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Abstract ▼ AI-Helper

The Korean government recently announced greenhouse gases (GHG) emissions reduction target as 30% of 2020 business as usual (BAU) emission projection. As carbon emissions trading is widely used to achieve reductions in the emissions of pollutants, this study deals with the sectoral allocation of ini...

The Korean government recently announced greenhouse gases (GHG) emissions reduction target as 30% of 2020 business as usual (BAU) emission projection. As carbon emissions trading is widely used to achieve reductions in the emissions of pollutants, this study deals with the sectoral allocation of initial carbon emission permits in Korea. This research tests the effectiveness of a variety of allocation rules based on the bankruptcy problem in cooperative game theory and hybrid input-output tables which combines environmental statistics with input-output tables. The impact of initial emission permits allocation on economic growth is also analyzed through green growth accounting. According to the analysis result, annual GDP growth rate of Korea is expected to be 4.03%, 4.23%, and 3.67% under Proportional, Constrained Equal Awards, and Constrained Equal Losses rules, respectively. These rates are approximately from 0.69% points to 0.13% points lower than the growth rate of 4.36% without compulsory $CO_2$ reduction. Thus, CEA rule is the most favorable in terms of GDP growth. This study confirms the importance of industry level study on the carbon reduction plan and initial carbon emission permits should reflect the characteristic of each industry.

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