Driving forces of rapid CO2 emissions growth: A case of Korea

This study aims to investigate Korea's final demand structure and its impacts on CO2 emissions in order to reduce CO2 emissions and develop environmental policy directions. Based on the environmentally extended input-output model, this study adopts a two-step approach: (1) to estimate the embodied emissions and their intensities for 393 sectors induced by final demand; and (2) to calculate the driving factors of emission growth between 2003 and 2011 and then evaluate the result by using Structural Decomposition Analysis (SDA). The findings of this study demonstrate that the impact of composition change in export with less embodied emission intensities tends to offset the increase in CO2 emission by the export scale growth. The relatively low residential electricity price has resulted in the rapid growth of household electricity consumption and significantly contributed to emissions growth. The result of SDA indicates that Korea's final demand behavior yielded high carbonization over the same period. The findings suggest that Korean government should promote exports in industries with less embedded CO2 in order to protect environments. In addition, emission information of each product and service should be provided for consumers to change their purchase patterns towards contributing to low carbon emissions as active players.