Power sector reform and CO2 abatement costs in Korea

Abstract

The current Korean administration is driving change in the power sector by gradually phasing out nuclear power plants, expanding the use of renewable energy, and imposing restrictions on the operation of coal power plants. Considering these changes, the marginal abatement cost (MAC) curve would provide crucial information to determine an appropriate greenhouse gas reduction target, especially for 2030. This study derives the MAC curves for the Korean power sector in 2030 using a bottom-up optimization model with three scenarios based on different carbon pricing schedules. In addition, the carbon price required to achieve the CO2 emission targets in the Korean power sector in 2030 are estimated. The results show that a carbon price of 135–157 US$/tCO2 would be required to achieve the 2030 emission target for the power sector. By comparing the MAC curves of three different scenarios, we can reiterate the fact that early action regarding climate change mitigation is more effective and efficient than delayed action.