The Impact of Korea’s Green Growth Policies on the National Economy and Environment

Abstract

Abstract The Korean government has recently established national and sectoral mid-term greenhouse gas (GHG) reduction targets. Specifically, the country must reduce its total GHG emissions by 30% compared to business-as-usual (BAU) by 2020. This study has two main purposes. First, the study aims to measure the economic impacts of pursuing and achieving the government’s GHG reduction targets. Second, it aims to estimate each major policy’s potential GHG emission reductions in the various sectors. We use the computable general equilibrium model and develop three scenarios to examine the economic and environmental impacts of Korea’s green growth policies – a baseline scenario wherein the national economy proceeds without green growth policies; scenario A, wherein the government imposes national and sectoral emission reduction targets without adopting green technologies; and scenario B, wherein the government adopts policy and technology as renewable portfolio standard and carbon capture and storage. The simulation results from scenario A indicate that the government’s mid-term targets could pose a significant challenge to Korea’s national economy. In addition, the results from scenario B indicate that low-carbon green policy and technology will play an important role in reducing GHG emissions.