Evaluation of decarbonization cost transfer: From transport to power sector in South Korea

Abstract

To achieve net-zero emissions, major countries have implemented energy transition and electrification policies, incurring significant costs. Each sector, including generation, industry, transport, and buildings, has its own decarbonization strategy. However, as net-zero emission is a cross-sectoral issue, decarbonization efforts in one sector can impact others. In this study, we employed a combination of renewable energy adoption planning, battery electric vehicles (BEVs) charging pattern simulation, and electricity market modeling to evaluate the cost implications of transitioning to BEVs in the transport sector and its subsequent impact on the power generation sector. We considered long-term Korean policies for the power and transport sectors when constructing scenarios to compare transition costs. Our results indicate that, while the additional electricity demand from BEVs increases electricity system costs, utilizing nuclear power can significantly reduce these costs. The estimated cost of BEVs, totaling three billion US dollars, can be covered through the relevant transition policy in the power sector. However, nuclear power in Korea is only a temporary solution that delays the social costs of achieving net-zero emissions. Thus, the Korean government should develop alternatives for clean electricity. Our results also suggest that the decarbonization cost transition from a sector to the power sector should be considered in the net-zero policy.