3.1. Driving Forces of the Increase in CO2 Emissions between 1990–2015
Korea’s CO
2 emissions have increased from 228.1 megatonnes (Mt) CO
2 in 1990 to 609.2 MtCO
2 in 2015. The right side of
Table 3 displays the contributions of nine driving factors of the total emission increase for the last 25 years (381.2 MtCO
2 = 609.2 MtCO
2 − 228.1 MtCO
2) and reveals that the effect of economic growth (PGDP) is dominant. Economic growth (PGDP) accounts for 92.7% of the emissions increases, which is consistent with those of [
15,
16,
39]. The growth in population (POP) is another significant driver of the emissions increases. The considerable contributions of PGDP and POP to the emission growth may seem obvious as the Korean economy and the population have continuously increased in the last 25 years.
On the contrary, three effects (CI, EI, and STR) are negative. In particular, the negative STR effect (−15.4%) implies that structural change in the industries is an important factor in offsetting CO
2 emissions over an extended period. The role of carbon intensity, energy intensity, and structural change in reducing emissions in the long term is also observed in other countries, such as the United States, Japan, Canada, Australia, Mexico, China [
12], Spain [
40], and Ireland [
41].
One of the most important sectors among the 19 end-users is the household sector. Households were the largest CO
2-emitting sector in 1990 and the second largest in 2015. Household behavior accounts for an 11.9% increase in emissions, mainly due to an increase in HC (18.9%) and POPH (3.7%). The intuitive reasoning behind the large contribution of HC and POPH is the same as before: the growth in the Korea’s economy and population. Nonetheless, the changes in energy intensity and carbon intensity greatly reduced emissions (EIH: −9.2%, CIH: −1.5%). We further break down the two negative factors, CIH and EIH, into three energy types (coal and oil products, electricity, and gas).
Figure 1 shows only coal and oil products contributed to negative EIH and CIH, while both electricity and gas increased emissions. The negative EIH of coal and oil products (and the positive CIH of electricity and gas) imply that households have consumed relatively fewer coal and oil products (and more electricity and gas) compared to 1990. The net effect of this energy substitution is a large carbon reduction, which is consistent with [
18]. The negative CIH of coal and oil products can be interpreted as the consequence of the energy substitution within the products: from more carbon intensive products (e.g., coal) to less intensive ones (e.g., oils). This trend also contributed to offsetting the emissions caused by economic growth in Korea.
The iron and steel sector, the petroleum chemical sector, the commercial sector, and the fabricated metal sector also made large contributions to emissions growth. These four sectors show a relatively large positive EI (5.6%, 2.4%, 0.6%, and 4.9%, respectively), which demonstrates these industries consumed more energy during the production process and increased CO2 emissions. Instead, the electronic equipment, transportation equipment, and other manufactured products sector, the road transportation sector, and the non-metallic mineral products sector have large negative EI effects (−4.1%, −5.1%, and −3.7%, respectively).
The time series of Korea’s emissions and the driving factors reveals three findings (see
Figure 2). First, CO
2 emissions growth peaked in 2010 (54.3 MtCO
2). The sudden surge in 2010 is attributed to PGDP (25.3 MtCO
2), HC (4.0 MtCO
2), and STR (17.4 MtCO
2), implying an influence of economic recovery during the post-global financial crisis period. This “rebound effect” that resulted in a surge of carbon emissions occurred around the world [
42]. The upturn in CO
2 emissions in 1999 (31.2 MtCO
2) right after the Asian financial crisis was also dominantly derived from the PGDP effect (28.7 MtCO
2) and HC (7.6 MtCO
2), verifying the rebound effect after the economic shock.
Second, the rapid CO2 emissions growth in Korea has fallen since 2012. Except for 1998, the emission growth rate is higher than 1.4% before 2012. After 2012, however, it drops to 1.2% at most. The annual average emission growth rate for 2012–2015 is 0.3%.
Third, a reduction in emissions is observed in 2014. This was the first reduction in Korea since 1998. The first emissions cut observed in 1998 is clearly a result of the economic shock in relation to the PGDP of −17.9 MtCO2 and HC of −10.2 MtCO2. However, this emissions reduction in 2014 was achieved even with positive economic growth (13.9 MtCO2) and a corresponding household consumption increase (1.4 MtCO2). The economy lowered its carbon emissions owing to EI (−10.8 MtCO2), EIH (−4.2 MtCO2), CI (−9.9 MtCO2), and CIH (−2.0 MtCO2). These results demonstrate that the Korean economy achieved a CO2 reduction in 2014 through the improvement of carbon intensity and energy intensity.
3.2. A Recent Slowdown in CO2 Emissions after 2012
The recent slowdown in CO
2 in the Korean economy is remarkable, as seen in
Table 4. While the average annual growth rate (AAGR) of emissions before the slowdown period (1990–2011) is 4.9% (17.8 MtCO
2 per annum), it plunges to 0.3% (1.7 MtCO
2 per annum) after 2012. While the economic growth of 5.7% is also downgraded to 2.7%, the consumption of energy (4.9% to 1.0%) and electricity (7.9% to 1.5%) was reduced faster than the GDP.
Calculating the contributions of the nine factors, we find a noticeable change in EI after 2012 (−7.8 MtCO
2).
