Energy Policy 34 (2006) 25722585

The economic impact of strengthening fuel quality

regulationreducing sulfur content in diesel fuel
H.J. Chang
a,
, G.L. Cho
b
, Y.D. Kim
c
a
Sejong University, 98 Gunja-dong, Gwangjin-gu, Seoul, Korea
b
National Assembly Budget Ofce, 27-1 Yeouido-dong, Yeongdeungpo-gu, Seoul, Korea
c
Pusan National University, 30 Jangjeon-dong, Geumjeong-gu, Busan, Korea
Available online 9 June 2005
Abstract
This paper investigates the impact of strengthening vehicle emission regulation on economic activities. The government attempts
to use three regulation measures to protect air quality from transportation emission. The measures include the aggregate limit
(bubbles), the vehicle emission standard, and the fuel quality standard. Especially, we focus on the economic impact of reducing
sulfur content in diesel fuel quality standard. Sulfur content in diesel fuel is one of the main factors in worsening local air quality.
The emission from diesel vehicle accounts for 51.8% of total vehicle emission in Korea. If sulfur content reduction regulation is
implemented, then the petroleum industry should build more facility to produce low sulfur content diesel, leading to additional
production costs and increasing prices and decreasing outputs. We use computable general equilibrium model to analyze how the
sulfur reduction regulation affects economic activities and trace out local emission reduction cost and GDP loss. And we suggest the
tax-recycling mechanism to mitigate the negative economic costs due to the sulfur reduction regulation.
r 2004 Published by Elsevier Ltd.
Keywords: Transportation; Regulation on fuel quality and emission
1. Introduction
In Korea, local pollution from the transportation
sector is increasing and threatening peoples health and
welfare. Especially, cars and trucks using diesel fuel are
thought as a cause of worsening air quality. According
to air pollution emission published by Ministry of
Environment (1999), the emission from the transporta-
tion sector takes 55.8% of total emission and diesel fuel
is responsible for 51.8% of the transportation emission.
In order to improve air quality and welfare, reduction of
emission from the transportation sector, especially diesel
fuel, is necessary.
The Korean government has attempted to reduce
local emission, trying to use some measures to reduce
local emission in the transportation sector. Strengthen-
ing emission standard for vehicles and fuel quality
standard are considered as an efcient policy tool.
However, strengthening regulation on fuel quality
requires additional investments for rening facility,
additional production costs, and nally increases in fuel
prices in petroleum and automobile industry. In turn,
such increases in costs and prices may cause sluggishness
in economic growth and advance in the price level.
In this paper, we ask some questions about how we
can minimize the adverse economic impact from the
regulation enforcement to obtain the environmental
target and who can pay the costs. And we attempt to
provide some answers to the above questions. In this
sense, we investigate the impact of strengthening fuel
quality standard on the economic activities and measure
the overall economic costs incurred over the various
ARTICLE IN PRESS
www.elsevier.com/locate/enpol
0301-4215/$ - see front matter r 2004 Published by Elsevier Ltd.
doi:10.1016/j.enpol.2004.08.017

Corresponding author.
E-mail addresses: hjc21c@naver.com (H.J. Chang),
glcho@nabo.go.kr (G.L. Cho), ydkim@pusan.ac.kr (Y.D. Kim).
regulation scenarios. Then we suggest some plausible
measures minimizing economic costs incurred from
enforcing the regulation on fuel quality.
In Section 2, we explain computable general equili-
brium (CGE) model for economic impact of strengthen-
ing fuel quality standard. Section 3 explains the results
and introduces some measures for economic cost
minimization. Section 4 gives concluding remarks.
2. The model of transportation fuel and environmental
regulation
The propriety of environmental taxation and regula-
tions has been agreed widely on the air pollution. Not
only Korea but also most of industrialized countries try
to improve the air quality along with total emission
control and enforcement regulation on industrial
activities such as tightening vehicle emission standard
and improving fuel quality.
There are lively discussions on the Sustainable
Development saying to pursue both continuous eco-
nomic growth and clean environment for the future
generations. In this point, the environmental improve-
ment and economic growth is not a matter of choice but
of a compulsory policy objective to carry out together.
But in case that the government regulation leads to any
distortion on investment, it may cause social loss such as
rising prices and weakening industrial competitiveness.
In this context, we also recognize the importance of
minimizing adverse effects.
This study aims to analyze the economic benet and
cost of environmental regulations on fuel quality control
and vehicle emission standard and, in the end, to nd
the efcient way to achieve satisfactory environmental
quality. To evaluate the policies and suggest the
appropriate policy options, we develop the dynamic
CGE model, taking the backward and forward linkage
effect among industries into consideration.
Carbon monoxide (CO), hydrocarbon (HC), nitrogen
oxide (NO
x
) and particulate matter (PM) are the target
pollutants to analyze, which are currently the regulated
air pollutants of vehicle emission. It is analyzed for the
period from 2001 to 2012 toward oil industries,
transportation industries, service industries and car
industries. The oil products include gasoline, diesel,
LPG, other oil products and alternative fuel (50 ppm
diesel, 15 ppm diesel). We classify the transportation
industry according to the emission pattern of the fuel
and vehicle type. The vehicle includes passenger car, van
and truck, also as gasoline, diesel and LPG car by the
fuel, and classied further as small, medium and large
car by the volume of a car. The detailed division is good,
in the sense that it makes possible the analysis of the
substitution effect among the conventional cars and
from conventional cars to new cars.
Therefore, this model has an advantage to consider
the various linkage effects over the national economy, as
well as the substitution effect of vehicles from the
government regulation (Table 1).
2.1. Data and model structure
2.1.1. Data
Fuel consumption for transportation use
1
The gasoline consumption is estimated to be
10,090 kl, diesel 15,153 kl and LPG 6022 kl in 2001.
2
The average fuel price of 2001 is applied as 1280 won
for gasoline, 645 won for diesel and 440 won for
LPG. The consumption expenditure for transporta-
tion fuel amounts to 12,916 billion won for gasoline,
9773 billion won for diesel, 2649 billion won for LPG
(Table 2).
Number of registered vehicles
The total number of registered vehicles in 2001 is 12
million and new vehicles hold about 10%. Gasoline
vehicles take up 60%, diesel vehicles about 32% and
LPG about 8%. The share of diesel and LPG vehicles
rises in new vehicles in 2001 as 42% for diesel and
18% for LPG vehicles, due to the low fuel price and
benets on tax deduction (Table 3).
