Do People Place More Value on Natural Gas Than Coal for Power Generation to Abate Particulate Matter Emissions? Evidence from South Korea

As of 2017, coal is responsible for about half of all power generation in South Korea, while natural gas (NG) is responsible for about 20%. This increases particulate matter (PM) emissions, as coal emits 6 to 55 times more PM than NG in the course of power generation. Increased PM concentration causes visibility impairment and acute respiratory diseases. Thus, the South Korean government is seeking to shift from coal to NG power generation for the purpose of abating PM emissions. The government also considers NG as a bridge energy to facilitate the transition from fossil fuels to renewable energy. This article attempts to answer the question, “Do people place significant value on shifting from coal to NG power generation in order to abate PM?” To this end, additional willingness to pay (WTP) for NG over coal for electricity for the purpose of PM emissions abatement was assessed from 1000 South Koreans’ contingent valuations (CV). More specifically, each of these randomly chosen interviewees was asked about her/his WTP for the switch from coal to NG for 1 kWh of electricity use. The average additional WTP estimate was KRW 31.27 (USD 0.028) per kWh, which is equivalent to 28.8% of the average price of electricity in 2017. Moreover, this estimate is statistically significant. The generation cost of NG is about KRW 100.13 per kWh, which is higher than that of coal (KRW 78.5 per kWh). The gap is KRW 22.08 per kWh, which is less than the additional WTP. Thus, it is obvious that the governmental policy of shifting from coal to NG for power generation in order to abate PM emissions is supported by the public and, hence, the shift should be made gradually