**Minyoung Roh 1, Seungho Jeon 1, Soontae Kim 2, Sha Yu 3, Almas Heshmati <sup>4</sup> and Suduk Kim 1,\***


Received: 30 June 2020; Accepted: 2 August 2020; Published: 3 August 2020

**Abstract:** South Korea has been suffering from high PM2.5 pollution. Previous studies have contributed to establishing PM2.5 mitigation policies but have not considered provincial features and sector-interactions. In that sense, the integrated assessment model (IAM) could complement the shortcomings of previous studies. IAM, capable of analyzing PM2.5 pollution levels at the provincial level in Korea, however, has not been developed yet. Hence, this study (i) expands on IAM which can represent provincial-level spatial resolution in Korea (GCAM-Korea) with air pollutant emissions modeling which focuses on the road transportation sector and (ii) examines the zero-emission vehicles (ZEVs) subsidy policy's effects on PM2.5 mitigation using the expanded GCAM-Korea. Simulation results show that PM2.5 emissions decrease by 0.6–4.1% compared to the baseline, and the Seoul metropolitan area contributes 38–44% to the overall PM2.5 emission reductions. As the ZEVs subsidy is weighted towards the light-duty vehicle 4-wheels (LDV4W) sector, various spillover effects are found: ZEVs' share rises intensively in the LDV4W sector leading to an increase in its service costs, and at the same time, driving bus service costs to become relatively cheaper. This, in turn, drives an increase in bus service demand and emissions discharge. Furthermore, this type of impact of the ZEVs subsidy policy does not reduce internal combustion engine vehicles (ICEVs) in freight trucks, although diesel freight trucks are a major contributor to PM2.5 emissions and also to NOx.

**Keywords:** integrated assessment model; subsidy policy; air quality improvement; zero-emission vehicles; fine particulate matter