Environmental pollution of transportation sector
The amount of air pollution by vehicles is estimated
with the estimating method of moving emission
source by the Ministry of Environment in Table 4
Emissionton=yr number of registered car number
mileage by vehicle type km=a car day
emission coefficient g=km
365 day=yr 0:0000001 ton=g:
2.1.2. The model structure
2.1.2.1. The basic features. The CGE model we
applied has an interrelated structure among production,
consumption and government sectors so that it is good
at explaining the linkage effect of a policy change in the
other sectors. The production sector is assumed to try to
maximize prot with labor, capital, energy and inter-
mediate goods. The consumption sector uses its income
from labor income and capital revenue as saving and
expenditure to maximize its utility. The government
sector has tax revenue from production and consump-
tion activities and spends it for government expenditure
ARTICLE IN PRESS
1
Hereafter, the fuel indicates the fuel for transportation use.
2
They are somewhat different from the real data in the Monthly
Energy statistics, however, for the consistency of data, we use the
estimated fuel consumption data which are obtained from the number
of registered car, mileage and fuel consumption ratio.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2573
and household transfer. The export and import goods
make domestic nal consumption goods with competi-
tion in international trade. The export and import are
controlled by exchange rate.
The CGE model focuses on deriving the equilibrium
price of demand and supply, with regards to the
producers prot maximization and consumers utility
maximization. Therefore, the policy variance in a
specic eld intrinsically affects the overall economy of
consumer, producer and international trade. For in-
stance, the regulation on sulfuric fuel affects the
production cost of fuel and price of output products.
At rst the oil renery industry is affected, then the
transportation service industry, car industries and the
household in the end. The variance in other industries
and consumption sector continues to affect the oil
renery industry again as a circular reaction.
The air pollution regulation may affect the market
with the following procedure. Once a government sets
the total amount of emission permit and chooses
environmental tax or emission trade as a policy
instrument, a consumer encounters a condition to
choose buying a new car satisfying the environmental
regulation or keeping a conventional car with some
additional payment (environmental tax or emission
permit purchase). If the additional payment is big
enough to cover up the expense for the new car, then
the regulation will cause more new cars to be
introduced.
Our model classies a car in detail by vehicle type, fuel
type and volume. Furthermore, it takes into considera-
tion the substitution effect not only among conventional
cars, but also between conventional cars and new cars
which satisfy the EURO4 standard.
ARTICLE IN PRESS
Table 1
Industries in model
Oil industry Gasoline
Transport industry Diesel
LPG for transportation
Other oil products
Alternative fuel
Alternative fuel vehicle 430 ppm sulfuric fuel (diesel)
80 ppm sulfuric fuel
50 ppm sulfuric fuel
15 ppm sulfuric fuel
Car industry Passenger car Gasoline Small and medium Below 2000 cc
Large Above 2001 cc
Diesel Small and medium Below 2000 cc
Large Above 2001 cc
LPG Small and medium Below 2000 cc
Large Above 2001 cc
Van Gasoline Small and medium Less than 710 passengers
Large Bus
Diesel Small and medium Less than 710 passengers
Large Bus
LPG Small and medium Less than 710 passengers
Large Bus
Truck Gasoline Small and medium Below 5 ton
Large Above 6 ton
Diesel Small and medium Below 5 ton
Large Above 6 ton
LPG Small and medium Below 5 ton
Large Above 6 ton
Other industry
Table 2
Fuel consumption for transportation use (2001)
Gasoline Diesel LPG
Consumption (1000 kl) 10,090 15,153 6022
Price (won/L) 1280 645 440
Consumption (billion won) 12,916 9773 2649
Source: Korea Energy and Economics Institute (2002).
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2574
However, the new car and cleaner fuel would
generate the additional production cost such as
R&D and capital investment, which probably cause
the increase of car and fuel price and, furthermore,
the output price which use them as intermediate
goods. Therefore, the strong environmental regula-
tion may induce the positive effect of better environ-
ment but at the same time, the negative effect of
weakening industrial competitiveness and price increases
(Fig. 1).
2.1.2.2. The sectors in the model structure
Consumer
It is a good feature of our model that classies
the vehicles in detail and makes consumers choose
ARTICLE IN PRESS
Table 3
Number of registered vehicles in 2001
New vehicle Conventional vehicle Total
Small and medium Large Small and medium Large
Passenger car Gasoline 490,773 85,047 6,820,624 206,200 7,602,644
Diesel 72,967 148,588 2976 455,960 680,491
LPG 225,224 16,141 748,950 130,580 1,120,895
Van Gasoline
Diesel 51,816 6770 765,366 65,972 889,924
LPG
Truck Gasoline
Diesel 305,432 4153 2,148,631 55,406 2,513,622
LPG
Total 1,146,212 260,699 10,486,547 914,118 12,807,578
Source: Number of registered car 2001, Korea Automobile Manufacturers Association, Korea.
Note: The gasoline and LPG van and trucks are combined as a passenger car for the convenience of analysis, since their numbers are insignicant.
Table 4
Emission by vehicle type in 2001 (unit: ton/yr)
CO HC NO
x
PM Total
Passenger car Small and medium Gasoline 300,598 (2.56) 50,491 (0.43) 52,839 (0.45) (0.00) 403,928
Diesel 3028 (1.66) 1149 (0.63) 2699 (1.48) 1131 (0.62) 8007
LPG 307,557 (6.36) 37,236 (0.77) 40,621 (0.84) (0.00) 385,413
Large Gasoline 11,974 (2.56) 2011 (0.43) 2105 (0.45) (0.00) 16,090
Diesel 144,759 (9.97) 19,456 (1.34) 172,781 (11.9) 28,022 (1.98) 365,018
LPG 48,321 (6.36) 5608 (0.77) 6118 (0.84) (0.00) 58,047
Van Small and medium Gasoline (6.21) (0.5) (1.43) (0.00)
Diesel 44,166 (1.66) 16,762 (0.63) 39,377 (1.48) 16,496 (0.62) 116,800
LPG (6.17) (0.75) (0.82) (0.00)
Large Gasoline
Diesel 79,414 (9.97) 10,673 (1.34) 94,786 (11.9) 15,373 (1.93) 200,248
LPG
Truck Small and medium Gasoline (6.21) (0.5) (1.43) (0.00)
Diesel 132,633 (1.66) 50,337 (0.65) 118,251 (1.48) 49,538 (0.62) 350,758
LPG (6.17) (0.75) (0.82) (0.00)
Large Gasoline
Diesel 39,078 (12.00) 4624 (1.42) 39,795 (12.22) 6448 (1.98) 89,945
LPG
Total 1,109,527 198,347 569,372 117,007 1,994,254
Source: Air pollution emission, 1999, Ministry of Environment.
