Does the greenhouse gas Target Management System improve emission intensity in the industrial sector?

Greenhouse gas (GHG) abatement policies are generally categorized into market-based instruments such as taxes, emissions trading schemes, and command-and-control regulations. Many of the GHG reduction policies implemented in South Korea exhibit strong command-and-control characteristics, and one of the most prominent examples is the Target Management System (TMS), which has been in place for over a decade. This study empirically examines the effectiveness of the TMS in the industrial sector and investigates whether the emissions intensity of affected firms declined over the period of 2015 ~ 2023. The study uses firm-level panel data from 2015 to 2023 and estimates a fixed effects model. The results show a modest but statistically significant decrease in emissions intensity over time among industrial firms subject to the TMS. Although the effect is not substantial, it is important not to underestimate the impact of the TMS. One of the system’s main objectives is to establish greenhouse gas management capacity among small and medium-sized enterprises and to establish data-driven emissions reduction systems. The findings of this study, in conjunction with the qualitative achievements of the system, are empirical evidence supporting the need for continued advancement of the TMS.