IDEAS home Printed from https://ideas.repec.org/a/taf/tcpoxx/v17y2017i8p947-961.html
   My bibliography  Save this article

Korea’s approach to overcoming difficulties in adopting the emission trading scheme

Author

Listed:
  • Hyungna Oh
  • Junwon Hyon
  • Jin-Oh Kim

Abstract

In this study, we aim to describe the background for design characteristics of emissions trading schemes (ETS) in developing and emerging economies, with a particular focus on the case of Korea. These countries may face unique hardships such as fierce opposition from industry sectors, the presence of a power imbalance between the Ministry of Environment (MOE) and ministries that are in charge of supporting output growth, and the absence or incomplete development of financial markets and auctioning mechanisms. To overcome these hardships, the Korean government legislated laws that defined timelines for every stage of ETS development, established a strategic governance architecture to make up the weak position of the MOE, offered strong market-stabilizing measures focused on maintaining the allowance price below a certain level, and provided support packages to make the low-carbon transition easy by compensating for losses caused by the Korea Emissions Trading Scheme (KETS). Such policy instruments that made adoption of KETS easier could be obstacles to making it efficient.Policy relevanceIn the process of adopting a cap-and-trade system, both a developing economy and an emerging economy may face unique hardships, such as strong opposition from industry sectors, the presence of a power imbalance between the Ministry of Environment (MOE) and ministries that are in charge of supporting output growth, and the absence or incomplete development of financial markets and auctioning mechanisms. To make up for the weak base of Korea’s ETS, the government legislated laws that defined timelines for every stage of the ETS development, established a strategic governance architecture to make up for the weak position of the MOE, offered strong market-stabilizing measures focused on maintaining the allowance price below a certain level, and provided support packages to make the low-carbon transition easy by compensating for losses caused by the Korea’s ETS. Korea’s experiences can be shared with other developing economies that are considering adoption of a cap-and-trade scheme.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:tcpoxx:v:17:y:2017:i:8:p:947-961
    DOI: 10.1080/14693062.2016.1213696
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/14693062.2016.1213696
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/14693062.2016.1213696?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. Aristides Patrinos & Anjuli Bamzai, 2005. "Policy needs robust climate science," Nature, Nature, vol. 438(7066), pages 285-285, November.
    2. Christina Hood, 2010. "Reviewing Existing and Proposed Emissions Trading Systems," IEA Energy Papers 2010/13, OECD Publishing.
    3. Kim, Yong-Gun & Lim, Jong-Soo, 2014. "An emissions trading scheme design for power industries facing price regulation," Energy Policy, Elsevier, vol. 75(C), pages 84-90.
    4. Richard G. Newell & William A. Pizer & Daniel Raimi, 2013. "Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 123-146, Winter.
    5. Zhang, Da & Karplus, Valerie J. & Cassisa, Cyril & Zhang, Xiliang, 2014. "Emissions trading in China: Progress and prospects," Energy Policy, Elsevier, vol. 75(C), pages 9-16.
    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. Huang, Wenyang & Wang, Yizhi, 2024. "Identifying price bubbles in global carbon markets: Evidence from the SADF test, GSADF test and LPPLS method," Energy Economics, Elsevier, vol. 134(C).
    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.
    3. Tang, Ling & Wang, Haohan & Li, Ling & Yang, Kaitong & Mi, Zhifu, 2020. "Quantitative models in emission trading system research: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    4. Lin, Boqiang & Jia, Zhijie, 2020. "Does the different sectoral coverage matter? An analysis of China's carbon trading market," Energy Policy, Elsevier, vol. 137(C).
    5. 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.
    6. Lin, Boqiang & Jia, Zhijie, 2019. "What will China's carbon emission trading market affect with only electricity sector involvement? A CGE based study," Energy Economics, Elsevier, vol. 78(C), pages 301-311.