Note: Number in ( ) indicates the emission coefcient by vehicle type.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2575
either new car or conventional car, so that it is
possible to analyze the substitution effect comprehen-
sively. With the introduction of environmental tax or
emission trading, consumers face the following
choices:
J Purchase a new car (substitution between vehicle
type) and sell the emission right.
J Shorten the mileage with an existing car (decrease
of transportation service demand) and sell the
emission right after reducing the consumption of
transportation service.
J Purchase emission right or pay the environmental
tax without changing the consumption style
(increase of environmental cost).
Consumers choose one of the four options to
maximize their utility under the budget constraint.
A few details are assumed to reect the consumers
choice in the model.
J The transportation service is interpreted as mileage
and consumers pay the fee by mileage.
J The transportation service is composed of passen-
ger car service, van service and truck service with
the elasticity of substitution of 0.25.
J Each service is formed with the identical composi-
tion. For instance, the passenger car service
has gasoline car service, diesel car service and
LPG car service with the elasticity of substitution
of 0.25.
J The passenger car service has two sizes with the
elasticity of substitution of 0.25: small and medium
vehicle, large vehicle.
J The fuel consumption ratio per km and emission
are xed by vehicle size with 0 elasticity of
substitution. This assumption implies no substitu-
tion among pollutants, that is, it is not possible to
emit more of a pollutant and less of another one.
ARTICLE IN PRESS
Oil Product market
Transportation fuel: Gasoline,
Diesel, LPG
Non-transportation fuel: Other oil
products
Low sulfuric fuel
the fuel with low sulfuric
concentration
low economic efficiency at present
be introduced with environmental
regulation in the future
Total Emission Control
& Emission Trading
New Vehicle Market
by f uel: Diesel car ,
Gasol ine car, LPG car,
bus and t r uck
by vehi cle volume:
Small&medium car,
Large Car
Future Vehicle
The new vehicle which
is not in the market but
will be introduced with
stricter environmental
regulation in the future
Old Vehicle Market
The number of
vehicles(t) =
old car(t-1)
- retired car(t-1)
+ new vehicles(t)
Fig. 1.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2576
Production sector
Producers aim to maximize their prot in producing
the output with factor input (labor, capital, energy)
and intermediate goods.
Government sector
Government has the revenue from income tax on
labor and capital, consumption tax on commodity
consumption, tariff on imported goods and environ-
mental tax or emission permit upon environmental
regulation scenarios. On the other hand, the govern-
ment expenditure includes government consumption,
household transfer and subsidy (for an alternative
energy scenario) (Fig. 2).
2.2. Environmental regulation and fuel control
2.2.1. Total emission control
We apply Emission Trading system to achieve the
total emission control. The level of permitted emission is
set at the year 2007 level which is estimated with
EURO4&ULEV emission coefcient. The emission level
of business as usual (BAU) scenario by vehicle type, the
permitted emission level and abatement amount are
shown in Tables 510. CO is permitted to emit by
396,000 ton, HC 83,000 ton, NO
x
124,000 ton and PM
10,000 ton annually from 2007. Therefore, the abate-
ment amount is 1,091,000 ton of CO, 182,000 ton of HC,
639,000 ton of NO
x
, 147,000 ton of PM in 2007,
compared to the BAU scenario. The amount of emission
abatement is supposed to consistently increase by 2012.
The EURO4&ULEV emission coefcient is indicated in
Table 11. ULEV is applied to gasoline and LPG cars
and EURO4 to diesel cars.
2.2.2. Vehicle emission and fuel quality regulations
Vehicle emission regulation
We assume to put in effect the vehicle regulation and
fuel regulation with the total emission control. Under
the vehicle regulations, diesel cars with EURO4 level
are gradually introduced from 2007 and replace the
conventional cars by 1/7 annually. There may be 910
billion won of additional investment cost to develop
cars with EURO4 level (Table 12)
3
.
Fuel regulation
The fuel regulations have three scenarios to supply
low sulfuric fuel (current 430 ppm) from 2007
J Instant switch to 50 ppm from 2007.
J Instant switch to 15 ppm from 2007.
J Gradual switch to 50 ppm from 2007 to 2009 and
to 15 ppm from 2010.
The Association of Oil Industry presumes that the
initial investment cost to produce the low sulfuric fuel
amounts to 824, 3965 and 3141 billion wons for the
three scenarios. The cost of the third scenario is derived
from the difference of the other two scenarios. In spite
of the initial investment, additional investment is
necessary as suggested in Table 13, regarding the
depreciation rate (0.06) and economic growth rate
(0.05).
The National Environment Institute suggests that not
only the new vehicles but the conventional vehicles emit
much less when they use the low sulfuric fuel. The new
vehicles are assumed to emit at the same level of
EURO4 with 50 ppm diesel and less than the EURO4
level with 15 ppm diesel. The ratio of emission abate-
ment is shown in Tables 14 and 15 by vehicle type.
3. The result of analysis
3.1. The economic impact
3.1.1. The permit price of pollutant
It is our objective to x the total emission level from
2007 with introducing new vehicles and low sulfuric fuel
through Emission Trading. The price of permit may
take a main role to affect the consumers choice and
market. Table 16 shows the change of permit price,
according to the three scenarios of fuel regulation.
In Table 16, we can see the permit prices of all the
pollutants are positive. Consumers have to choose
among pollutants by choosing between gasoline and
ARTICLE IN PRESS
Utility
Transportation Service (km) Other goods and service
Van Passenger car Truck
Gasolince Vehicle Diesel Vehicle LPG Vehicle
Small& Medium Large New Vehicles
fuel& mileage CO HC NOx PM
Fig. 2. Consumer choice.
3
There are not yet any ofcial data about additional investment cost
for developing diesel vehicle with EURO4 standard.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2577
diesel cars and by reducing their transportation service.
