KYOTO PROTOCOL MAY COST S.KOREA MORE THAN JAPAN, STUDY WARNS
SEOUL, Apr 11, 2005 -- AsiaPulse
The cost of South Korea's commitments under the Kyoto environmental agreement, which will come into force here from 2013, will probably be higher than for Japan because of South Korea's higher reliance on electricity generated from coal, a study released Monday warned.
"As Korean electricity generating capacity is dominated by public utilities, the scope to reduce emissions by using newer technology and reforming its electricity generating industry is presumably greater than Japan," the report noted.
The report is seen as the first study of the possible impact on South Korea's economy for promising to restrict emissions of carbon dioxide, considered the main contributor to rising global temperatures.
"Under the estimates I understand from the Korean government, if South Korea cuts its carbon dioxide emissions by 20 per cent by 2015, it will cost it about 0.2 per cent of its gross domestic product, or about US$1 billion," said Alan Oxley, the center's chairman, in a press conference.
Oxley is in Seoul to attend a second meeting of Asia Region Climate and Energy Workshop jointly sponsored by the governments of South Korea, Australia, Japan and the United States.
The Kyoto Protocol, an ambitious environmental pact initiated by the United Nations to slow global warming by reducing carbon dioxide and other gases blamed for causing the greenhouse effect, was implemented in mid-February by 141 countries.
Among the 141 signatories to the treaty, 39 industrialized economies, including Japan and Western European nations, will be required to reduce their greenhouse-gas emission output to an average 5.2 per cent of 1990 levels between 2008 and 2012, as "a first step."
South Korea will be required to accept obligations to cut emissions under the Kyoto Protocol from 2013 because it is treated as a developing country.
Japan's economy has the lowest emissions intensity, or energy consumption relative to total output, as a result of significant reductions in fossil fuel use over recent decades in most sectors of its economy, the report said, citing an assessment by the Australian Bureau of Agriculture and Resource Economics (ABARE).
"Japan has already exhausted many of its low cost abatement possibilities and the cost of further abatement is relatively high," Oxley said.
Both South Korea and Japan rely on imported inputs of energy and raw materials for their manufactured exports, he said.
Energy intensity in South Korea is high, reflecting the fact that economic growth here has been led by expansion in energy intensive industries, such as petrochemicals, steel and shipbuilding. While the nation's energy intensity had declined since 1997 as a result of industrial restructuring, it remains one of the highest among OECD countries.
"Given this high energy intensity, the possible impact on South Korea of a binding emissions reduction target is therefore likely to be substantial," Oxley pointed out.
Gas is estimated to account for 11 per cent of South Korea's electricity generating capacity in 2010, compared with Japan's 22 percent. Nuclear is estimated to be 41 per cent of South Korean electricity generation in 2010, compared with Japan's 36 per cent, according to the report.
"Given the high share of nuclear energy, the scope of South Korea to meeting any Kyoto target by a substantial increase in nuclear capacity is more limited than in Japan," it said.
The report also warned South Korea of probably losing its competitiveness against China and India especially in the manufacturing sectors.
"The costs facing South Korea from policies to reduce its emissions to meet any Kyoto target would exacerbate the stiff competitiveness challenge it already faces with China, which will never accept a binding Kyoto target," the report concluded.
On Feb. 16, the Ministry of Commerce, Industry and Energy announced a plan to spend 21 trillion won (US$20.7 billion) in coming years to reduce greenhouse gases and make local companies more eco-friendly.
Despite the launch of the first commitment period by industrialized nations, doubts about the Kyoto Protocol remain as the United States, the world's biggest producer of greenhouse gases, refused to sign the agreement, saying it could cost its economy too much.
"One of the effective policies to implement the Kyoto Protocol is to make electricity more expensive, because about 60 per cent of greenhouse gases come from coal, oil and gas used for generating electricity," Oxley said.
However, Oxley said he is also skeptical of the possible effectiveness of the Kyoto Protocol without the participation of the United States and China. China and other developing nations will refuse to support the Kyoto Protocol because taxing electricity would slow economic growth.
"The question now we are grappling with is what do we do (without the United States and China refusing to joint the Kyoto Protocol)?," he said. "We don't want to continue in that direction."
(Yonhap)
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