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Treatment of indirect emissions from the power sector in Korean emissions trading system

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  • Yong-Gun Kim

    (Korea Environment Institute)

  • Jong-Soo Lim

    (Kwangwoon University)

Abstract

This paper analyzes the effects of carbon pricing on the economy, focusing specifically on the power sector under retail-price control. A simulation analysis using a CGE model implicates that it is desirable not to bestow the power sector with carbon pricing waiver to avoid a severe burden to the economy in terms of real GDP and real consumption. And excessive carbon price burden on GHG emissions in the power sector under Korean emissions trading system, where not only direct but also indirect emissions are covered, can and needs to be relieved through intensity-based (output-based) updating allocation of allowances to the power sector. Finally, we have reached a somewhat counter-intuitive conclusion that we can achieve higher economic efficiency by treating both fossil and non-fossil power plants equally when implementing the output-based updating allowance allocation for the power sector.

Suggested Citation

  • Yong-Gun Kim & Jong-Soo Lim, 2021. "Treatment of indirect emissions from the power sector in Korean emissions trading system," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 581-592, July.
    • Handle: RePEc:spr:envpol:v:23:y:2021:i:3:d:10.1007_s10018-020-00282-7
    DOI: 10.1007/s10018-020-00282-7
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    References listed on IDEAS

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    2. Weixin Yang & Hao Gao & Yunpeng Yang & Jiacheng Liao, 2022. "Embodied Carbon in China’s Export Trade: A Multi Region Input-Output Analysis," IJERPH, MDPI, vol. 19(7), pages 1-16, March.

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