If consumers with a diesel car like to reduce a specic
pollutant like NO
x
or PM, then they have to choose an
option: use the existing diesel car and purchase permit of
the pollutant or purchasing a gasoline car which emits
less pollutant than the existing diesel car. It is because
the emission coefcients of gasoline car differ from those
of diesel car. In this situation, all the permit prices can
be positive.
In the rst scenario of fuel regulation, instant switch
to 50 ppm of sulfuric fuel, the permit price may be about
808.5 thousand won for CO, 1177.1 thousand won for
HC, 1266.1 thousand won for NO
x
, and 1942.6
thousand won for PM in 2007. As the introduction of
new vehicles, the permit price will gradually decrease to
489.3 thousand won for CO, 871.7 thousand won for
HC, 1040.7 thousand won for NO
x
and 1383.8 thousand
won for PM in 2012. Since new vehicles emit
less pollution than the conventional vehicles, consumers
will face the decision of buying more expensive new
car or keeping the conventional car with the environ-
mental expenditure. The more new vehicles, the less
demand for the emission permit, then the permit price
decreases.
ARTICLE IN PRESS
Table 5
Permitted emission and abatement by vehicle type (2007)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC NO
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 402.8 67.7 70.8 0.0 166.8 0.8 4.9 0.0 236.0 66.9 65.9 0.0
Large 16.0 2.7 2.8 0.0 6.6 0.0 0.2 0.0 9.4 2.7 2.6 0.0
Diesel Small 4.1 1.5 3.6 1.5 1.2 0.7 0.6 0.1 2.8 0.8 3.0 1.5
Large 194.0 26.1 231.5 37.6 14.4 9.0 7.6 1.2 179.6 17.1 224.0 36.4
LPG Small 412.2 49.9 54.4 0.0 68.7 0.3 2.0 0.0 343.5 49.6 52.4 0.0
Large 62.1 7.5 8.2 0.0 10.3 0.0 0.3 0.0 51.7 7.5 7.9 0.0
Van Diesel Small 59.2 22.5 52.8 22.1 26.4 16.4 13.9 2.1 32.8 6.1 38.9 20.0
Large 106.4 14.3 127.0 20.6 16.0 4.9 37.4 0.2 90.4 9.4 89.7 20.4
Truck Diesel Small 177.7 67.5 158.5 66.4 79.2 49.3 41.8 6.4 98.5 18.2 116.7 60.0
Large 52.4 6.2 53.3 8.6 6.5 2.0 15.3 0.1 45.8 4.2 38.1 8.6
Total 1486.9 265.8 763.0 156.8 396.3 83.4 123.9 10.1 1090.6 182.4 639.1 146.7
Note: The amount with permits is the amount that, the model predicts, each type will emit, given the overall limits at the bottom of table.
Table 6
Permitted emission and abatement by vehicle type (2008)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC NO
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 423.0 71.0 74.4 0.0 166.8 0.8 4.9 0.0 256.2 70.3 69.5 0.0
Large 16.8 2.8 3.0 0.0 6.6 0.0 0.2 0.0 10.2 2.8 2.8 0.0
Diesel Small 4.3 1.6 3.8 1.6 1.2 0.7 0.6 0.1 3.0 0.9 3.2 1.5
Large 203.7 27.4 243.1 39.4 14.4 9.0 7.6 1.2 189.3 18.4 235.5 38.3
LPG Small 432.8 52.4 57.2 0.0 68.7 0.3 2.0 0.0 364.1 52.1 55.1 0.0
Large 65.2 7.9 8.6 0.0 10.3 0.0 0.3 0.0 54.8 7.8 8.3 0.0
Van Diesel Small 62.1 23.6 55.4 23.2 26.4 16.4 13.9 2.1 35.8 7.2 41.5 21.1
Large 111.7 15.0 133.4 21.6 16.0 4.9 37.4 0.2 95.7 10.1 96.0 21.4
Truck Diesel Small 186.6 70.8 166.4 69.7 79.2 49.3 41.8 6.4 107.4 21.6 124.6 63.3
Large 55.0 6.5 56.0 9.1 6.5 2.0 15.3 0.1 48.4 4.5 40.7 9.0
Total 1561.2 279.1 1561.2 279.1 801.2 164.6 396.3 83.4 123.9 10.1 1164.9 195.7
Note: The amount with permits is the amount that, the model predicts, each type will emit, given the overall limits at the bottom of table.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2578
The permit prices of pollutants become lower in use of
15 ppm sulfuric fuel than that of 50 ppm during the
studied period. Consumers with 15 ppm diesel like to
demand new cars more than with 50 ppm diesel. Since
new cars emit pollutants less than existing cars,
consumers with 15 ppm diesel will purchase less permits
of pollutants than with 50 ppm diesel. Then permit
prices with 15 ppm diesel will be lower than with 50 ppm
diesel.
The permit prices of the gradual switch are lower than
the instant switch to 15 ppm, which may be caused by
the low adjustment cost from policy-forecasting effect.
Therefore, if it is intended to tighten the fuel regulation,
it would be better to switch gradually to minimize the
adverse effect of instant switch.
Han (2000) suggested the social cost of air pollutant
as follows. The unit social cost of each pollutant may
provide intuition as to how much benet can occur with
the fuel regulation in this study (Table 17).
3.1.2. Total abatement cost
The permit price can be interpreted as the abatement
cost of a pollutant which is paid by a company to
achieve the total emission control standard. Therefore,
the total abatement cost is the permit price of
Table 16 times the amount of abatement to satisfy the
ARTICLE IN PRESS
Table 7
Permitted emission and abatement by vehicle type (2009)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC No
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 444.1 74.6 78.1 0.0 166.8 0.8 4.9 0.0 277.3 73.8 73.2 0.0
Large 17.7 3.0 3.1 0.0 6.6 0.0 0.2 0.0 11.0 2.9 2.9 0.0
Diesel Small 4.5 1.7 4.0 1.7 1.2 0.7 0.6 0.1 3.3 1.0 3.4 1.6
Large 213.9 28.7 255.3 41.4 14.4 9.0 7.6 1.2 199.5 19.8 247.7 40.2
LPG Small 454.4 55.0 60.0 0.0 68.7 0.3 2.0 0.0 385.7 54.7 58.0 0.0
Large 68.4 8.3 9.0 0.0 10.3 0.0 0.3 0.0 58.1 8.2 8.7 0.0
Van Diesel Small 65.3 24.8 58.2 24.4 26.4 16.4 13.9 2.1 38.9 8.4 44.3 22.2
Large 117.3 15.8 140.0 22.7 16.0 4.9 37.4 0.2 101.3 10.9 102.7 22.5
Truck Diesel Small 196.0 74.4 174.7 73.2 79.2 49.3 41.8 6.4 116.7 25.1 133.0 66.8
Large 57.7 6.8 58.8 9.5 6.5 2.0 15.3 0.1 51.2 4.8 43.5 9.4
Total 1639.3 293.1 841.2 172.9 396.3 83.4 123.9 10.1 1243.0 209.6 717.3 162.8
Note: The amount with permits is the amount that, the model predicts, each type will emit, given the overall limits at the bottom of table.
