ARTICLE IN PRESS

Energy Policy 38 (2010) 3598–3607

Contents lists available at ScienceDirect

Energy Policy

0301-42

doi:10.1

n Corr

E-m

mrmete

journal homepage: www.elsevier.com/locate/enpol

Trends in passenger transport energy use in South Korea

Jiyong Eom a,n, Lee Schipper b,c

a Joint Global Change Research Institute, Pacific Northwest National Laboratory 5825 University Research Court, Suite 3500, College Park, MD, USAb Precourt Energy Efficiency Center, Stanford University, Yang and Yamasaki Environment and Energy Building, 473 Via Ortega, Stanford, CA, USAc Global Metropolitan Studies, UC Berkeley, USA

a r t i c l e i n f o

Article history:

Received 9 December 2009

Accepted 17 February 2010Available online 6 March 2010

Keywords:

Transport energy

Passenger travel

South Korea

15/$ - see front matter Published by Elsevier

016/j.enpol.2010.02.037

esponding author. Tel.: +1 301 314 6783; fax

ail addresses: eomjiyong@gmail.com, jiyong.e

r@stanford.edu (L. Schipper).

a b s t r a c t

Having a clear understanding of transport energy use trends is crucial to identifying opportunities and

challenges for efficient energy use for the transport sector. To this date, however, no detailed analysis

has been conducted with regard to rapidly growing passenger transport energy use in South Korea.

Using bottom-up data developed from a variety of recent sources, we described the trends of transport

activity, energy use, and CO2 emissions from South Korea’s transport sector since 1986 with a particular

focus on its passenger transport. By decomposing the trends in passenger transport energy use into

activity, modal structure, and energy intensity, we showed that while travel activity has been the major

driver of the increase in passenger transport energy use in South Korea, the increase was to some extent

offset by the recent favorable structural shift toward bus travel and away from car travel. We also

demonstrated that while bus travel has become less energy intensive since the Asian Financial Crisis,

car travel has become increasingly energy intensive.

Published by Elsevier Ltd.

1. Introduction

While South Korea is globally the 11th largest in terms ofprimary energy consumption, it depends for almost 97% of totalenergy and 100% of oil on foreign countries (EIA, 2007). WithSouth Korea’s remarkable economic development since 1960s, asculminated by its accession to the OECD in 1996, primary energyconsumption increased by more than twelve times from 1970 to2007, and the share of oil as the primary source of energyincreased from 47% in 1970 to the record-high 63% in 1995 (KEEI,2007a). Although this oil share soon fell to 45% in 2008 due to fastgrowing uses of other energy sources such as coal, natural gas,and nuclear, the economy’s significant oil dependency remainsunchanged.

Related to this energy security issue are environmentalconcerns associated with air pollution and, most importantly,rapidly increasing CO2 emissions in South Korea. While thecombined share of oil and coal in the country’s primary energyconsumption has been steadily declining since 1994 to the level of68% in 2007, its CO2 emissions more than doubled since 1990,exhibiting the fastest growth in the OECD countries. Expressed inper capita terms, the OECD countries on average increased theiremissions by 7% from 1990 to 2005, whereas South Koreaexhibited an 82% increase over the same period (UNHDR, 2007).

Ltd.

: +1 301 314 6719.

om@pnl.gov (J. Eom),

This was mainly because, over the same period, South Korea’s percapita GDP almost doubled, more than offsetting the decrease inthe carbon intensity of the economy. Not surprisingly, SouthKorea, which has come under pressure to cut its CO2 emissions,joined voluntarily other developed nations in setting targets tomitigate global climate change. In late 2009, the country pledgedto cut greenhouse gases by 4% below 2005 levels by 2020, whichappear to be modest compared to the goals set by other countriesbut may be aggressive considering its pace of economic growth.

Therefore, sensible energy policy for South Korea should helpthe country lessen its energy dependency and slow down thecontinued growth of CO2 emissions, while simultaneouslymimimizing the impact on its economic growth. The mostpromising and readily available approach would be to promoteeconomically efficient use of energy particularly for the sectorwith high carbon intensity.

