• Environmental and Resource Economics Review
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• v.16 no.4
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• pp.923-946
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• 2007

The goal of this study is to analyse the effects of financial support by governmental on KERRP (Korea Emission Reduction Registration Project) in the case of descending clock auction. Result shows that about 60% of total reduction (612,000ton) can be achieved at the price of 8,000 Won/ton with the budget amount of 5 billion Won, if the benefit from energy saving by the project is not included. Also 100% of total reduction (1,015,713ton) can be achieved at the price of 4,900Won/ton, if the benefit from energy saving by the project is included. Because most projects get some benefits from the energy saving occurred by project performance, the financial support by government may not be needed. However, this type of support would be meaningful from the aspect of encouraging GHG (Green House Gas) reduction to be prepared for the potential obligation of national GHG reduction from 2013.