Table 8
Permitted emission and abatement by vehicle type (2010)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC NO
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 466.3 78.3 82.0 0.0 166.8 0.8 4.9 0.0 299.5 77.5 77.1 0.0
Large 18.6 3.1 3.3 0.0 6.6 0.0 0.2 0.0 11.9 3.1 3.1 0.0
Diesel Small 4.7 1.8 4.2 1.8 1.2 0.7 0.6 0.1 3.5 1.1 3.6 1.7
Large 224.6 30.2 268.0 43.5 14.4 9.0 7.6 1.2 210.2 21.2 260.5 42.3
LPG Small 477.1 57.8 63.0 0.0 68.7 0.3 2.0 0.0 408.4 57.4 61.0 0.0
Large 71.9 8.7 9.5 0.0 10.3 0.0 0.3 0.0 61.5 8.7 9.2 0.0
Van Diesel Small 68.5 26.0 61.1 25.6 26.4 16.4 13.9 2.1 42.1 9.6 47.2 23.5
Large 123.2 16.6 147.0 23.8 16.0 4.9 37.4 0.2 107.2 11.6 109.7 23.6
Truck Diesel Small 205.8 78.1 183.4 76.8 79.2 49.3 41.8 6.4 126.5 28.8 141.7 70.4
Large 60.6 7.2 61.7 10.0 6.5 2.0 15.3 0.1 54.1 5.2 46.5 9.9
Total 1721.2 307.7 883.3 181.5 396.3 83.4 123.9 10.1 1325.0 224.3 759.4 171.4
Note: The amount with permits is the amount that, the model predicts, each type will emit, given the overall limits at the bottom of table.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2579
environmental regulation.
4
In the case of 50 ppm sulfuric
fuel, total abatement cost is equivalent to 2190 billion
won in 2007, 2162 billion won in 2008 and 2105 billion
won in 2012. As the sulfuric concentration is decreased
to 15 ppm, the total abatement cost of air pollution falls
to 1722 billion won in 2007 and 1524 billion won in 2012.
The benet of fuel shift from 50 to 15 ppm is expected to
be as much as 543 billion won per year.
It is noticeable that the gradual fuel shift scenario
shows lower abatement cost of about 15% compared
with instant shift scenario during the studied period.
The policy-forecasting effect seems to affect the unit
abatement cost. Table 18 shows the pollution abatement
effect by fuel switch.
3.1.3. GDP loss
It is a positive effect of the fuel shift that total
abatement can be decreased. There is adverse effect,
however, that it weakens industrial competitiveness and
ARTICLE IN PRESS
Table 9
Permitted emission and abatement by vehicle type (2011)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC NO
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 489.6 82.2 86.1 0.0 166.8 0.8 4.9 0.0 322.8 81.5 81.2 0.0
Large 19.5 3.3 3.4 0.0 6.6 0.0 0.2 0.0 12.9 3.2 3.2 0.0
Diesel Small 4.9 1.9 4.4 1.8 1.2 0.7 0.6 0.1 3.7 1.1 3.8 1.8
Large 235.8 31.7 281.4 45.6 14.4 9.0 7.6 1.2 221.4 22.7 273.9 44.5
LPG Small 501.0 60.7 66.2 0.0 68.7 0.3 2.0 0.0 432.3 60.3 64.2 0.0
Large 75.5 9.1 10.0 0.0 10.3 0.0 0.3 0.0 65.1 9.1 9.7 0.0
Van Diesel Small 71.9 27.3 64.1 26.9 26.4 16.4 13.9 2.1 45.6 10.9 50.2 24.7
Large 129.4 17.4 154.4 25.0 16.0 4.9 37.4 0.2 113.3 12.5 117.0 24.8
Truck Diesel Small 216.0 82.0 192.6 80.7 79.2 49.3 41.8 6.4 136.8 32.7 150.9 74.3
Large 63.7 7.5 64.8 10.5 6.5 2.0 15.3 0.1 57.1 5.5 49.5 10.4
Total 1807.3 323.1 927.4 190.6 396.3 83.4 123.9 10.1 1411.0 239.6 803.6 180.5
Note: The amount with permits is the amount that, the model predicts, each type will emit, given the overall limits at the bottom of table.
Table 10
Permitted emission and abatement by vehicle type (2012)
BAU Amount with permits Abatement amount
CO HC NO
x
PM CO HC NO
x
PM CO HC NO
x
PM
Passenger car Gasoline Small 614.1 86.4 90.4 0.0 166.8 0.8 4.9 0.0 347.3 86.6 85.5 0.0
Large 20.6 3.4 3.6 0.0 6.6 0.0 0.2 0.0 13.8 3.4 3.4 0.0
Diesel Small 6.2 2.0 4.6 1.9 1.2 0.7 0.6 0.1 4.0 1.2 4.0 1.9
Large 247.6 33.3 296.6 47.9 14.4 9.0 7.6 1.2 233.2 24.3 287.9 46.8
LPG Small 626.0 63.7 69.6 0.0 68.7 0.3 2.0 0.0 457.3 63.4 67.6 0.0
Large 79.2 9.6 10.6 0.0 10.3 0.0 0.3 0.0 68.9 9.6 10.2 0.0
Van Diesel Small 76.6 28.7 67.3 28.2 26.4 16.4 13.9 2.1 49.2 12.3 63.4 26.1
Large 136.8 18.3 162.1 26.3 16.0 4.9 37.4 0.2 119.8 13.3 124.8 26.1
Truck Diesel Small 226.8 86.1 202.2 84.7 79.2 49.3 41.8 6.4 147.6 36.8 160.6 78.3
Large 66.8 7.9 68.1 11.0 6.6 2.0 15.3 0.1 60.3 5.9 52.8 10.9
Total 1897.7 339.2 973.8 200.1 396.3 83.4 123.9 10.1 1601.4 255.6 849.0 190.0
Note: The amount with permits is the amount that the model predicts each type will emit, given the overall limits at the bottom of the table.
