Summary: South Korea’s Nationally Determined Contribution (NDC) to the Paris Agreement on climate centers on a pledge to reduce its greenhouse gas emissions by 37 percent in 2030 from levels projected for that year under business-as-usual policies. To reach that target, the government has launched two main climate policy instruments: a cap-and-trade system (South Korean Emissions Trading System, or KETS) and a fuel economy standard for light-duty vehicles. But according to projections by the independent Climate Action Tracker, South Korea’s current policies are insufficient to fulfill its Paris pledge, and by 2030 would result in more than double the national emissions level set in 1990.

To better understand the emissions and economic impacts of South Korean climate policies, and how they can be optimally deployed to meet the 37-percent emissions reduction goal, researchers at the MIT Joint Program on the Science and Policy of Global Change have developed and applied a customized economy-wide model of the country. The study appears in the journal Climate Change Economics.

Using the model, the MIT researchers projected that under KETS with fuel economy standards, the country would require a 2030 carbon price of $88 per metric ton of carbon dioxide-equivalent emissions to meet its NDC target. Excluding economic benefits from avoided climate damages, the combined policies would reduce the 2030 GDP by $21.5 billion (1.0 percent) and household consumption by 8.1 billion (0.7 percent). The fuel economy standard accounts for $1.1 billion of the GDP loss and $4.2 billion of the household consumption loss.