One of major sectors of the economy to which immediateattention should be devoted is the transport sector. The sector used17% of petroleum energy used in South Korea in 1987, followed by32% in 1997 and 37% in 2007 (KEEI, 2007a). Although energyconsumption of the transport sector dropped temporarily aroundthe Asian Fianncial Crisis in 1997, it has been steadily rising at anannual rate of 3% since 2000, accounting for 20% of CO2 emissions in2005 (KEEI, 2007a). Thus, to the extent that clean vehicletechnologies are not deployed extensively in the near future, theproper policy question should be how the rising transport energyuse might be held down or perhaps even reduced to curb CO2

emissions, without failing to serve growing demand for transporta-tion services as major inputs for economic growth.

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We analyze trends of South Korea’s transport sector with aparticular focus on passenger transport to offer policy insights todecision makers, academics, and researchers on transportation.Specifically, this study aims to answer the following questions:What has been major drivers of the changes in passengertransport energy use in South Korea? What are the challengesand opportunities for efficient energy use for passenger trans-port? The paper is organized as follows: The next section presentsan overview of data sources and the analytic framework. Thepaper then presents a brief discussion on trends in the SouthKorean transport sector, followed by a comparison of theperformances of its passenger car travel with that of otherdeveloped countries. The subsequent section discusses thesector’s trends in activity, modal structure, and modal energyintensity. In the final two sections, we discuss policy implicationsand review important findings from this study.

2. Data and methods

2.1. Data sources

The primary sources are data from Korean Energy Consump-tion Survey (KECS), which has been conducted every three yearssince 1983 by the Korea Energy Economics Institute (KEEI).1 Wecompiled data for the transport sector in 1986, and every thirdyear through 2007 (KEEI, various years). The KECS classifies totaltransport energy into business and non-business uses (i.e., privateand government uses) and each of them is again divided intopassenger and freight transportation. The passenger categoryincludes cars, buses, rail, ships, and air; and the freight categoryincludes trucks, rail, ships, and air.2 Each subcategory is furtherdifferentiated by sizes, vehicle purposes, and types of fuels. Forinstance, non-business passenger cars include gasoline sedans,LPG sedans, and other multi-uses, and business passenger carsinclude LPG private taxis and corporate taxis. The KECS providesdetailed information about on-road fuel intensity, or fuel use perkilometer, yearly distance traveled per-vehicle, and annual fueluse per-vehicle for most of vehicle subcategories. In this study,energy used by international shipping and international aviationis excluded to avoid any complications associated with identifyingpassengers and freight transported as a part of South Korea’seconomic activities.

One problem occurred while compiling the data relates to theclassification of vehicle energy uses and the scope of theirinformation reported by the KECS. These changed over time,particularly in the early years of the surveys. To conduct a moreprecise bottom-up analysis, we complemented and calibrated theKECS data with vehicle registration and business transportactivity information for individual modes of transportationreported since 1966 in the Statistical Yearbooks by the Ministry

1 One of the authors (Lee Schipper) was part of a joint US/ROK Energy

Assessment carried out in the 1978–81 period. At a meeting with the late Kim Jae

Ik (the former senior secretary to the president for economic affairs), the author

suggested that ROK carry out a regular energy census that included information on

activity (household equipment, vehicle use, etc.), and this advice was taken,

starting in 1983. The model for the Survey was in part the US EIA sectoral surveys

and those carried out for the French Government from the 1970s. In the case of the

2007 transport sector survey, 7000 samples representing 0.04% of total population

were taken by using stratified and proportional sampling techniques, and the

entire survey took about three months.2 In this study, we do not examine travel by two wheelers. Unlike other Asian

countries, two wheelers have not been a major travel mode in South Korea. In

2007, only 3.5 out of hundred people owned motorcycles. According to the KECS’s

data on motorcycles, which are available only for 2004 and 2007, motorcycles’

energy use accounted only for 2% of total passenger travel energy use for both

years.