4
We assume that all of production technologies involving transpor-
tation services are constant returns to scale. The nal composed
transportation service consists of various sub-transportation services
which also satises constant returns to scales. In order to maximize
utility, consumer equalizes the marginal cost of each service at the
equilibrium. Therefore, the marginal cost is considered as the average
cost and also permit price at the equilibrium.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2580
economic growth like a double-edged sword. The
environmental regulations such as total emission control
bring the additional cost to every economic activity
which emits air pollutants. Furthermore, the fuel and
vehicle regulations may require additional investment
for fuel improvement and R&D cost of new vehicles.
The increase of production cost may induce the price
rise of fuel and vehicles. The industries which use them
as intermediate goods raise the output price as a chain
reaction. The domestic goods may lose the price
competitiveness in international market. The labor and
capital income may decrease and, in the end, GDP will
decrease as shown in Table 19.
In the rst scenario of fuel regulation, the GDP loss is
estimated as 0.49% in 2007 and 0.62% in 2012, which is
equivalent to 2977 billion won in 2007 and 4807 billion
won in monetary unit. The economic loss becomes
bigger in the instant switch to 15 ppm sulfuric fuel as
4434 billion won in 2007 and 8838 billion won in 2012. It
is found that the gradual fuel switch is more desirable in
the aspects of GDP loss. Compared to the instant switch
scenario, it has the effect of reducing the GDP loss by as
ARTICLE IN PRESS
Table 11
Emission coefcient of EURO4 and ULEV by vehicle (unit: g/km)
CO HC NO
x
PM
Passenger car Small and medium Gasoline 1.060 0.005 0.031 0.000
Diesel 0.500 0.300 0.250 0.025
LPG 1.060 0.005 0.031 0.000
Large Gasoline 1.060 0.005 0.031 0.000
Diesel 0.740 0.460 0.390 0.060
LPG 1.060 0.005 0.031 0.000
Van Small and medium Gasoline 1.060 0.005 0.031 0.000
Diesel 0.740 0.460 0.390 0.060
LPG 1.060 0.005 0.031 0.000
Large Gasoline 1.060 0.005 0.031 0.000
Diesel 1.500 0.460 3.500 0.020
LPG 1.060 0.005 0.031 0.000
Truck Small and medium Gasoline 1.060 0.005 0.031 0.000
Diesel 0.740 0.460 0.390 0.060
LPG 1.060 0.005 0.031 0.000
Large Gasoline 1.060 0.005 0.031 0.000
Diesel 1.500 0.460 3.500 0.020
LPG 1.060 0.005 0.031 0.000
Source: Korea Automobile Manufacturers Association (2002).
Table 12
Investment cost by car manufacturing companies (unit: billion won)
Company A B C D E Total
Investment cost 250.0 250.0 250.0 160.0 250.0 910.0
Table 13
Additional investment cost for low sulfuric fuel (unit: billion won)
2007 2008 2009 2010 2011 2012
50 ppm diesel 824.1 90.7 95.2 99.9 104.9 110.2
15 ppm diesel 3964.9 436.1 457.9 480.8 504.9 530.1
50 and 15 ppm diesel 824.1 90.7 95.2 3240.7 356.5 374.3
Note: The equilibrium investment increases as much as growth rate every year.Equilibrium investment=(depreciation rate+growth rate) capital.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2581
ARTICLE IN PRESS
Table 14
Emission abatement rate of diesel vehicles
Vehicle type Sulfuric concentration (ppm) Abatement rate (%)
CO HC NO
x
PM
Small and medium diesel car 430 0.00 0.00 0.00 0.00
50 0.42 13.58 5.85 8.07
15 0.46 21.19 9.12 12.58
Large diesel car 430 0.00 0.00 0.00 0.00
50 4.67 7.53 1.49 3.79
15 5.10 8.22 1.62 4.14
Table 15
Emission abatement rate of new vehicles with 15 ppm sulfuric fuel
Vehicle type Sulfuric concentration (ppm) Abatement rate (%)
CO HC NO
x
PM
Small and medium diesel car 50 0.00 0.00 0.00 0.00
15 0.04 7.61 3.27 4.51
Large diesel car 50 0.00 0.00 0.00 0.00
15 0.43 0.69 0.13 0.35
Table 16
Emission permit price by sulfuric concentration (unit: won/ton)
2007 2008 2009 2010 2011 2012
50 ppm CO 808,550 783,210 643,620 555,650 506,860 489,360
HC 1,177,180 930,510 879,590 859,820 859,150 871,770
NO
x
1,266,170 1,206,750 1,123,970 1,073,470 1,047,400 1,040,770
PM 1,942,620 1,621,920 1,512,200 1,445,140 1,405,040 1,383,840
15 ppm CO 684,290 586,440 483,120 417,560 390,740 366,860
HC 814,910 636,820 589,940 567,740 560,890 564,700
NO
x
965,680 882,240 819,020 779,610 758,220 751,130
PM 1,428,390 1,190,950 1,105,320 1,051,820 1,018,800 1,000,130
50 and 15 ppm CO 807,270 781,800 642,290 416,570 379,710 365,730
HC 1,156,330 911,670 859,230 552,720 543,930 545,190
NO
x
1,250,810 1,193,290 1,109,640 768,250 745,600 736,840
PM 1,889,690 1,571,410 1,458,380 1,009,040 971,440 947,000
Table 17
Social cost of air pollution (unit: 1000 won/ton)
CO HC NO
x
PM
Social cost per unit 1408.5 1495.3 1747.7 2171.6
Adjusted social cost per unit 1408.5 2112.7 7042.5 14,085.0
Adjustment ratio 1.0 1.5 5.0 10.0
Note: Study on the long-term standard of transportation fuel, 2000, Association of Oil Industry.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2582
much as 61 billion won in 2007 and 233 billion won in
2012.
