The Korean Journal of Economic Studies
The Impact of Greenhouse Gas Abatement Policy on Manufacturing Industries in South Korea
Eunsun Gil (Korea Institute for Industrial Economics & Trade), Sul-Ki Lee (Korea Institute for Industrial Economics & Trade) and Mira Rim (Bank of Korea)Year 2021Vol. 69No. 3
CO2 emissions in Manufacturing industry account for about half of national greenhouse gas emissions in South Korea. To control for endogeneity between output and greenhouse gas emissions, this paper uses employment and total payroll as instrumental variables in an analysis of 2012-2018 linked panel data. Following the implementation of climate policy, CO2 emissions from production activities in the manufacturing sector increased significantly, running counter to policy objectives. Since the primary metals industry shows a high degree of regional heterogeneity in carbon dioxide emissions relative to its production level, it is necessary to upgrade facilities and adopt technologies for particularly ‘brown’ firms.