Impacts of Climate Change, Income Change, and Mitigation Measures on CO₂ Emission in the Korean Residential Sector in 2050

2.1 Modeling framework

This analysis consists of two parts: 1) estimating potential emissions considering future changes in population, income and climate, 2) assessing the mitigation potential of CO₂ with a carbon tax scenario and analyzing co-benefits of reducing air pollutants such as NOx, SO₂, and so on by using a technology bottom-up model, the AIM/Enduse model (Fig. 1). We develop regression model of energy service demand using energy use data, technology efficiency, and climate data from 2000 and 2010. We predict future energy service demand with 3 SSPs and 4 RCP scenarios using empirical model. We set the scenario to answer our research question and analyze our scenario using AIM/Enduse model. This scenario framework is envisioned as being useful to address a variety of questions, such as investigating in more detail its dependence on both the level of climate change and future socioeconomic conditions, evaluation of specific policies, and discovering the tradeoffs and synergies of reducing air-pollutant reduction while reducing CO₂s under mitigation measures.

Fig. 1.

Study framework.

2.2 AIM/Enduse

The AIM/Enduse model is a bottom-up optimization model with a detailed mitigation technology selection method. The model firstly analyzes combinations of technologies in order to satisfy the future service demand in each service and sector, then estimates CO₂ emissions and final energy consumption in the demand sectors and uses the given final energy demand to estimate the CO₂ emissions and primary energy consumption for the power generation sector. Technologies are selected in a linear optimization framework to minimize the total system costs including initial costs, the operating costs of technologies, energy costs, taxes and subsidies, and other costs. The AIM/Enduse model is a recursive dynamic model which can simultaneously perform calculations for multiple years and can analyze various CO₂ emission scenarios under several constraints such as satisfaction of service demands, availability of energy and material supplies, and other system constraints (Kainuma et al, 2003; Hanaoka et al, 2015).

2.3 Scope and target

The Korea residential model was developed with 6 mega-regions to predict future impact more precisely as a model with finer resolution can provide more insights in the national level estimation. We referred to economic dependency and cultural similarity to disaggregate Korea. The mega-regions were the Capital Area (CA), the Middle West area (MW), the South West area (SW), the North East area (NE), the Middle East area (ME), and the South East area (SE). This study simulates from 2010 to 2050 to gain mid-long-term information on CO₂ emissions.

Fig. 2.

Region aggregation.

2.4 Energy service demand

The residential sector was divided by heating, hot-water, cooling, cooking, lighting, refrigeration, Information and Communication Technology (ICT), and other services as shown in Table 1.

We used a decomposition analysis method to predict future energy service demand (Isaac and van Vuuren, 2009). Energy service demand is divided by activity and intensity. Activity is the population in this study, and intensity is energy service demand per person. For intensity change modeling, a general liner regression method was developed using variables (GDP, heating degree days (HDD), cooling degree days (CDD), and so on). To make each service regression model, four-year regional panel data sets (2001, 2004, 2007, and 2010) were used (Eq. 1 and 2). The Gomertz curve function is used to estimate device penetration. The regression method was applied to identify the intensity change due to socio-economic changes and lifestyle changes, using energy service demand. All SSP scenario and all climate condition (RCP scenario) data was used mainly to illustrate possible feedback between climate change and energy service demand.

Table 1.

Disaggregated end use technologies for various energy services in the residential sector

Current energy service demand

Future energy service demand

Where, RSD: Energy Service Demand, EC: Energy Consumption, EE: Energy Efficiency, DP: device penetration (r: Region, s: Service, e: Energy, d: Device)

2.5 Disaggregation of population and GDP

In order to prepare the local scale drivers such as population and GDP, ideally a local model will be developed, and parameters will be calculated to replicate a national value that is equal to the total of local values. But even though a local model similar to the national model can be used, it is difficult to replicate the national values and provide a theoretical basis to change the parameters. Based on the calculated regional population change, the annual regional population is calculated. The national GDP per capita up to 2050 is calculated from SSPs, and the regional GDP per capita in the benchmark year is also calculated. The regional GDP is adjusted to meet the national total value using the regression and convergence year that correspond with SSP storylines (van Vuuren et al., 2012). Disaggregation of population and GDP into mega-regions using SSP scenario results has been described (See appendix).

