greenhouse gas (GHG) emissions by 26.0% by fiscal year (FY) 2030 compared to
FY 2013 (a 25.4% reduction compared to FY 2005; approximately 1042 MtCO 2 -eq
as 2030 emissions). South Korea has pledged to reduce emissions by 37% compared
to the business-as-usual (BAU) level (850.6 MtCO 2 -eq) by 2030 (UNFCCC 2020).
Some studies have assessed the use of emissions trading among countries or local
regions to achieve NDCs. Fujimori et al. (2016) showed that achieving NDCs with
emissions trading could decrease reductions in global welfare stemming from
changes in household consumption by 75%. Caciagli (2018) reviewed existing
emissions trading schemes (ETS) and suggested ways to combine them with international carbon credits to contribute to achieving NDCs. Schneider et al. (2020)
analyzed how to allow the transfer and use of mitigation not covered by NDCs to
facilitate the identification of mitigation potential and reduce the costs of achieving
NDCs. Gao et al. (2019) assessed the opportunities and challenges for China to
participate in international carbon markets. Inspired by these studies, we use a case
study to assess the possible economic benefits or losses, for example, GDP losses or
carbon prices changes, if emissions trading were to occur under NDCs among three
important East Asian countries, China, Japan, and Korea. We utilize the Glocal
Century Energy Environment Planning (G-CEEP) model (Su et al. 2010, 2012b,
2014) for our analysis, assuming a balanced scenario, the shared socioeconomic
pathway 2 (SSP2; O’Neill et al. 2014, Fricko et al. 2016) as the BAU scenario.
In Chap. 4, carbon abatement and its associated co-benefits are assessed in the
context of achieving emission reduction targets domestically. For developed countries, such as Japan and Korea, existing carbon intensities are relatively low, and it is
costly to further reduce carbon emissions. Developing countries do not have compulsory emission reduction obligations according to the “common but differentiated
responsibilities” of the UNFCCC; carbon emissions originating in developing countries will grow to meet social and development needs. A market-based approach is
used to abate carbon emissions by providing economic incentives for achieving
reductions, allowing countries to sell excess capacity of their allowable emissions to
countries that have exceeded their targets. Thus, countries with strict climate policies
are able to meet their reduction targets at significantly lower than projected costs.
China, Japan, and Korea lead the economic development of Asia, covering
developing and developed countries, and can form a representative economic community in East Asia. This chapter introduces a comparative scenario with emissions
trading occurring only among China, Japan, and Korea as a “Glocal Low-Carbon
Community” and focuses on the following questions:
• What occurs when emissions trading is allowed?
• How does emissions trading affect the cost of carbon emission reduction, and
what is the price of traded carbon credits?
• How sensitive are different abatement measures to emissions trading?
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X. Su and W. Zhou
FY 2013 (a 25.4% reduction compared to FY 2005; approximately 1042 MtCO 2 -eq
as 2030 emissions). South Korea has pledged to reduce emissions by 37% compared
to the business-as-usual (BAU) level (850.6 MtCO 2 -eq) by 2030 (UNFCCC 2020).
Some studies have assessed the use of emissions trading among countries or local
regions to achieve NDCs. Fujimori et al. (2016) showed that achieving NDCs with
emissions trading could decrease reductions in global welfare stemming from
changes in household consumption by 75%. Caciagli (2018) reviewed existing
emissions trading schemes (ETS) and suggested ways to combine them with international carbon credits to contribute to achieving NDCs. Schneider et al. (2020)
analyzed how to allow the transfer and use of mitigation not covered by NDCs to
facilitate the identification of mitigation potential and reduce the costs of achieving
NDCs. Gao et al. (2019) assessed the opportunities and challenges for China to
participate in international carbon markets. Inspired by these studies, we use a case
study to assess the possible economic benefits or losses, for example, GDP losses or
carbon prices changes, if emissions trading were to occur under NDCs among three
important East Asian countries, China, Japan, and Korea. We utilize the Glocal
Century Energy Environment Planning (G-CEEP) model (Su et al. 2010, 2012b,
2014) for our analysis, assuming a balanced scenario, the shared socioeconomic
pathway 2 (SSP2; O’Neill et al. 2014, Fricko et al. 2016) as the BAU scenario.
In Chap. 4, carbon abatement and its associated co-benefits are assessed in the
context of achieving emission reduction targets domestically. For developed countries, such as Japan and Korea, existing carbon intensities are relatively low, and it is
costly to further reduce carbon emissions. Developing countries do not have compulsory emission reduction obligations according to the “common but differentiated
responsibilities” of the UNFCCC; carbon emissions originating in developing countries will grow to meet social and development needs. A market-based approach is
used to abate carbon emissions by providing economic incentives for achieving
reductions, allowing countries to sell excess capacity of their allowable emissions to
countries that have exceeded their targets. Thus, countries with strict climate policies
are able to meet their reduction targets at significantly lower than projected costs.
China, Japan, and Korea lead the economic development of Asia, covering
developing and developed countries, and can form a representative economic community in East Asia. This chapter introduces a comparative scenario with emissions
trading occurring only among China, Japan, and Korea as a “Glocal Low-Carbon
Community” and focuses on the following questions:
• What occurs when emissions trading is allowed?
• How does emissions trading affect the cost of carbon emission reduction, and
what is the price of traded carbon credits?
• How sensitive are different abatement measures to emissions trading?
264
X. Su and W. Zhou