of Land, Transport, and Marine Affairs (MLTMA, various years). Inparticular, size- and fuel-specific vehicle registration informationavailable in the Yearbooks between 2001 and 2007 was used toeliminate the effect of South Korea’s 2001 revision in vehicleclassification: The revision reclassified buses with 7–10 maximumpassenger seats (e.g., minivans and large SUVs) as passenger cars,which led to a disproportionate increase in the number of carregistration since 2001. By subtracting the numbers of would-bebuses from those of cars during 2001–2007 and counting them inbus registration, we made the dataset more time-consistent.Another important problem was that because the KECS is asample survey, it does not necessarily represent all types oftransport energy uses. For instance, the KECS does not providedata for a number of business minivans and rental cars. Toreasonably account for the energy use and transport activity bythe business minivans and rental cars in the analyses, we chosecalibrated values for their per-vehicle fuel use, travel distance,and on-road fuel efficiency in such a way that the values areconsistent with MLTMA’s vehicle registration information andKEEI-reported gross energy consumption data for the transportsector (KEEI, 2007a, 2008). Regarding missing years between theKECS survey years, both on-road fuel efficiency and per-vehicletravel distance for each mode of transportation were interpolatedto yield per-vehicle energy use and ultimately total energy use bythe mode.

International data sources are reviewed in Schipper (2008) andSchipper and Fulton (2009). For each country, official nationalstatistics on car ownership, use, and on-road fuel efficiency,complemented by authoritative national analyses, have been usedfor a number of repeated analyses of the trends in travel andfreight transport (Schipper and Marie-Lilliu (1999)). Also, toinvestigate trends in South Korea’s automobile industry, weobtained model-specific domestic car sales data from theAutomobile Industry Annual published by the Korean AutomobileManufacturers Association (KAMA, various years) and from ourpersonal communications with its staffs. The data, in combinationwith specifications of individual car models provided by theKAMA or automakers themselves, were used to calculate averagecharacteristics of passenger cars between 1990 and 2007.

2.2. Analytic framework

The analytic framework for analyzing changes in transport CO2

emissions involves four components, that is, transportationactivity, modal structure, modal energy intensity, and CO2 contentof fuels, which are shown as follows (Howarth et al., 1993):

G¼X

i

X

j

ASiIiFi;j

Here, A is the volume of transport activity measured inpassenger-km (pkm) or tonne-km (tkm); Si represents the modalshare of mode i in total activity; Ii is the energy intensity of modei, that is, energy use per loaded transport activity; and Fi,j is theemission rate of mode i with fuel mix j. This equation indicatesthat an increase in transport CO2 emissions is explained by foureffects: (i) the growth of transport activity, (ii) the shift oftransport to more energy-intensive modes, (iii) the increase inenergy intensities of modes in use, and (iv) the increase in CO2

content of each mode through varying its fuel mix or increasingthe emission rate of fuels in use. These effects are referred to asthe activity effect, the structural effect, the intensity effect, andthe CO2 content effect, respectively.

To explain changes in transport CO2 emissions in South Korea,we decomposed the changes into the aforementioned four effects.To derive the activity effect term in year t, we calculated what CO2

emissions would have been in year t if the energy intensity, modal

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J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–36073600

structure, and CO2 content remained the same as in 1990.Likewise, to derive the individual structural, intensity, and CO2

content effects, we calculated what CO2 emissions would havebeen in year t if all of the other three factors remained the same asin 1990. 1990 was chosen for the base year because it is also thereference year for negotiations related to the Kyoto protocol. Thisprocedure is further elaborated in Kiang and Schipper (1996).