2.6 Heating degree days (HDD) and Cooling degree days (CDD)

HDDs and CDDs can have an important influence on heating and cooling demand. Degree-days are the summation of temperature differences from a human comfort level over time. They capture both extremity and duration of difference between outdoor temperatures and reference temperatures. Heating degree days are degree-days below the ‘‘set point’’ of 18°C, and cooling degree days are degree-days above the ‘‘set point’’ of 24°C The population grid in 2005 was used for the weighting to provide a more precise explanation at provincial level. To remove model uncertainty, an average of five major climate models (gfdl-esm2m, hadgem2-es, ipsl-cm5a-lr, miroc-esm-chem, noresm1-m) and four RCPs (RCP2.6, RCP4.5, RCP6.0, RCP8.5) for each model are used to derive future climate (See appendix).

3.1 Population and GDP

In order to estimate future service demand, it is important to set socio-economic drivers such as population growth rate and GDP growth rate. This study used the population growth and GDP growth ratio (instead of income) based on the SSP scenario developed by Statistics Korea, Korea Development Institute, IIASA and OECD. In this research, SSP2 (similar with medium-growth scenario from Korea government projection), SSP3, and SSP5 were selected. SSP2 show similar pattern and range with SSP1 and SSP4 in Korea.

According to the SSP2 scenario and the government forecast, the total population for Korea is projected to decrease from 49.4 million people in 2010 to 48.8 million people in 2050. The annual rate of population growth is expected to decrease from 0.46 percent in 2010 to 0.28 percent in 2020. Beginning in 2031, the population growth rate will become negative, then decline to -1.0 percent in 2050. The population of most areas, except the CA and MW areas, are expected to decrease from 0.88 to 0.98 compared to that of the 2010 level. The number of households is expected to increase because of the increasing total population in the CA and MW regions, and family size will decrease from around three to two. The Gross Domestic Product (GDP) in SSP2, SSP3, and SSP5 will expand respectively, 3.2, 2.7, and 2.8 percent from 2010 to 2030, 2.0, 0.3, and 2.6 percent from 2031 to 2050 according to OECD outlook. The proportion of GDP is 49% (CA), 12% (MW), 11% (SW), 2% (NE), 9% (ME), and 16% (SE) in 2010.

3.2 Climate change

HDD and CDD correspond to the long-term global average temperature. HDD is expected to decrease among RCP scenarios and regions except for the NE region (Fig 4). CDD trends vary over time, associated with variability in RCP scenarios and regions (Fig 4). It might be expected that predicting cooling energy service demand is relatively important. The RCP85 scenario shows high CDD changes in all regions.

Fig. 3.

Population and GDP per capita with different SSP scenarios from IIASA database and the Korean government prediction (KOR) from Statistics Korea (Population) and Korea Development Institute (GDP).

Fig. 4.

Heating degree days and Cooling degree days in 2010, 2030, and 2030 under different climate conditions.

3.3 Scenario

Assumptions of socio-economic factors and service demands were the same across the scenarios and only technology selections were different as they were determined by the AIM/Enduse model to satisfy these given service demands. Estimations of mitigation potentials are influenced by the portfolio of various mitigation measures, and various options are available for accelerating the introduction of energy efficient technologies on the demand side.

In this study, there is a scenario setting for estimating the impacts of socio-economic change, climate change, and mitigation measures on CO₂, as shown in Table 2. Each SSP scenario (SSP2, SSP3, SSP5) under the climate conditions of the RCP85 scenario were used with the same policy and same discount rate to analyze socio-economic change impacts. For the climate impact, the SSP2 scenario under the four RCP cases is used with the same conditions and socio-economic change impact. We looked at three scenarios, one with technology frozen, one with BaU with no tax, and one economic scenario with tax from 50 ~ 1000 $/tCO₂ in 2050. Decisions require considering comprehensive strategies of pay-back time, and here the model uses a low discount rate, 5%, equivalent to the current interest of Korea, and a high discount rate of about 10% to 33% which is related Japan’s device life cycle study.

