- Joint Program Report
Summary: South Korea’s Nationally Determined Contribution (NDC) to the Paris Agreement included a pledge to reduce its greenhouse gas (GHG) emissions by 37 percent in 2030 from levels projected for that year under business-as-usual policies. Using an economy-wide model, researchers at the MIT Joint Program on the Science and Policy of Global Change projected that under South Korea’s Emissions Trading System (KETS) with fuel economy standards, the country would require a 2030 carbon price of $89 per metric ton of carbon dioxide-equivalent to meet its NDC target. According to their analysis, if economic benefits from avoided climate damages are excluded from consideration, the combined policies would reduce 2030 GDP by $20.6 billion (1.0 percent) and consumer welfare by 7.9 billion (0.7 percent). Adding the fuel economy standard to KETS increases the cost of meeting South Korea’s NDC: it reduces GDP and consumer welfare by, respectively, $4.2 billion and $1.1 billion relative to reducing emissions with just an ETS. The researchers also found that production declines under the combined policies are largest for three sets of sectors: fossil-based energy; chemical, rubber and plastic products; and iron and steel.