This paper analyzes the effects of carbon pricing on the economy, focusing specifically on the power sector under retail-price control. A simulation analysis using a CGE model implicates that it is desirable not to bestow the power sector with carbon pricing waiver to avoid a severe burden to the economy in terms of real GDP and real consumption. And excessive carbon price burden on GHG emissions in the power sector under Korean emissions trading system, where not only direct but also indirect emissions are covered, can and needs to be relieved through intensity-based (output-based) updating allocation of allowances to the power sector. Finally, we have reached a somewhat counter-intuitive conclusion that we can achieve higher economic efficiency by treating both fossil and non-fossil power plants equally when implementing the output-based updating allowance allocation for the power sector.

The demographic changes of East Asian countries have accelerated in recent years. With consideration of the linkage between human behavior and carbon emissions, it is necessary to consider demographic characteristics for the CO2 emission projections of these countries. This study examines how changes in the demographic structure affect the emission projections of three East Asian countries (South Korea, China, and Japan) by comparing two different vintages of population projections. The study constructed a dynamic computable general equilibrium (CGE) model and applied the most up-to-date dataset of population prospects, GTAP 10, and the labor force participation rate. By comparing UN2010 and UN2019 projections, the study examined the impact of demographic changes on CO2 emission profiles of the three East Asian countries. The simulation result showed that GDP, which represents economic activity along with the population, is the direct channel of CO2 emission projections. Moreover, the scenario analysis suggested the population factor as one of the main drivers of the CO2 emission projection and a clear positive relationship between GDP and CO2 emissions, though CO2 emissions are generally inelastic in response to a GDP decrease in the three East Asian countries. The finding indirectly implies that not only the size of the population but also demographic composition should be considered to project CO2 emissions, as the labor participation rate is an important factor to determine the production function.

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