Table 2.

Modeling scenario

Table 3.

Power generation plan in 2030 (7th Korean government plan) and 2050 (assumption)

3.4 Technology database, energy database, emission factors and energy resources

Understanding current patterns of energy consumption in Korea is important because they determine the potential for energy share and allow the model to represent the preferences for individual energy services. Energy balances (KEEI, 2011) give the total residential sector energy consumption for Korea. We used technology efficiency and ownership ratio to calculate energy service demand (Korea Power Exchange, 2011). The AIM/Enduse model require an energy database, an energy resource database and a technology option database. In the energy database, information on emission factors and energy prices are stored. In this study, we developed AIM/Enduse Korea database using current energy, technology data. Energy prices are set exogenously, and they are one of the important factors in estimating mitigation costs. Current energy prices were set based on current price and taxes and future international energy prices in the midterm were set based on IEA World Energy Outlook (IEA, 2010). The future energy prices by fuel type, sector, and country were set under the assumption that domestic energy prices would rise with international energy prices. Emission coefficients are important factors for estimating emissions amounts. Regarding air pollutants, this study considered emission coefficients of primary emissions derived from energy combustion, and they were set by energy source, based on various international emissions factor guidelines and Korean reports (NIER, 2013). This study used the 7^th Korean government power generation plan to observe the possibility of reductions as this plan combines both energy security issues and social concerns.

4.1 Empirical model

The regression model results of each services are given in Table 4. Heating service demand and hot-water service demand per person will be influenced by HDD changes. This model can account for 65% and 55% of each. Cooling demand not only depended on CDD but also on purchasing of air-conditioning systems, which is usually described as an S-shaped curve function of the level of income. Lighting service demand per person was affected by income. Cooking depended on an income level at which people go outside of the home to eat. Other appliances such as refrigerators, TVs, computers, and so on were also correlated with income level

Table 4.

Regression model of intensity of each energy service per person

Figs 5. and 6. show energy service demand among the three SSP scenario under the RCP85 scenario. According to our model, final energy service demand does not grow significantly across the scenario up to 2050, which is predominantly due to the declining population. Energy service demand in the residential sector increases to 1.08 ~ 1.15 times among SSP scenario between 2010 and 2050 and changes to 0.86 ~ 1.23 times between 2010 and 2050. Socio-economic variation shows an overwhelming impact on CO₂ emissions when we think about a sufficient energy supply. Energy service demand is sensitive to climate, growth of population and GDP, and region in terms of magnitude and spatial pattern. Although the model does not include macroeconomic impacts beyond energy service demand, there is evidence that accounting for feedback effects both the economy and energy service demand. The relative impact of these factors varies across space and time. For example, in the SW and SE region, climate change has an impact comparable to population growth, while in other province, such as the CA region, population growth shows an overwhelming impact. When cross-province population movements occur on a more active basis, by adaptation to temperature, energy service demand for heating and hot-water can be reduced more in the future. These results are consistent with all regions in Korea. Other services using electricity are expected to increase their service demand because of population increase and higher income levels. Demand for power for cooking is decreasing due to lifestyle change. People want to go outside to eat when they earn more money. Household expenditure for eating outside of the home is strongly correlated with GDP increases (Lee and Kim, 2005).

Fig. 5.

Comparison of energy service demand of each SSP scenario under climate condition of RCP8.5 by region.

Fig. 6.

Comparison of energy service demand of each SSP scenario under climate condition of RCP8.5 by service.

The current as well as future energy use pattern is significantly dominated by space heating and hot-water use (Fig. 6). One notable trend in energy service demand is reduced heating and hot-water demand due to temperature increase (Fig. 7).

Fig. 7.

Comparison of energy service demand for each climate condition under SSP2 among climate related services.

