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

In order to achieve the 2030 Nationally Determined Contribution (NDC), which proposed a 40% reduction compared to 2018, Korea designed the reduction path so that a power sector bears the reduction burden of the industrial sector to minimize the harm in industry competitiveness. However, in order to achieve carbon neutrality in the end, it is essential to reduce carbon in the industrial sector, which accounts for more than one-third of national greenhouse gas emissions. In this study, the impact of carbon intensity on firm value was empirically analyzed based on panel data from 2011-2021 of 687 firms participating in the emission trading system to study if it is possible to establish a sustainable carbon reduction system that can achieve both carbon reduction and competitiveness expansion in the industrial sector. The main results of this study can be summarized into the following three. First, it was confirmed that the improvement of carbon intensity had a positive effect on the increase in firm value, and sustainable carbon reduction incentives are properly operating in Korea. Second, the emission trading system is not significant in strengthening the relationship between carbon intensity and profit, but it was significant with market capitalization, which represents long-term corporate potential. Third, it was observed that the relationship between carbon intensity and firm value was strengthened in larger firms and industries that produce carbon more heavily. This study shows that the structure in which the improvement of carbon intensity leads to an increase in firm value is working in Korea, which is a key incentive for the transition to a low-carbon economy. In the future, this trend is expected to strengthen further when additional policies such as RE100 and carbon border adjustment mechanism (CBAM) are imposed.