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Sustainability 2015, 7(11), 14982-15002; doi:10.3390/su71114982

Efficiency versus Equality: Comparing Design Options for Indirect Emissions Accounting in the Korean Emissions Trading Scheme

1
Department of Advanced Industry Fusion, Konkuk University, Gwangjin-gu, Seoul 143-701, Korea
2
Technology Management, Economics and Policy Program, Seoul National University, Gwanak-gu, Seoul 151-742, Korea
*
Author to whom correspondence should be addressed.
Academic Editor: Giuseppe Ioppolo
Received: 24 August 2015 / Revised: 3 November 2015 / Accepted: 6 November 2015 / Published: 11 November 2015
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
View Full-Text   |   Download PDF [1134 KB, uploaded 11 November 2015]   |  

Abstract

The Korean emissions trading scheme (ETS) has one special characteristic that makes it different from other schemes, such as the EU ETS. While the other schemes consider only direct emissions from fossil fuels, the Korean ETS also regulates indirect emissions arising from the consumption of electricity. The problem of double counting arises under this setting, in which emissions from the power sector can be accounted for twice, when electricity is produced and consumed. This study aims to compare design options on indirect emissions accounting for the Korean ETS using a computable general equilibrium model. Four scenarios are generated for options accounting for direct and/or indirect emissions and are evaluated in terms of efficiency and equality. The result shows that the ETS operates most efficiently when only direct emissions are considered. However, the option that includes both direct and indirect emissions produces a competent result in terms of equality by spreading the economic burden of emissions reduction among industries. We conclude that this option can be an alternative to meet the key purposes of the Korean ETS. View Full-Text
Keywords: emissions trading scheme; indirect emissions; computable general equilibrium; South Korea emissions trading scheme; indirect emissions; computable general equilibrium; South Korea
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Oh, I.; Yeo, Y.; Lee, J.-D. Efficiency versus Equality: Comparing Design Options for Indirect Emissions Accounting in the Korean Emissions Trading Scheme. Sustainability 2015, 7, 14982-15002.

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