Korea's emission trading scheme and policy design issues to achieve market-efficiency and abatement targets

Hojeong Park; Won Kyung Hong

doi:10.1016/j.enpol.2014.05.001

Korea's emission trading scheme and policy design issues to achieve market-efficiency and abatement targets

Hojeong Park, Won Kyung Hong

Department of Food and Resource Economics

Research output: Contribution to journal › Article › peer-review

44 Citations (Scopus)

Abstract

In 2008, the government of Republic of Korea (Korea) announced the national abatement target aiming at 30% reductions from the Business-as-Usual projections by 2020. Accordingly, the Emission Trading Scheme (ETS) will be implemented from 2015 onwards. As ETS performance substantially depends on the structural design, it is critically important to examine the details of Korean ETS for the achievement of cost effectiveness and concurrent development of an active emission trading market. This paper addresses several policy design issues for this purpose. After providing an overview on the current framework of Korean ETS, we propose ways to achieve flexibility, consistency and market efficiency of the program in consideration of the preexisting policies. Issues in policy design are discussed by focusing on allowance allocation, market stabilization measures and price mechanism in the emission and energy markets in Korea. This paper will serve as a practical guideline for establishing sustainable and market-efficient Korean ETS that can be compatible with the international standards as in the EU ETS.

Original language	English
Pages (from-to)	73-83
Number of pages	11
Journal	Energy Policy
Volume	75
DOIs	https://doi.org/10.1016/j.enpol.2014.05.001
Publication status	Published - 2014 Dec 1

Keywords

Korean ETS
Market-based mechanism
Policy design

ASJC Scopus subject areas

Energy(all)
Management, Monitoring, Policy and Law

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10.1016/j.enpol.2014.05.001

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title = "Korea's emission trading scheme and policy design issues to achieve market-efficiency and abatement targets",

abstract = "In 2008, the government of Republic of Korea (Korea) announced the national abatement target aiming at 30% reductions from the Business-as-Usual projections by 2020. Accordingly, the Emission Trading Scheme (ETS) will be implemented from 2015 onwards. As ETS performance substantially depends on the structural design, it is critically important to examine the details of Korean ETS for the achievement of cost effectiveness and concurrent development of an active emission trading market. This paper addresses several policy design issues for this purpose. After providing an overview on the current framework of Korean ETS, we propose ways to achieve flexibility, consistency and market efficiency of the program in consideration of the preexisting policies. Issues in policy design are discussed by focusing on allowance allocation, market stabilization measures and price mechanism in the emission and energy markets in Korea. This paper will serve as a practical guideline for establishing sustainable and market-efficient Korean ETS that can be compatible with the international standards as in the EU ETS.",

keywords = "Korean ETS, Market-based mechanism, Policy design",

author = "Hojeong Park and Hong, {Won Kyung}",

note = "Funding Information: We would like to thank Frank Jotzo in the Australia National University, and Andreas Lӧschel in the University of Heidelberg. We appreciate valuable comments and suggestions provided by anonymous referees. All remaining errors are ours. This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government ( NRF-2013S1A3A2055150 ). Publisher Copyright: {\textcopyright} 2014 Elsevier Ltd.",

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PY - 2014/12/1

Y1 - 2014/12/1

N2 - In 2008, the government of Republic of Korea (Korea) announced the national abatement target aiming at 30% reductions from the Business-as-Usual projections by 2020. Accordingly, the Emission Trading Scheme (ETS) will be implemented from 2015 onwards. As ETS performance substantially depends on the structural design, it is critically important to examine the details of Korean ETS for the achievement of cost effectiveness and concurrent development of an active emission trading market. This paper addresses several policy design issues for this purpose. After providing an overview on the current framework of Korean ETS, we propose ways to achieve flexibility, consistency and market efficiency of the program in consideration of the preexisting policies. Issues in policy design are discussed by focusing on allowance allocation, market stabilization measures and price mechanism in the emission and energy markets in Korea. This paper will serve as a practical guideline for establishing sustainable and market-efficient Korean ETS that can be compatible with the international standards as in the EU ETS.

AB - In 2008, the government of Republic of Korea (Korea) announced the national abatement target aiming at 30% reductions from the Business-as-Usual projections by 2020. Accordingly, the Emission Trading Scheme (ETS) will be implemented from 2015 onwards. As ETS performance substantially depends on the structural design, it is critically important to examine the details of Korean ETS for the achievement of cost effectiveness and concurrent development of an active emission trading market. This paper addresses several policy design issues for this purpose. After providing an overview on the current framework of Korean ETS, we propose ways to achieve flexibility, consistency and market efficiency of the program in consideration of the preexisting policies. Issues in policy design are discussed by focusing on allowance allocation, market stabilization measures and price mechanism in the emission and energy markets in Korea. This paper will serve as a practical guideline for establishing sustainable and market-efficient Korean ETS that can be compatible with the international standards as in the EU ETS.

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KW - Market-based mechanism

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SN - 0301-4215

VL - 75

SP - 73

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JO - Energy Policy

JF - Energy Policy

ER -

Korea's emission trading scheme and policy design issues to achieve market-efficiency and abatement targets

Abstract

Keywords

ASJC Scopus subject areas

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