The impact on GDP by fuel switch is classied as
private consumption expenditure, investment expendi-
ture and government expenditure in Table 20.
It is found that the fuel switch to 15 ppm induces more
economic loss than that of 50 ppm. Since 15 ppm
sulfuric fuel emits less pollutant, it has less abatement
cost but requires more investment cost and higher fuel
price. The higher fuel price results in higher output price
which may weaken the industrial competitiveness. The
net economic effect of fuel switch regarding the
low abatement cost and high GDP loss is indicated in
Table 21.
3.2. Tax revenue recycling
So far we have assumed that the government revenue
from permit sales is used only as scal expenditure
expansions. But if the government instead uses the fund
to increase the investment tax credit, it will work to
decrease the economic cost. So the negative impact can
be offset by the investment cost effect and income effect.
This is known as the double dividend hypothesis. If the
government introduces the environmental taxes (emis-
sion trading with auction) and uses the revenues towards
reducing pre-existing distortionary taxes, we may expect
environmental improvement and other welfare improve-
ment at the same time.
5
The strict environmental regulation is a double-edged
sword which has positive effect of improving environ-
mental quality and negative effect of weakening
economic growth. Therefore, it should aim to minimize
the negative effect while satisfying the initial policy
objective. We considered tax revenue recycling for that
purpose. Provided that the government owns the
emission rights and sells them to industries, the total
abatement cost in Table 18 becomes the government
revenue of emission permits. Table 22 shows how much
GDP loss can be diminished, when the revenue is
recycled to the new vehicles development and low
sulfuric fuel investment.
ARTICLE IN PRESS
Table 18
Comparison of total abatement costs (unit: billion won)
Scenario Cost 2007 2008 2009 2010 2011 2012 Annual average average
50 ppm Total 2190.7 2162.4 2036.8 1992.0 2016.4 2105.3 2083.9
15 ppm Total 1721.6 1589.3 1491.6 1452.9 1464.8 1523.7 1540.7
Improvement to 50 ppm 469.1 573.1 545.2 539.0 551.5 581.6 543.2
50 and 15 ppm Total 2167.9 2140.2 2011.9 1432.3 1440.6 1494.8 1781.3
Improvement to 50 or 15 ppm 22.8 22.3 25.0 20.6 24.2 28.9 24.0
Note: The reduced cost of gradual switch scenario is compared to instant switch to 50 ppm scenario from 2007 to 2009 and to instant switch to
15 ppm scenario from 2010.
Table 19
GDP loss for the environmental regulation
2007 2008 2009 2010 2011 2012 Annual average
BAU GDP (billion won) 607,447 637,819 669,710 703,196 738,355 775,273 688,633
50 ppm GDP loss (%) 0.49 0.58 0.6 0.6 0.61 0.62 0.58
GDP loss (billion won) 2976.5 3699.4 4018.3 4219.2 4504.0 4806.7 4037.3
15 ppm GDP loss (%) 0.73 1.02 1.07 1.09 1.12 1.14 1.03
GDP loss (billion won) 4434.4 6505.8 7165.9 7664.8 8269.6 8838.1 7146.4
Additional loss to 50 ppm scenario 1457.9 2806.4 3147.6 3445.7 3765.6 4031.4 3109.1
50 and 15 ppm GDP loss (%) 0.48 0.57 0.59 1.06 1.09 1.11 0.82
GDP loss (billion won) 2915.7 3635.6 3951.3 7453.9 8048.1 8605.5 5768.4
Additional loss to 50 or 15 ppm scenario 60.7 63.8 67.0 211.0 221.5 232.6 142.8
Note: The additional loss of gradual switch scenario is compared to instant switch to 50 ppm scenario from 2007 to 2009 and to instant switch to
15 ppm scenario from 2010.
5
See, for example, Bovenberg and Mooij (1994), Fullerton (1997),
Goulder et al. (1997, 1999). They underlie two welfare effects. The tax-
interaction effect produces the negative welfare impact since the
environmental tax compounds the pre-existing tax distortion. On the
other hand, the revenue recycling effects partially offset the distortions
caused by the pre-existing tax. According to the results of many
empirical tests, the tax-interaction effect dominates the revenue-
recycling effect, which implies the rejection of double dividend
hypothesis.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2583
Under the tax revenue recycling, the GDP of 50 ppm
sulfuric fuel decreased by 0.24% in the BAU
scenario, compared to 0.58% GDP loss of no revenue
recycling scenario in annual average. The revenue
recycling of 15 ppm sulfuric fuel is estimated to reduce
the GDP loss by about 0.15% in 2007, 0.2% in 2008
and 0.17% in 2012 in comparison with no revenue
recycling.