    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. Jiang, Jingjing & Xie, Dejun & Ye, Bin & Shen, Bo & Chen, Zhanming, 2016. "Research on China’s cap-and-trade carbon emission trading scheme: Overview and outlook," Applied Energy, Elsevier, vol. 178(C), pages 902-917.
    2. Stranlund, John K. & Murphy, James J. & Spraggon, John M. & Zirogiannis, Nikolaos, 2019. "Tying enforcement to prices in emissions markets: An experimental evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    3. Clayton Munnings & William Acworth & Oliver Sartor & Yong-Gun Kim & Karsten Neuhoff, 2016. "Pricing Carbon Consumption: A Review of an Emerging Trend," Discussion Papers of DIW Berlin 1620, DIW Berlin, German Institute for Economic Research.
    4. Cong, Ren & Lo, Alex Y., 2017. "Emission trading and carbon market performance in Shenzhen, China," Applied Energy, Elsevier, vol. 193(C), pages 414-425.
    5. Stranlund, John K. & Murphy, James J. & Spraggon, John M., 2014. "Price controls and banking in emissions trading: An experimental evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 68(1), pages 71-86.
    6. Peter Drahos & Christian Downie, 2017. "Regulatory Unilateralism: Arguments for Going It Alone on Climate Change," Global Policy, London School of Economics and Political Science, vol. 8(1), pages 32-40, February.
    7. Wu, Rongxin & Tan, Zhizhou & Lin, Boqiang, 2023. "Does carbon emission trading scheme really improve the CO2 emission efficiency? Evidence from China's iron and steel industry," Energy, Elsevier, vol. 277(C).
    8. Munnings, Clayton & Morgenstern, Richard D. & Wang, Zhongmin & Liu, Xu, 2016. "Assessing the design of three carbon trading pilot programs in China," Energy Policy, Elsevier, vol. 96(C), pages 688-699.
    9. John K. Stranlund & Insung Son, 2019. "Prices Versus Quantities Versus Hybrids in the Presence of Co-pollutants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(2), pages 353-384, June.
    10. Inha Oh & Yeongjun Yeo & Jeong-Dong Lee, 2015. "Efficiency versus Equality: Comparing Design Options for Indirect Emissions Accounting in the Korean Emissions Trading Scheme," Sustainability, MDPI, vol. 7(11), pages 1-21, November.
    11. Sunghee Shim & Jiwoong Lee, 2016. "Covering Indirect Emissions Mitigates Market Power in Carbon Markets: The Case of South Korea," Sustainability, MDPI, vol. 8(6), pages 1-11, June.
    12. Gao, Yuning & Li, Meng & Xue, Jinjun & Liu, Yu, 2020. "Evaluation of effectiveness of China's carbon emissions trading scheme in carbon mitigation," Energy Economics, Elsevier, vol. 90(C).
    13. Jiang, Jingjing & Ye, Bin & Xie, Dejun & Li, Ji & Miao, Lixin & Yang, Peng, 2017. "Sector decomposition of China’s national economic carbon emissions and its policy implication for national ETS development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 855-867.
    14. Liu, Yu & Tan, Xiu-Jie & Yu, Yang & Qi, Shao-Zhou, 2017. "Assessment of impacts of Hubei Pilot emission trading schemes in China – A CGE-analysis using TermCO2 model," Applied Energy, Elsevier, vol. 189(C), pages 762-769.
    15. Haoran Zhang & Rongxia Zhang & Guomin Li & Wei Li & Yongrok Choi, 2020. "Has China’s Emission Trading System Achieved the Development of a Low-Carbon Economy in High-Emission Industrial Subsectors?," Sustainability, MDPI, vol. 12(13), pages 1-20, July.
    16. Park, Hojeong & Hong, Won Kyung, 2014. "Korea׳s emission trading scheme and policy design issues to achieve market-efficiency and abatement targets," Energy Policy, Elsevier, vol. 75(C), pages 73-83.
    17. Meunier, Guy & Ponssard, Jean-Pierre & Quirion, Philippe, 2014. "Carbon leakage and capacity-based allocations: Is the EU right?," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 262-279.
    18. Peter Zaman & Adam Hedley, 2016. "Networked Carbon Markets," World Bank Publications - Reports 26430, The World Bank Group.
    19. Zhou, X. & Fan, L.W. & Zhou, P., 2015. "Marginal CO2 abatement costs: Findings from alternative shadow price estimates for Shanghai industrial sectors," Energy Policy, Elsevier, vol. 77(C), pages 109-117.
    20. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).

    More about this item

    Statistics

    Access and download statistics

    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:taf:tcpoxx:v:17:y:2017:i:8:p:947-961. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/tcpo20 .

    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.