Table 5 shows that economic sectors have increased the use of energy and consequently sped up the emissions growth until 2011 (0.7 MtCO
2 per annum). However, it turns into one of the main contributors to the CO
2 reduction after 2012 (−7.0 MtCO
2 per annum). The CI effect also shows a similar direction. The positive contribution of CI before 2012 (0.6 MtCO
2 per annum) changes to a negative effect for 2012–2015 (−3.3 MtCO
2 per annum). This implies that the Korean economy mitigated large amounts of carbon by increasingly relying on less carbon-intensive energy sources.
To see how Korean society has changed the use of energies during the slowdown period,
Table 6 further breaks down CI (and CIH) and EI (and EIH) by the three energy types (coal and oil products, electricity, and gas). We find that electricity played a significant role. Before 2012, the economy increased electricity consumption, emitting more CO
2 (EI: 3.4 MtCO
2 per annum). For 2012–2015, however, it achieved CO
2 reductions by using less electricity per GDP (EI: −1.8 MtCO
2 per annum). In addition, the negative CI and CIH effects are mainly caused by electricity (−3.0 MtCO
2 and −0.5 MtCO
2 per annum), which implies that power generation has changed such that it now uses less carbon-intensive energy sources. This is distinctive when compared to the positive CI and CIH effects by electricity before the slowdown (1.0 MtCO
2 and 0.2 MtCO
2 per annum). During the slowdown period (2012–2015), the share of renewables in electricity production has doubled (from 2% to 4%) and the share of nuclear power that does not produce direct CO
2 emissions has increased by 2% (from 29% to 31%), according to [
23]. Meanwhile, less power was generated from natural gas (from 22% to 19%), while the share of coal-fired power has been stable (39% in both 2012 and 2015). This implies that the source of power generation has shifted to cleaner energies, thereby reducing carbon emissions.
When analyzing the long-term driving forces between 1990 and 2015, we point to the shift in energy use of households from coal and oil products to electricity and gas as a contributor to emission cuts. For the recent years from 2012 to 2015, however, households used more coal and oil products, but less electricity and gas relative to the rise in household expenditure.
Table 6 reports that the EIH of coal and oil products is 0.2 MtCO
2, while that of electricity and gas is −0.3 MtCO
2 and −1.1 MtCO
2 per annum. It is also possible to see contributions of each economic sector to the slowdown.
Table 7 shows that substantial emissions have recently declined through improvement in energy intensity (EI) among four industries: commercial (0.5 MtCO
2 → −2.0 MtCO
2); electronic equipment, transportation equipment, and other manufactured products (−0.3 MtCO
2 → −2.4 MtCO
2); petroleum chemical (0.7 MtCO
2 → −1.4 MtCO
2); and fabricated metal (0.9 MtCO
2 → −0.2 MtCO
2). We further analyze the difference in EI by separating energy types and find that commercial and fabricated metal have reduced the energy intensity of electricity, while electronic equipment, transportation equipment, and other manufactured products and petroleum chemical have reduced consumption of coal and oil products per outputs (
Figure 3). Commercial, petroleum chemical, and fabricated metal improved the energy intensity of gas as well, leading to the observed decline in CO
2 during the slowdown period.
3.3. Discussion
Based on the results of the IDA analysis, it is clear that the negative EI and CI effects have made CO
2 emissions reductions possible for the slowdown (2012–2015) period. Ref. [
43,
44] reported that a recent decline in carbon intensity and energy intensity has been observed in many countries. In particular, the negative EI effect is reported in several country-case studies, such as Ireland [
41], Spain [
40], Turkey [
6], and a group of 33 other countries [
9]. Given that a rise in CO
2 emissions is naturally linked to economic and population growth over long periods of time, it would be meaningful to make continued efforts towards lowering carbon and energy intensity for sustainable development.
The EI effect, a major contributor to the recent slowdown, is closely related to innovation in energy efficiency technology. The Korean government has implemented several policies to improve energy efficiency through technological innovation, including the First National Energy Master Plan (2008–2030) [
45] and the Second National Energy Plan [
46]. Additionally, the Emission Trading Scheme that started in 2015 also provides incentives to develop energy efficiency technologies at the firm level. These strategies would be effective in maintaining this recent carbon reduction in Korea.
From an energy type perspective, the role of electricity in recent years is remarkable. In the long term, increasing the consumption of electricity relative to other energies has led to emissions growth in Korea [
18]. The reliance on electricity is mainly due to its cheapest price among the OECD countries [
47]. The price of electricity in Korea has been a debatable aspect of striking a balance in the reduction of CO
2 emissions. Korea has kept electricity prices low to enhance firms’ competitiveness and lower citizens’ living costs. However, the rapid increases in electricity consumption itself have become a source of increasing CO
2 emissions. Furthermore, Korea suffered a serious rolling power outage in 2011. The government has recently raised electricity prices not only to reduce carbon emissions but also to manage power demand. During the slowdown period (2012–2015), the electricity price has increased by 5.0% per year, which is far higher than the growth rates in OECD countries with low electricity prices such as the US (1.2%), Canada (−1.3%), and Mexico (−4.9%) [
48]. This rapid increase in electricity price could influence the observed reduction in electricity consumption in Korea, one of the most significant contributors to the recent CO
2 emissions reduction.
Another contributor to the slowdown is the CI (CIH) of electricity. This is mainly caused by a change in the source of power generation into cleaner energies. As reported in the literature (e.g., [
20]), the carbon intensity reductions by the diversification of the energy mix towards cleaner sources could be a crucial factor contributing to emissions mitigation. The Korean government recently declared a GHG emissions reduction roadmap in 2016 to switch power generation from coal-fueled power to cleaner energy sources by 2030. To constantly reduce CO
2 emissions, the plan needs to be well implemented.