In this paper, attention will not be paid to the CO2 contenteffect because the effect turned out to be very small (less than 1%for doubling of CO2 emissions) in explaining the rapid change intransport CO2 emissions over the last two decades. This is becausethe variation in CO2 per unit of energy among the major fuels(gasoline, diesel, and LPG) is very small. By eliminating the CO2

content effect from the above equation, we get the formula fortotal transport energy use, given by

E¼X

i

ASiIi

Note, however, that these three effects may not be indepen-dent of one another (IEA, 2000). One effect may induce the othereffects, which offset some of the first effect. For example, adecrease in modal intensity that reduces the marginal cost oftravel service may result in an increase in transport activity,offsetting the modal intensity effect on energy use. This is knownas the ‘‘rebound effect’’ (Walker and Wirl, 1993; Greening et al.,2000). To make the analysis tractable, we examine the pureeffects of the three factors on changes in transport energy use,ignoring the potential coupling between them.

1.0

1.2

1.4

per c

apita

CarsAirShipsRailBuses

3. Transport energy use in South Korea

3.1. Aggregate trends in transport energy use

Fig. 1 shows per capita GDP, energy use, and activity ofpassenger and freight transport in South Korea. Before the 1997Financial Crisis, which swept Asian Countries including SouthKorea, energy use for freight transport rose almost in parallel withGDP and freight transport activity, whereas energy use forpassenger transport increased faster than both GDP andpassenger transport activity. After the Crisis, however, while the

1

10

100

1986 1989 1992 1995 1998 2001 2004 2007

1000 GDP/capita [2000US$]Passenger GJ/capita1000 passenger-km/capitaFreight GJ/capita1000 tonne-km/capita

Fig. 1. GDP, energy, and activity of South Korea’s passenger and freight transport.

increase in freight transport activity started to fall below theincrease in its energy use, passenger transport activity continuedalmost in parallel with its energy use. That is, the energy intensityof freight transport activity began to rise after the Crisis, whereasthe energy intensity of passenger transport, which had steadilyincreased before the Crisis, started to moderate and remainedvirtually unchanged throughout the 2000s. This suggests thatthere have been fundamental changes in the structure andintensity of transport energy use in South Korea around theAsian Financial Crisis.

Fig. 2 presents per capita CO2 emissions from passenger andfreight transport in South Korea. As of 2007, cars accounted for68% of total passenger transport CO2 emissions; buses 28%; rail3%; and ships and air combined 1%. In the same year, trucksaccounted for 90% of total freight transport CO2 emissions; ships9%; and rail and air combined about 1%. Fig. 2 also indicates that,in 2007, passenger travel was responsible for 64% of total CO2

emissions in South Korea’s transport sector (passenger travel alsoaccounted for 64% in terms of final energy use). Withoutfundamental changes in the economy, this predominant role ofpassenger travel in the sector’s energy use and the associated CO2

emissions is likely to persist at least over the next several decades.Among various modes of passenger transport, road travel (i.e.,

car and bus) should be given a particular attention. Between 2000and 2007, road travel activity (passenger-km) has steadilyincreased with the annual average rate of 6%, while the travelactivity of other modes (i.e. rail, shipping, and air combined) hasincreased only at the annual average rate of 1%. Associated withthis trend is the continued increase in CO2 emissions (4%annually) from road travel, which accounted for 96% of totalCO2 emissions from passenger transport in 2007 (Fig. 2). Theimportance of road travel in the sector’s CO2 emissions might alsobe demonstrated by considering the potential for vehicle

0.0

0.2

0.4

0.6

0.8

Tonn

e o

f C

O2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Tonn

e o

f C

O2

per c

apita

TrucksAirRailShips

1986 1989 1992 1995 1998 2001 2004 2007

1986 1989 1992 1995 1998 2001 2004 2007

Fig. 2. Per capita CO2 emissions from passenger transport (upper) and freight

transport (lower) in South Korea (overseas shipping and international air are

excluded).