ARTICLE IN PRESS
Table 20
Impact on GDP by fuel switch (billion won)
2007 2008 2009 2010 2011 2012 Annual average
BAU scenario
GDP 607,447 637,819 669,710 703,196 738,355 775,273 688,633
Private consumption 377,419 396,290 416,105 436,910 458,756 481,694 427,862
Investment 167,460 175,833 184,624 193,856 203,549 213,726 189,841
Government expenditure 62,567 65,695 68,980 72,429 76,050 79,853 70,929
Instant switch to 50 ppm scenario
GDP 604,470 634,120 665,692 698,976 733,851 770,467 684,596
Private consumption 374,664 394,071 413,733 434,420 456,141 478,900 425,321
Investment Total 168,193 174,588 183,219 192,373 201,910 211,969 188,709
Fuel 824 90 95 99 104 110 220
Vehicle 130 144 145 146 146 146 143
Others 167,238 174,353 182,978 192,127 201,659 211,713 188,345
Government expenditure Total 61,613 65,460 68,739 72,183 75,799 79,597 70,565
Permit revenue 2190 2162 2036 1992 2016 2105 2083
Others 59,422 63,298 66,702 70,191 73,783 77,491 68,481
Instant switch to 15 ppm scenario
GDP 603,012 631,313 662,544 695,531 730,086 766,435 681,487
Private consumption 371,267 390,782 410,155 430,531 451,966 474,420 421,520
Investment Total 171,338 175,545 184,253 193,442 203,063 213,191 190,139
Fuel 3964 436 457 480 504 530 1,062
Vehicle 130 144 145 146 146 146 143
Others 167,243 174,964 183,650 192,815 202,412 212,514 188,933
Government expenditure Total 60,406 64,986 68,135 71,556 75,056 78,824 69,827
Permit revenue 1721 1589 1491 1452 1464 1523 1540
Others 58,684 63,396 66,644 70,103 73,591 77,300 68,287
Gradual switch to 50 and 15 ppm scenario
GDP 604,531 634,184 665,759 695,742 730,307 766,668 682,865
Private consumption 373,570 393,001 412,526 431,798 453,251 475,817 423,327
Investment Total 168,227 175,610 184,368 196,036 202,745 212,849 189,973
Fuel 824 90 95 3,240 356 374 830
Vehicle 130 144 145 146 146 146 143
Others 167,273 175,375 184,127 192,649 202,243 212,329 188,999
Government expenditure Total 62,733 65,572 68,864 67,907 74,310 78,001 69,564
Permit revenue 2167 2140 2011 1432 1440 1494 1781
Others 60,565 63,431 66,852 66,474 72,870 76,506 67,783
Table 21
Net loss under the fuel switch scenarios (unit: billion won)
2007 2008 2009 2010 2011 2012 Average
15 ppm Reduced abatement cost to 50 ppm 469.1 573.1 545.2 539.0 551.5 581.6 543.2
GDP loss to 50 ppm 1457.9 2806.4 3147.6 3445.7 3765.6 4031.4 3109.1
Net loss to 50 ppm 988.8 2233.3 2602.4 2906.6 3214.1 3449.9 2565.9
50 and 15 ppm Reduced abatement cost to 15 or 50 ppm 22.8 22.3 25.0 559.7 575.7 610.5 302.7
GDP loss to 50 or 15 ppm 60.7 63.8 67.0 211.0 221.5 232.6 142.8
Net loss to 50 or 15 ppm 83.5 86.0 91.9 770.6 797.2 843.1 445.4
Note: The gures in the gradual switch scenario are compared to those in the instant switch to 50 ppm scenario from 2007 to 2009 and to instant
switch to 15 ppm scenario from 2010.
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2584
Therefore, the tax revenue recycling is strongly
recommended to minimize the economic adverse effect
and to achieve environmental regulation successfully.
4. Concluding remarks
Air quality improvement is a target to improve
peoples health and welfare. To obtain the target, the
government cannot but use some regulatory measures
such as vehicle emission standard and fuel quality
standard. However, the measures bring about the
economic costs, which impose a heavy burden on
consumers as well as the petroleum and automobile
industries. In this sense, we consider plausible policy
measures to obtain the environmental target with
consideration of minimizing the economic cost incurred
by the regulation.
This paper investigates the impact of strengthening
fuel quality standard on the economic activities with the
CGE model, which characterizes the transportation
services as the main transmission mechanism of the
impact. As a result of this analysis, we suggest that
50 ppm sulfur content in diesel fuel should be better than
15 ppm in minimizing the economic costs to obtain the
equivalent environmental target, and that gradual
reduction of sulfur content in diesel fuel should be
recommended. To minimize consumers economic bur-
den, we also consider use of tax-recycling mechanism.
That is, the government puts the environmental tax on
transportation fuels and uses the tax revenue to support
the industries and consumers who are affected by the
strengthening of fuel quality standard.
There are many ways in which the government uses
the tax-recycling mechanism. In the current situation,
we need more advanced study on that issue. This will be
our future work.
Acknowledgments
We are pleased to thank a referee for helpful
comments and K.H. Huh for valuable research assis-
tance. We retain responsibility for all errors and
omissions.
References
Bovenberg, A.L., de Mooij, R.A., 1994. Environmental levies and
distortionary taxation. American Economic Review 84, 10851089.
Fullerton, D., 1997. Environmental levies and distortionary taxation:
comment. American Economic Review 87, 245251.
Goulder, L.H., Parry, I.W.H., Burtraw, D., 1997. Revenue-raising
versus other approaches to environmental protection: the critical
signicance of preexisiting tax distortions. The RAND Journal of
Economics 28 (4), 708731.
Goulder, L.H., Parry, I.W.H., Williams III, R.C., Burtraw, D., 1999.
The cost-effectiveness of alternative instruments for environmental
protection in a second-best setting. Journal of Public Economics
72, 329360.
Han, H.J., 2000. A long-run view on the establishment of the fuel
quality standard for vehicles. Korea Petroleum Association (in
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ARTICLE IN PRESS
Table 22
Environmental regulation and revenue recycling effect
GDP loss to BAU 2007 2008 2009 2010 2011 2012 Average
50 ppm No recycling % 0.49 0.58 0.60 0.60 0.61 0.62 0.58
Billion won 2976.5 3699.4 4018.3 4219.2 4504.0 4806.7 4037.3
Recycling % 0.18 0.21 0.23 0.26 0.27 0.27 0.24
Billion won 1093.4 1339.4 1540.3 1828.3 1993.6 2093.2 1648.0
Effect % 0.31 0.37 0.37 0.34 0.34 0.35 0.35
Billion won 1883.1 2359.9 2477.9 2390.9 2510.4 2713.5 2389.3
15 ppm No recycling % 0.73 1.02 1.07 1.09 1.12 1.14 1.03
Billion won 4434.4 6505.8 7165.9 7664.8 8269.6 8838.1 7146.4
Recycling % 0.58 0.82 0.89 0.92 0.95 0.97 0.86
Billion won 3523.2 5230.1 5960.4 6469.4 7014.4 7520.2 5952.9
Effect % 0.15 0.20 0.18 0.17 0.17 0.17 0.17
Billion won 911.2 1275.6 1205.5 1195.4 1255.2 1318.0 1193.5
50 and 15 ppm No recycling % 0.48 0.57 0.59 1.06 1.09 1.11 0.82
Billion won 2915.7 3635.6 3951.3 7453.9 8048.1 8605.5 5768.4
Recycling % 0.18 0.21 0.23 0.89 0.92 0.94 0.56
Billion won 1093.4 1339.4 1540.3 6258.4 6792.9 7287.6 4052.0
Effect % 0.3 0.36 0.36 0.17 0.17 0.17 0.25
Billion won 1822.3 2296.2 2411.0 1195.4 1255.2 1318.0 1716.3
H.J. Chang et al. / Energy Policy 34 (2006) 25722585 2585