The emission trading system, which is currently being introduced in many countries, is a representative system that induces emission control through pricing on greenhouse gas emissions. This study obtains implications for Korea’s future policy discussion by examining the empirical study on the institutional design and effectiveness of major emission trading systems in the United States and Japan and at home and abroad, and their relevance to other reduction policies. In consideration of economic impacts and technical constraints, Korea is setting up a target to reduce greenhouse gas emissions consistent with energy convergence, which is the original form of energy supply and demand presented by the government. Furthermore, in order to realize this, various policies are being devised on both sides of energy supply and demand. On the other hand, although there is no specific plan to introduce the emission trading system, it is arousing great debate as opinions that are expected as a cost-effective policy tool for long-term and large-scale emission reduction and opinions that question the effectiveness are divided.
Although the institutional design of each country varies greatly depending on detailed items such as the subject of regulation, the setting of emission restrictions (cap), and the distribution method, price stabilization measures (especially strategic stockpiling of emissions) are a trend common to many countries and regions in recent years. A series of recruitments are taking place. In the emission trading system, the future cap is set in advance, but if the future prospect of emission is wrong, an excess (or shortage) of emission occurs, resulting in a stagnation (or surge) in price. In such a major system, a price stabilization measure was introduced as a phenomenon such as the EU-ETS appeared. Since the strategic stockpiling of emissions is a relatively new measure, it is necessary to verify its effectiveness in the future operation process.
An increasing number of countries/regions are trying to achieve the goal of global warming measures in combination with other policies in order to achieve significant emission reductions in the long term to diversify transportation fuels by setting greenhouse gas emissions per unit fuel for fuel supply companies. In the US state of California, the reduction effect by policies other than the emission trading system is greater.
In the post-test conducted mainly by EU-ETS, the evaluation of the effect is largely divided, and it is not possible to draw a clear conclusion at present. The result of the verification, which was considered to be free from leakage caution, is an evaluation obtained under the real low price level, and does not deny the possibility of leakage during a price surge. Here, leak is used in two senses.
It is also called the Leakage problem. First of all, it means an increase in the emission of greenhouse gases generated by the project outside the project boundary. In the case of leakage when calculating the amount of emission reduction by the CDM project, that amount is deducted. Next, emissions will soften in areas where warming measures are lax. In the case of global warming countermeasures, for example, if Korea takes strict domestic measures, production shifts overseas, which increases local emissions, resulting in global greenhouse gas reductions not progressing. This is called a leak problem.
Until now, leakage has been considered a unique problem in the trade industry, but in the power sector as well, leakage in the power consumption industry due to an increase in electricity rates or leakage of non-systematic power sources in the power sector, the possibility of leakage is pointed out.
In regions leading the way with the introduction of the emission trading system, low-carbon investment is promoted by using policies other than emission trading in order to achieve long-term and significant emission reductions through the use of low-carbon power sources. If other policies reduce emissions, the price of emissions remains at a low level, so the role of the emission trading system is relatively small.
In order to realize energy convergence in 2030, Japan is trying to promote energy conservation and renewable energy, take initiative in the electricity business, and strengthen regulations under the Energy Conservation Act and the Supply Structure Advancement Act. As countries and regions that are ahead of the emission trading system tend to use measures other than trade in combination, I wonder what policies Korea is taking as the center of its global warming measures. As we approach the long-term emission reduction target year of 2050, the uncertainty of the emission forecast increases due to major changes in industry, technology and society, so setting a cap that gives a stable price signal will become even more difficult. Based on this, it is necessary to review the basic direction of a comprehensive policy aimed at 2050 without foreseeing the introduction of the emission trading system.