2050 Carbon neutrality measures and costs in the road transport sector of South Korea

Abstract

The South Korean government delineated carbon-neutral scenarios for the road transport sector in 2021, envisioning a more than 97% transition to battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs) by 2050. This study employs the Model for Energy Transition and Emission Reduction to examine changes in vehicle types, greenhouse gas emissions, and economic costs in the road transport sector until 2050. A comparison between the carbon-neutral (CN) and business-as-usual (BAU) scenarios, maintaining current policy levels, is conducted to derive policy implications. The attainment of carbon neutrality in the road transport sector hinges significantly on the widespread adoption of BEVs and FCEVs, with a crucial policy to ban the sales of internal combustion engine vehicle by the 2030s. A comparison of the two scenarios highlights the significant differences in the choice of BEVs and FCEVs between the non-business and business sectors. The direct costs, encompassing investment, operating, and fuel costs, are higher in the CN scenario than in the BAU scenario. However, when external costs related to greenhouse gas emissions and vehicle travel are factored in using carbon and vehicle miles traveled taxes, the total costs of the CN scenario are lower than those of the BAU scenario. Analyzing its economic viability by incorporating external costs enhances the policy’s feasibility of achieving carbon neutrality.