IDEAS home Printed from https://ideas.repec.org/a/spr/envpol/v23y2021i3d10.1007_s10018-021-00302-0.html
   My bibliography  Save this article

Evaluating the impact of the KETS on GHG reduction in the first phase

Author

Listed:
  • Sung-Hyun Jun

    (Department of Economics)

  • Jee Young Kim

    (Department of International Economics and Trade)

  • Hyungna Oh

    (Kyung Hee University)

Abstract

The purpose of this study is to test whether Korea’s emission trading scheme (KETS) was effective in curbing GHG emissions in the three major emitting sectors during the first commitment period (2015–2017). The merged dataset, which contains GHG emissions, the amount of free allowances, fuel use and sales at the firm level, and market price information for fuels and Korea’s allowance units (KAU), was used for the empirical exercise in this paper. Our research show that the adoption of the KETS was effective in improving the carbon intensity of KETS-regulated entities in the manufacturing and building sectors, but not in the power sector. The reduction burden, defined as the proportion of the expected emission level to the amount of free allowances allocated before the complying year starts, was shown to be critical in altering CO2 emission characteristics of covered entities in the manufacturing and building sectors. This paper’s empirical findings also suggest that the development of a pricing scheme reflects carbon costs in electricity prices, In addition to the stringency in free allowances allocated to large emitters, is necessary to mitigate CO2 emissions in the power sector.

Suggested Citation

  • Sung-Hyun Jun & Jee Young Kim & Hyungna Oh, 2021. "Evaluating the impact of the KETS on GHG reduction in the first phase," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 613-638, July.
    • Handle: RePEc:spr:envpol:v:23:y:2021:i:3:d:10.1007_s10018-021-00302-0
    DOI: 10.1007/s10018-021-00302-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10018-021-00302-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10018-021-00302-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2017. "A meta-analysis on the price elasticity of energy demand," Energy Policy, Elsevier, vol. 102(C), pages 549-568.
    2. Petrick, Sebastian & Wagner, Ulrich J., 2014. "The impact of carbon trading on industry: Evidence from German manufacturing firms," Kiel Working Papers 1912, Kiel Institute for the World Economy (IfW Kiel).
    3. Zachmann, Georg & von Hirschhausen, Christian, 2008. "First evidence of asymmetric cost pass-through of EU emissions allowances: Examining wholesale electricity prices in Germany," Economics Letters, Elsevier, vol. 99(3), pages 465-469, June.
    4. Pierfederico Asdrubali & Bent E. Sørensen & Oved Yosha, 1996. "Channels of Interstate Risk Sharing: United States 1963–1990," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(4), pages 1081-1110.
    5. David I. Stern, 2012. "Interfuel Substitution: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 307-331, April.
    6. Hyungna Oh & Junwon Hyon & Jin-Oh Kim, 2017. "Korea’s approach to overcoming difficulties in adopting the emission trading scheme," Climate Policy, Taylor & Francis Journals, vol. 17(8), pages 947-961, November.
    7. Barry Anderson & Corrado Di Maria, 2011. "Abatement and Allocation in the Pilot Phase of the EU ETS," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 83-103, January.
    8. Chan, Hei Sing (Ron) & Li, Shanjun & Zhang, Fan, 2013. "Firm competitiveness and the European Union emissions trading scheme," Energy Policy, Elsevier, vol. 63(C), pages 1056-1064.
    9. Jurate Jaraite-Ka~ukauske and Corrado Di Maria, 2016. "Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    10. Martin, Ralf & de Preux, Laure B. & Wagner, Ulrich J., 2014. "The impact of a carbon tax on manufacturing: Evidence from microdata," Journal of Public Economics, Elsevier, vol. 117(C), pages 1-14.
    11. Max Keilbach, 1995. "Estimation of the value of the marginal product of emission in a country where emissions output is regulated — an empirical study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(3), pages 305-319, April.
    12. Petrick Sebastian & Rehdanz Katrin & Wagner Ulrich J., 2011. "Energy Use Patterns in German Industry: Evidence from Plant-level Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(3), pages 379-414, June.
    13. Nicola Commins & Seán Lyons & Marc Schiffbauer & Richard S.J. Tol, 2011. "Climate Policy & Corporate Behavior," The Energy Journal, , vol. 32(4), pages 51-68, October.
    14. Jan Abrell & Anta Ndoye Faye & Georg Zachmann, 2011. "Assessing the impact of the EU ETS using firm level data," Working Papers of BETA 2011-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    15. Obernhofer, Ulrich & Rennings, Klaus & Sahin, Bedia, 2006. "The impacts of the European Emissions Trading Scheme on competitiveness and employment in Europe: A literature review," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 111466.
    16. repec:dau:papers:123456789/10174 is not listed on IDEAS
    17. Dechezleprêtre, Antoine & Nachtigall, Daniel & Venmans, Frank, 2023. "The joint impact of the European Union emissions trading system on carbon emissions and economic performance," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    18. Ellerman, A. Denny & Buchner, Barbara K., 2006. "Over-Allocation or Abatement? A Preliminary Analysis of the Eu Ets Based on the 2005 Emissions Data," Climate Change Modelling and Policy Working Papers 12062, Fondazione Eni Enrico Mattei (FEEM).
    19. Anger, Niels & Oberndorfer, Ulrich, 2008. "Firm performance and employment in the EU emissions trading scheme: An empirical assessment for Germany," Energy Policy, Elsevier, vol. 36(1), pages 12-22, January.
    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. Zhaoyang Zhao & Shuning Zhou & Siying Wang & Chong Ye & Tuolei Wu, 2022. "The Impact of Carbon Emissions Trading Pilot Policy on Industrial Structure Upgrading," Sustainability, MDPI, vol. 14(17), pages 1-25, August.
    2. Toshi H. Arimura & Maosheng Duan & Hyungna Oh, 2021. "EEPS special issue on “Carbon Pricing in East Asia”," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 495-500, July.

