job creation from renewable energy deployment through a value-chain approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 262-271.
    20. Ackermann, Thomas & Söder, Lennart, 2002. "An overview of wind energy-status 2002," Renewable and Sustainable Energy Reviews, Elsevier, vol. 6(1-2), pages 67-127.
    21. Jacobson, Mark Z. & Delucchi, Mark A., 2011. "Providing all global energy with wind, water, and solar power, Part I: Technologies, energy resources, quantities and areas of infrastructure, and materials," Energy Policy, Elsevier, vol. 39(3), pages 1154-1169, March.
    22. Gene M. Grossman & Elhanan Helpman, 1993. "Innovation and Growth in the Global Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570971, December.
    23. Apergis, Nicholas & Payne, James E., 2011. "The renewable energy consumption-growth nexus in Central America," Applied Energy, Elsevier, vol. 88(1), pages 343-347, January.
    24. Mohammed H. Alsharif & Jeong Kim & Jin Hong Kim, 2018. "Opportunities and Challenges of Solar and Wind Energy in South Korea: A Review," Sustainability, MDPI, vol. 10(6), pages 1-23, June.
    25. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Grzegorz Zimon & Dulal Chandra Pattak & Liton Chandra Voumik & Salma Akter & Funda Kaya & Robert Walasek & Konrad Kochański, 2023. "The Impact of Fossil Fuels, Renewable Energy, and Nuclear Energy on South Korea’s Environment Based on the STIRPAT Model: ARDL, FMOLS, and CCR Approaches," Energies, MDPI, vol. 16(17), pages 1-21, August.
    2. Yao Li & Yugang He, 2024. "Unraveling Korea’s Energy Challenge: The Consequences of Carbon Dioxide Emissions and Energy Use on Economic Sustainability," Sustainability, MDPI, vol. 16(5), pages 1-29, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    2. Carroll, Christopher D. & Weil, David N., 1994. "Saving and growth: a reinterpretation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 133-192, June.
    3. Edy Yusuf Agung Gunanto & Tri Wahyu & Jaka Aminata & Banatul Hayati, 2021. "Convergence CO2 Emission in ASEAN Countries: Augmented Green Solow Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 572-578.
    4. William Brock & M. Taylor, 2010. "The Green Solow model," Journal of Economic Growth, Springer, vol. 15(2), pages 127-153, June.
    5. Nicholas Apergis & Christina Christou & Stephen Miller, 2012. "Convergence patterns in financial development: evidence from club convergence," Empirical Economics, Springer, vol. 43(3), pages 1011-1040, December.
    6. Hamilton, James D. & Monteagudo, Josefina, 1998. "The augmented Solow model and the productivity slowdown," Journal of Monetary Economics, Elsevier, vol. 42(3), pages 495-509, October.
    7. Uzma Zia, 2019. "An Evidence of Diverging SAARC Economies," PIDE-Working Papers 2019:170, Pakistan Institute of Development Economics.
    8. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    9. Renelt, David, 1991. "Economic growth : a review of the theoretical and empirical literature," Policy Research Working Paper Series 678, The World Bank.
    10. Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
    11. Cem Ertur & Julie Le Gallo & Catherine Baumont, 2006. "The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?," International Regional Science Review, , vol. 29(1), pages 3-34, January.
    12. Robert J. Barro, 1994. "Democracy & Growth," NBER Working Papers 4909, National Bureau of Economic Research, Inc.
    13. Jeffrey A. Frankel & Andrew K. Rose, 2005. "Is Trade Good or Bad for the Environment? Sorting Out the Causality," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 85-91, February.
    14. Cem Ertur & Wilfried Koch, 2007. "Growth, technological interdependence and spatial externalities: theory and evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1033-1062.
    15. Sebastian George, ENE & Danut, CHILAREZ, 2015. "The Influence Of Government Spending, Financial, Monetary And Fiscal Policies On The Gdp. Comparative Analysis Romania – Lithuania," Management Strategies Journal, Constantin Brancoveanu University, vol. 29(3), pages 6-15.
    16. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, February.
    17. Mark Strazicich & John List, 2003. "Are CO 2 Emission Levels Converging Among Industrial Countries?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(3), pages 263-271, March.
    18. Osvaldo Lagares, 2016. "Capital, Economic Growth and Relative Income Differences in Latin America," Discussion Papers 16/03, Department of Economics, University of York.
    19. Liu, Yiming & Hao, Yu & Gao, Yixuan, 2017. "The environmental consequences of domestic and foreign investment: Evidence from China," Energy Policy, Elsevier, vol. 108(C), pages 271-280.
    20. Mau, Karsten, 2014. "Margins, Gravity, and Causality: Export Diversification and Income Levels Reconsidered," GIGA Working Papers 249, GIGA German Institute of Global and Area Studies.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:12:p:9281-:d:1166646. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.