The main objective of this paper is to identify and analyze the key drivers behind changes of CO₂ emissions in the residential sectors of the emerging economies, China and India. For the analysis, we investigate to what extent changes in residential emissions are due to changes in energy emissions coefficients, energy consumption structure, energy intensity, household income, and population size. We decompose the changes in residential CO₂ emissions in China and India into these five contributing factors from 1990 to 2011 by applying the Logarithmic Mean Divisia Index (LMDI) method. Our results show that the increase in per capita income level was the biggest contributor to the increase of residential CO₂ emissions, while the energy intensity effect had the largest effect on CO₂ emissions reduction in residential sectors in both countries. This implies that investments for energy savings, technological improvements, and energy efficiency policies were effective in mitigating CO₂ emissions. Our results also depict that the change in CO₂ emission coefficients for fuels which include both direct and indirect emission coefficients slowed down the increase of residential emissions. Finally, our results demonstrate that changes in the population and energy consumption structure drove the increase in CO₂ emissions.

The Korean emissions trading scheme (ETS) has one special characteristic that makes it different from other schemes, such as the EU ETS. While the other schemes consider only direct emissions from fossil fuels, the Korean ETS also regulates indirect emissions arising from the consumption of electricity. The problem of double counting arises under this setting, in which emissions from the power sector can be accounted for twice, when electricity is produced and consumed. This study aims to compare design options on indirect emissions accounting for the Korean ETS using a computable general equilibrium model. Four scenarios are generated for options accounting for direct and/or indirect emissions and are evaluated in terms of efficiency and equality. The result shows that the ETS operates most efficiently when only direct emissions are considered. However, the option that includes both direct and indirect emissions produces a competent result in terms of equality by spreading the economic burden of emissions reduction among industries. We conclude that this option can be an alternative to meet the key purposes of the Korean ETS.

This study proposes a conceptual framework to investigate the economy-wide impacts of factor-biased technological change and the role of policy packages to spur inclusiveness of the economy. Based on this conceptual framework, this study explores the impacts of proposed policy-mixes in terms of growth and distribution using a computable general equilibrium (CGE) model. The results show that the policy package consisting of innovation, education, and taxation policies has the potentials to serve as a policy option to achieve the inclusive growth. Our simulation results suggest that governments should adapt tax systems for the inclusive growth and adjustment mechanisms to help workers navigate sufficient opportunities for skill accumulation, and to facilitate technological innovation within the economic system. Our results shed light on the importance of the policy packages in resolving the side effects of factor-biased technological progress and spur the inclusive growth in the knowledge-based economy.