Sectoral decomposition analysis of driving factors in South Korea and comparative study with OECD countries

Abstract

This study applies the Logarithmic Mean Divisia Index (LMDI) method to identify the key drivers influencing carbon emissions, focusing on South Korea’s progress in meeting its commitments under the Paris Agreement. Initially, the analysis contextualizes South Korea’s performance by comparing it to OECD countries, emphasizing two essential indicators: energy intensity (energy consumption per unit of GDP) and carbon intensity (carbon emissions per unit of energy consumed). The study investigates these indicators during two pivotal periods: the aftermath of the global financial crisis (2010 ~ 2014) and the early implementation phase of the Paris Agreement (2015 ~ 2019). Furthermore, a comprehensive analysis of South Korea’s carbon emission trends from 2005 to 2022 is conducted, highlighting sectoral contributions from power generation, industry, transportation, buildings, agriculture, and waste management sectors. Results indicate that South Korea has demonstrated considerable progress in reducing energy intensity compared to the OECD average; however, improvements in carbon intensity have lagged behind, suggesting room for enhancement in the nation’s carbon management strategies. Notably, the power sector exhibited the most significant emission reductions, primarily due to shifts toward renewable energy sources and advancements in power generation efficiency. Contrastingly, sectors such as transportation and industry have shown slower progress, highlighting critical areas for targeted policy interventions. This study offers actionable insights and tailored policy recommendations essential for achieving South Korea’s ambitious 2035 Nationally Determined Contributions (NDC) targets. These recommendations underscore the necessity of adopting sector-specific strategies informed by comprehensive international and sectoral comparisons to effectively steer South Korea toward a sustainable and low-carbon future.