4.2 Comparisons of CO₂ emission pathway

In base scenario (population and GDP of SSP2 scenario case), CO₂ emission will peak, and emit 76 MtCO₂ in 2030. After 2030, CO₂ emission will decrease to 72 tCO₂ due to population decrease. Fig. 8 (left) shows CO₂ emissions in the residential sector under the different population and GDP changes. In the event of population and GDP change impacts, the emissions pattern is similar to population change in 2030, and 2050. CO₂ emissions will increase by 1.13 times in SSP5, and decrease by 0.78 times in SSP3 compared to SSP2’s 2050 emission level. The gap of CO₂ emissions in 2030 and 2050 is smaller than in 2020. In the case of climate change, CO₂ emission will be shown fluctuation due to different potential changes by regions and climate scenario. More CO₂ will be emitted in the RCP6.0 and RCP2.6 scenario due to heating and hot-water energy service demand in 2020, 2050 (Fig. 8 right). In case of Korea, climate change will help to reduce emission that comes from heating and cooling energy demand in certain period.

Fig. 8.

CO2 emission scenario impacted by socio-economic change, and climate change.

Fig. 9.

CO2 emission scenario impacted by climate policy such as carbon tax.

In the technology-frozen scenario, which represents a scenario in line with the current and the previous share of device efficiency, CO₂ will be emitted 78 MtCO₂. Korea residential sector can reduce 6 MtCO₂ without any tax due to autonomous efficiency improvements. The carbon tax scenario at 50 US$/tCO₂ to 1000 US$/tCO₂ in 2050 can reduce CO₂ emissions. A low discount rate, 5%, equivalent to the current interest rate of Korea, shows drastic decreases in CO₂ emissions compared to a high discount rate of between 10% and 33%. In a low discount rate, no carbon tax scenario can reduce CO₂ emissions more than 1000 US$/tCO₂ scenario result of the high discount rate in 2050. With a long-term investment plan of customer and carbon taxes from government policy, Korea could reduce emissions by an average 16 MtCO₂ compared to BaU case in 2050. To achieve the low carbon target, government should report cost-effectiveness of new device investment even if its device cost is high. And carbon taxes is needed in order to expand the use of energy-efficient devices at a faster rate than the demand side.

4.3 Co-benefits of air-pollutant reduction from CO₂ mitigation measures

Fig. 10 shows the co-benefits of CO₂ mitigation action in reducing energy-related air pollutant emissions. While reducing CO₂ emission with mitigation measures, PM and SO₂, which harm human health, can be reduced by more than the average level. There is also a benefit of large reduction potential of air pollutants, in the range of 5-40% reductions. There number is quite similar with Chae and park (2010). Regarding the reduction of emissions, energy efficiency change and fuel shift could play an important role in curbing air pollutants (see 1000 US$/tCO₂ carbon tax case). In the residential sector, the use of LNG or electricity for heating services is a good way to reduce air-pollutant emission. But rural households are significantly different and characterized by the dominance of different fuels. Rural Korea is currently dependent on kerosene for heating and hot-water supply because of the lack of an infrastructure for LNG.

Fig. 10.

CO2 and air-pollutant emission reduction ratio with mitigation measure compared to BaU case under SSP2 and RCP85 scenario.

This study analyzed the impacts of socio-economic change, climate change and mitigation measures on CO₂, and also discussed co-benefit of air-pollutant emissions reduction from climate policies such as carbon tax. Our model can present a detailed, service-based model in the Korean residential sector and power generation sector. It covered multi-gas including not only the CO₂ emission but also major air pollutants such as SO₂, NOx, and PM, and analyzed the co-benefits of reducing air pollutants due to CO₂ mitigation actions. Socio-economic variation shows an overwhelming impact on CO₂ emissions. With a long-term investment plan of customer and carbon taxes from government policy, Korea could reduce emissions by an average 16 MtCO₂ compared to BaU case in 2050. There is also a benefit of large reduction potential of air pollutants, in the range of 5-40% reductions. Using energy-efficient technologies and fuel shift can play an important role in curbing air pollutants. This study has not fully considered the potential practical, political, and institutional barriers to implement each option region by region. That question will be for a future agenda to be discussed in our ongoing studies.