Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

This study assesses the compatibility of current energy policy with climate change policy by simulating the feasible domain of GHG emissions in Korean electricity sector and evaluating whether the mitigation pledge can be achieved, based on the 6th Basic Plan on Electricity Supply and Demand. With electricity generation capacity fixed until 2030 according to the 6th Plan, we simulate 6 alternative scenarios, each of which is the different combination of electricity demand, utilization of renewable technologies, and fuel substitution. We found that even the lowest emission pathway, which requires unprecedented combination of demand reduction, enhanced renewable generation, and fuel substitution, can not reach the pledge level in 2020. The lowest emission scenario also inevitably incurs additional fuel cost and stranded cost on already-installed coal capacity. These findings provide a supporting evidence that current energy and climate change policy are incompatible and either of them is not binding at least in an economic sense. The characteristics of both energy system and associated climate change problem imply that energy policy making should take a long-term perspective and secure the consistency with climate policy goal. Such harmonized forwarding-looking energy policy is necessary conditions for cost-effective carbon mitigation.