    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. Marit Klemetsen & Knut Einar Rosendahl & Anja Lund Jakobsen, 2020. "The Impacts Of The Eu Ets On Norwegian Plants’ Environmental And Economic Performance," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-32, February.
    2. Joltreau, Eugénie & Sommerfeld, Katrin, 2016. "Why does emissions trading under the EU ETS not affect firms' competitiveness? Empirical findings from the literature," ZEW Discussion Papers 16-062, ZEW - Leibniz Centre for European Economic Research.
    3. Massimo Bordignon & Duccio Gamannossi degl’Innocenti, 2023. "Third Time’s a Charm? Assessing the Impact of the Third Phase of the EU ETS on CO 2 Emissions and Performance," Sustainability, MDPI, vol. 15(8), pages 1-21, April.
    4. Dechezleprêtre, Antoine & Nachtigall, Daniel & Venmans, Frank, 2023. "The joint impact of the European Union emissions trading system on carbon emissions and economic performance," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    5. Giovanni Marin & Marianna Marino & Claudia Pellegrin, 2018. "The Impact of the European Emission Trading Scheme on Multiple Measures of Economic Performance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 551-582, October.
    6. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).
    7. Makridou, Georgia & Doumpos, Michalis & Galariotis, Emilios, 2019. "The financial performance of firms participating in the EU emissions trading scheme," Energy Policy, Elsevier, vol. 129(C), pages 250-259.
    8. Ralf Martin & Mirabelle Mu?ls & Laure B. de Preux & Ulrich J. Wagner, 2014. "Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," American Economic Review, American Economic Association, vol. 104(8), pages 2482-2508, August.
    9. Giovanni Marin & Marianna Marino & Claudia Pellegrin, 2018. "The impact of the European Union Emission Trading Scheme on Multiple Measures of Economic Performance," Post-Print hal-01768870, HAL.
    10. Brown, Marilyn A. & Li, Yufei & Soni, Anmol, 2020. "Are all jobs created equal? Regional employment impacts of a U.S. carbon tax," Applied Energy, Elsevier, vol. 262(C).
    11. Jonathan Colmer & Ralf Martin & Mirabelle Muûls & Ulrich J. Wagner, 2020. "Does pricing carbon mitigate climate change? Firm-level evidence from the European Union emissions trading scheme," CEP Discussion Papers dp1728, Centre for Economic Performance, LSE.
    12. Simone Lazzini & Zeila Occhipinti & Angela Parenti & Roberto Verona, 2021. "Disentangling economic crisis effects from environmental regulation effects: Implications for sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2332-2353, July.
    13. Jurate Jaraite-Ka~ukauske and Corrado Di Maria, 2016. "Did the EU ETS Make a Difference? An Empirical Assessment Using Lithuanian Firm-Level Data," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    14. Martin, Ralf & Muûls, Mirabelle & de Preux, Laure B. & Wagner, Ulrich J., 2014. "On the empirical content of carbon leakage criteria in the EU Emissions Trading Scheme," Ecological Economics, Elsevier, vol. 105(C), pages 78-88.
    15. aus dem Moore, Nils & Großkurth, Philipp & Themann, Michael, 2017. "Multinational corporations and the EU emissions trading system: Asset erosion and creeping deindustrialization?," Ruhr Economic Papers 719, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    16. Petrick, Sebastian & Wagner, Ulrich J., 2014. "The impact of carbon trading on industry: Evidence from German manufacturing firms," Kiel Working Papers 1912, Kiel Institute for the World Economy (IfW Kiel).
    17. aus dem Moore, Nils & Großkurth, Philipp & Themann, Michael, 2019. "Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization," Journal of Environmental Economics and Management, Elsevier, vol. 94(C), pages 1-26.
    18. Böning, Justus & Di Nino, Virginia & Folger, Till, 2023. "Benefits and costs of the ETS in the EU, a lesson learned for the CBAM design," Working Paper Series 2764, European Central Bank.
    19. Nicola De Vivo & Giovanni Marin, 2018. "How neutral is the choice of the allocation mechanism in cap-and-trade schemes? Evidence from the EU-ETS," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 9(9), pages 1-24, January-A.
    20. Flori, Andrea & Borghesi, Simone & Marin, Giovanni, 2024. "The environmental-financial performance nexus of EU ETS firms: A quantile regression approach," Energy Economics, Elsevier, vol. 131(C).

    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:spr:envpol:v:23:y:2021:i:3:d:10.1007_s10018-021-00302-0. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.