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来源类型 | Research papers |
规范类型 | 报告 |
A Study on Market-Friendly Energy Price System | |
K. S. Park; T. H. Kim | |
发表日期 | 2012-12-31 |
出版年 | 2012 |
语种 | 英语 |
摘要 | ABSTRACT 1. Purpose of the study Under the market economy system, resources are efficiently distributed by a price mechanism. However, efficiency in resource distribution cannot be automatically achieved by a price mechanism in the event of a market failure. In this case, the government can intervene to boost efficiency in resource distribution. The energy market is a leading case where a market failure frequently takes place. Many pollutants are discharged in the process of energy production and consumption. For this reason, there is distortion in resource distribution unless there is appropriate government intervention, ultimately resulting in a decrease in social welfare. The energy market - especially network energy industries - usually has a monopolistic structure, and this is why social welfare can be increased through government intervention. In most countries, the government is intervening in the energy market by adopting such methods as regulations and taxes. This is not an issue in that it addresses inefficiency in resource distribution that results from a market failure. In Korea as well, the government is intervening in the market by imposing taxes on most energy sources and regulating their prices. However, government intervention can be justified only when it removes inefficiency that results from a market failure and enhances social welfare. If government intervention worsens inefficiency in resource distribution, it becomes difficult to justify the intervention. In this sense, energy taxes and regulations in Korea have much room for improvement. The purpose of this research is to analyze issues of Korea's energy price system and to suggest improvement measures. The research was carried out as a three-year project. The first-year report examined overall issues of Korea's energy price system as well as the future direction for improvements. The focus of the second-year report was emissions trading and carbon tax. Based on past reports, this research suggests a simple roadmap on improving the energy price system. 2. Summary of the study An examination of Korea's energy price system indicates that prices of petroleum products are determined in the market and that the government influences prices through taxation. In contrast, the government is intervening in prices through direct regulations in case of such network energy as electricity. However, government intervention is distorting prices rather than removing inefficiency in resource distribution that is attributable to a market failure, thereby triggering a greater number of issues. The biggest issue in relation to network energy prices is that priority is placed on macroeconomic policy goals, such as price stabilization and strengthening of industrial competitiveness, over supply and demand conditions or costs in the process of determining prices. Energy price policies are causing price distortion, ultimately resulting in an unreasonable energy consumption structure, rather than bolstering the efficiency and effects of energy and environmental policies. Decisions on energy taxes are not made by accurately reflecting external effects that arise from energy consumption and production. What is given greater importance is convenience in securing tax revenue. There is also a fairness issue among energy sources in levying taxes. Taxes are concentrated on some energy sources, and no taxes are levied on energy sources that discharge a greater amount of environmental pollutants such as coal. Rules and consistency are lacking in the imposition of taxes, thus triggering distortion in relative prices. Another issue is the complicated energy tax system. It was stated in the first-year report that issues with the current energy price system are incurring considerable social costs, and that resolving these issues would result in substantial economic effects. In detail, if electric charges, which are now below the cost of production, are made more practical, there will be a net profit of nearly 700 billion won in the national economy. It is true that a rise in energy prices has a somewhat negative effect on consumer prices and national income. An analysis conducted as part of this research estimates that a 5% increase in electric charges would raise consumer prices by 0.2% and decrease GDP by 0.203%. It also showed that there would be a 0.4% increase in consumer prices and a 0.399% drop in GDP if taxes were to be levied on coal used for power generation (on which no taxes are levied at present), with the tax amount being the same as that of LNG, which is 60 won/kg. Despite these negative effects, improvements in the energy price system would promote a reasonable consumption structure, thereby considerably reducing energy import costs. They would also bring about substantial positive effects, such as greatly reducing the discharge of environmental pollutants and greenhouse gases. This research's analysis leads to the estimation that CO2 emissions will drop by a whopping 8.9% when taxes worth 60 won/kg are levied on coal for power generation. This shows that various positive effects can be gained by simply improving fairness in taxation among energy sources. 3. Result and policy suggestions To build a market-friendly energy price system, government regulations or a tax system on energy sources should be implemented in the direction of resolving market failure. To this end, prices need to be determined based on supply and demand as well as the cost of production. In addition, a tax system that accurately reflects external costs should be established. Improvements need to be made to a tax system that maintains distorted prices for policy objectives or that obstructs fair competition among energy sources. A short-term way of improving the energy price system in this direction would be to make distorted network energy prices practical and to implement the fuel adjustment mechanism, thus establishing a price system that fully reflects costs. There is also a need to more accurately reflect the cost of production by adopting a charge system per voltage and to strengthen demand management charges. In the mid- to long-term, there is a need to establish a tax system that reflects accurately-determined social costs that are incurred from energy. In particular, consideration needs to be made for levying taxes on electricity, on which no taxes are imposed at present other than VAT. This is because many pollutants are discharged throughout the electricity production process. A more market-friendly approach would be to levy taxes on bituminous coal for power generation rather than on electricity to ensure fair competition among power generation fuel sources. Tax revenues can be used for such purposes as purchasing sites for power generation facilities or reducing fuel taxes. It is expected that levying taxes on bituminous coal for power generation will contribute substantially to reducing greenhouse gas emissions. Adopting environmental taxes, such as carbon tax, will be inevitable for reducing greenhouse gas emissions, but improving the current energy tax system alone will bring about considerable effects. For this reason, there is a need to consider the short- and long-term improvement measures that are set forth in this research ahead of carbon tax adoption. |
URL | http://www.keei.re.kr/web_keei/en_publish.nsf/by_report_year/9A77E802C579BBAF49257C750020AA5D?OpenDocument |
来源智库 | Korea Energy Economics Institute (Republic of Korea) |
资源类型 | 智库出版物 |
条目标识符 | http://119.78.100.153/handle/2XGU8XDN/322696 |
推荐引用方式 GB/T 7714 | K. S. Park,T. H. Kim. A Study on Market-Friendly Energy Price System. 2012. |
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