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Modeling Regional Emission Trading System of Northeast Asian Countries Including Korea, China, and Japan

초록/요약

Many countries have submitted their Nationally Determined Contributions (NDCs) under the 2015 Paris Agreement whereby they specify voluntary CO2 abatement targets as part of the international effort to limit the global mean temperature increase to less than 2C. Korea has committed to an emission reduction of 37% from the Business-As-Usual (BAU) level by 2030 in its NDC. Attainment of this emission reduction target is expected to be realized through both domestic and international policy measures; domestically, a 25.7% reduction from BAU is to be achieved from a national emission trading system (ETS), while the remaining 11.3% reduction from BAU (or 96.1 MtCO2eq.) is to be accomplished through an international ETS. While the precise delineation of the amount of reduction to be accomplished through domestic vis-à-vis international ETSs suggests that this delineation was made on the basis of extensive analyses, a close examination of the underlying analyses reveals otherwise. In fact, the NDC was issued without a full scenario analysis which examined, among other things, how partially linking or fully integrating a domestic ETS and international ETSs might impact the economy and energy systems of Korea (and potential international counterparts). This is a crucial gap in our understanding of how Korea can most effectively and efficiently meet its obligations to mitigate climate change, and how Korea can best partner with its international neighbors in doing so. This thesis helps to fill this gap. This thesis models the linkage of emission trading systems among Korea, China, and Japan by cap-and-trade under the CO2 emission targets in their NDCs. The CO2 abatement, CO2 price stabilization effect, the total abatement cost, the size of the emission trading market, and the gains from emission trading are summarized as effects of ETS linkage. The results indicate that the three countries could obtain gains from trade by collaborative mitigation through ETS linkage under the decarbonization targets in their NDCs. In the case of Korea, there are dual prices in the partially-linked ETS case because the CO2 prices determined in the domestic ETS and the international ETS are different. Due to the dual prices for the CO2 permits, there could be an incentive to purchase CO2 permits through the international ETS rather than the domestic ETS. By choosing the partially linked ETS rather than the full linked ETS in 2030, Korea could lose $1.84 billion of potential economic benefit and 48 MtCO2 of the CO2 abatement. Also, this thesis clarifies the CO2 emissions, CO2 abatement, and the demand and supply of the CO2 permits using the change in the unit CO2 cost and CO2 emissions by technology level. For all countries, the CO2 abatement is generated mainly from the coal utilization technology. As a result of ETS linkage, CO2 permits demand is generated from the coal utilization technology in Korea and Japan, while the CO2 permits are supplied from the further CO2 abatement from the coal utilization technology of China. The NDCs target achievement domestically or through ETS linkage can transform the overall energy system into cleaner energy systems in Korea, China, and Japan. Moreover, as decarbonization targets become more ambitious, greater economic and environmental benefits can be expected through ETS linkage. Indeed, as the collective mitigation represented by the international community’s NDCs under the Paris Agreement is being increasingly seen as inadequate, we can reasonably expect more ambitious CO2 abatement targets to come. As a policy tool, ETS linkage provides CO2 abatement, along with relieving the uncertainty incurred by the lack of domestic CO2 mitigation options. Furthermore, it is a means of connecting the energy and environmental energy systems indirectly. Finally, it is critically important to expand our understanding of ETS linkage in international energy and environmental cooperation through long-term international research.

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목차

1 Introduction 1
1.1 Background 1
1.2 Previous Studies 3
1.3 Motivations and Research Objectives 7
1.4 Outline of Study 8
2 CO2 Emissions and NDCs Target Review 10
2.1 Korea 10
2.2 China 12
2.3 Japan 16
3 Model and Scenarios 18
3.1 Overview 18
3.2 Short Description of Integrated Assessment Models 18
3.3 Global Change Assessment Model (GCAM) 20
3.3.1 General Structure 20
3.3.2 Technology Choice 22
3.4 Development of Abatement Cost Curve 25
3.4.1 Marginal Abatement Cost Curve and ETS Linkage 25
3.4.2 Development of Abatement Cost Curve by Technology 27
3.5 Scenarios Description 32
3.5.1 Korea 32
3.5.2 China 37
3.5.3 Japan 39
3.5.4 Nuclear Power Promotion Plan 42
3.5.5 ETS Linkage and Summary of Scenarios 43
4 Results and Discussions 47
4.1 CO2 Price and Its Stabilization Effects in ETS Linkage 47
4.2 Tradable Permits, Economic Cost and Benefit 50
4.2.1 Overview 50
4.2.2 Korea 51
4.2.3 China 54
4.2.4 Japan 56
4.2.5 Summary and Findings 59
4.3 Sources and Utilization of CO2 Permits 60
4.3.1 Overview 60
4.3.2 Korea 63
4.3.3 China 72
4.3.4 Japan 76
4.3.5 Summary and Findings 80
5 Conclusions 83
Abbreviations 85
References 86

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