| 摘要 | 1. Purpose of the study
Due to greenhouse gas emissions, the cost incurred from responding to extreme weather events that are occurring frequently is increasing sharply. If the amount of greenhouse gas emissions is not controlled at a reasonable level, it is highly likely that uncontrollable damages could take place; thus, there is a heightened interest in climate change agreement both domestically and internationally. Korea, which is ranked at 9th place in the world for energy consumption, currently does not have obligations to mitigate greenhouse gas emissions but is under increasing pressure to take on the responsibilities in follow-up climate change negotiations. Due to such changes in domestic and international circumstances, the Korean government has taken an active stance in responding to climate change by clarifying national mitigation target and promoting green growth.
In order to reduce greenhouse gas emissions, an approach of reflecting the social cost incurred from greenhouse gas emissions through carbon tax and another approach of regulating greenhouse gas emissions can be implemented. Currently, there are increasing cases of introducing carbon tax among European countries and New Zealand is following the steps of EU ETS by implementing its own ETS. Korea, through extensive discussions, is promoting to introduce ETS and carbon tax as well.
With green growth strategy full-fledged and the need to respond appropriately to climate change agreements ever increasing, this study was started to suggest green energy price system, which reflects mitigation cost. In the first year, problems of existing energy price system were analyzed and suggestions to improve the system were made. This study, which is in the second year, implementation of carbon tax and ETS was analyzed in order to build green energy price system, which is central to creating a market for green growth, and ways to implement such market mechanisms in the future.
2. Summary of the study
Carbon tax and ETS are systems that can induce active participation in reducing greenhouse gas emissions from businesses by providing economic incentives. The difference between the two schemes is that carbon tax reduces pollution through price and ETS reduces pollution through quantity.
In the case of carbon tax, if the government has accurate information on marginal abatement cost of each company, then it can impose an optimal tax rate at the level where national marginal abatement cost and marginal loss cost from greenhouse gas emissions are equal so that it can reduce greenhouse gas emissions optimally. ETS is similar to carbon tax because if the government allocates proper amount of emission units with accurate information on marginal abatement cost of each company, then an optimal emission trading price can be formed through the market at the level where the companies' marginal abatement cost and social marginal loss cost from greenhouse gas emissions are equal. Carbon tax and ETS are similar because they both have economic efficiency by achieving minimum cost through equalization of marginal abatement cost between economic units. Therefore, implementing such schemes increases social welfare compared to government regulating companies' emissions directly. However, it should be noted that social welfare from carbon tax and ETS is equal only if when the government has accurate information of companies' marginal abatement cost. If this precondition is not met, then social welfare of the two schemes differ.
Currently, cases of introducing carbon tax has been increasing among European countries and Norway, Denmark, England are among those that have introduced carbon tax. In Global Warming Response Cabinet meeting in 2010, Japan announced that it will indefinitely postpone the introduction of ETS, which was to be initiated in 2013, and actively promote the implementation of carbon tax. EU has introduced ETS in 2005 and New Zealand has also implemented ETS from July, 2010. Australia is planning to introduce a system called carbon pricing, which will implement fixed price ETS from July, 2012 and market-based ETS from July, 2015. It should be noted that countries that have or are planning to implement carbon tax or ETS have included in their legal provisions various policy considerations to minimize pressure from possible competitive disadvantages by implementing such schemes.
In order to effectively implement carbon tax or ETS, applicable entities for each scheme should be identified. For instance, large size businesses in industry and power sectors are included in ETS so imposing carbon tax on these entities would double the burden. This means that carbon tax should be imposed on transportation, residential and public sectors but if carbon tax were to be imposed on electricity consumption, then since power sector is included in ETS, end-users downstream will have to bear double the burden. Also, materialization and elasticity of energy price from implementing carbon tax or ETS should be considered. Especially, in Korea, price elasticity by energy source in domestic industry sector is mostly negative and its absolute value is less than 1. This implies that even if energy price increases, energy demand does not decrease proportionally; thus, whether carbon tax could become an effective measure to achieve mitigation goal is doubtful. This question is also exemplified in the analysis of the change in energy consumption and CO2 emissions when carbon tax is introduced. The result of the analysis shows that CO2 emissions decrease by less than 3% when carbon tax is introduced.
3. Result and policy suggestions
The means to reduce greenhouse gases are ETS and target management, which regulate quantity and carbon tax, which uses taxation. According to the results from the study, in order to achieve mitigation goal--reducing certain level of greenhouse gas emissions--, controlling quantity is more practical than imposing tax. When carbon tax is imposed, decrease in energy consumption due to increased energy price would lead to a certain level of reduction of greenhouse gas emissions but the mitigation effect compared to energy price increase is not great. In order to achieve mitigation goal by imposing carbon tax, the cost greater than social cost from greenhouse gas emissions should be reflected in the price. This is definitely not a market-based way. Therefore, if mitigation goal has already been set, ETS and target management could be more effective means than carbon tax.
In ETS and target management system, a difficulty of not being able to apply the scheme to all producers and consumers is a challenge. For example, applying ETS and target management to residential sector is not realistic. Therefore, by considering characteristics of consumption sector, imposing carbon tax on sectors that are difficult to control by quantity and implementing quantity-controlled mechanisms to the other sectors will be a market-friendly approach and be effective in reducing greenhouse gas emissions. |