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5,000

7,500

10,000

12,500

15,000

Veh-

km/c

apita

J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–3607 3601

penetration based on Japan’s motorization, which, as we will see,has taken a similar path prior to South Korea. While South Korea’sownership of road vehicles (i.e., cars, buses, and trucks) perthousand people was 340 in 2007, Japan had 510 in the same yearand 460 in the income-equivalent year of 1990. All of these trendscollectively suggest that even a minor regulatory measuretargeted at South Korea’s road travel may have substantialimpacts on its energy use and associated CO2 emissions in thenear term. To get a sense of how South Korea’s road travel mightevolve, in the following we specifically examine the country’spassenger car travel by comparing its important indicators withthose of other countries that have already experienced economicdevelopment ahead of South Korea.

0

2,500

GDP/capita [thousand 2000$ at PPP]US cars/ householdlight trucks 1970-2007w. Germany1970-1994/ Germany1995-2006UK 1970-2007

France 1970-2007

Spain 1990-2004South Korea 1986-2008Japan 1970-2007

7 12 17 22 27 32 37

Fig. 4. Per capita car use vs. per capita GDP.

14

16

18

20

equ

ival

ent

350

400

450

3.2. Comparison of car travel with other Countries

We portray, in Fig. 3, ownership of cars (and household lighttruck/SUV) for several OECD countries. The scale is in units of realGDP per capita using purchasing power parity: Portrayal againstGDP gives an approximate and useful adjustment for income,which is an important driver of car ownership (Dargay et al.,2007). South Korea follows the motorization path of Japan—at agiven GDP/capita, car ownership in South Korea is relatively closeto that of Japan—but far from that of Europe or the two largercountries represented, Australia and the US, data for which wereextended back to 1971 and 1941, respectively, to give acomparison with other countries at lower incomes per capita.

Car ownership does not translate directly into oil use or CO2

emissions per se. Therefore, we compare car use per capita in thesame way. Fig. 4 shows the evolution from 1986 to 2007 for SouthKorea and for similar years for the other countries. The highposition of South Korea at low incomes is explained by thedomination of official, company and Chauffeur-driven cars in the1980s, which gradually yielded to usage dominated by privatehouseholds.

0

100

200

300

400

500

600

700

800

GDP/capita [thousand 2000$ at PPP]

Car

s/10

00 p

eopl

e

US Cars/householdlight trucks 1941-2007Italy 1970-2006

Australia 1971-2007

w. Germany1970-1994/ Germany1995-2006

France 1970-2007

UK 1970-2007

Japan 1965-2007

South Korea 1980-2008

5 10 15 20 25 30 35 40

Fig. 3. Per capita car ownership vs. per capita GDP.

0

2

4

6

8

10

12

1970

L/10

0 km

, on

road

, gas

olin

e

0

50

100

150

200

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300

CO

2 gr

ams/

km

US cars/householdlight trucks/SUVs

Japan incl minicars

Australia

South Korea

All Germany

UKSwedenSpain

France

1975 1980 1985 1990 1995 2000 2005

Fig. 5. On-road fuel intensity of cars in gasoline equivalents and CO2 emissions

(diesel and LPG counted at its energy equivalent of 1.13 and 0.84 times a volume of

gasoline).

Also, as shown in Fig. 5, the on-road fuel intensity (L/100 km)of South Korean cars has been relatively high and steadilyincreasing in the past decade. Indeed, according to the data wehave, South Korea has among the highest fuel intensities of the

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J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–36073602

countries portrayed. This could be a function of poor traffic as wellas the significant number of larger company cars and taxis thatare included. South Korea’s high fuel intensity of car travel isdiscussed in more detail later in this paper.

When these data are combined, we find that, for its carownership and income, South Korea has relatively high per capitafuel use for passenger cars particularly in the 2000s (per capita GDPbelow $20K). This is mainly because the country’s on-road fuelintensity has been rising since 1995. Although South Korea’s percapita fuel use is now among the lowest of the group of Europeancountries, it is higher than that of Japan as shown in Fig. 6. Perhaps acombination of efficiency measures applied to new cars, improvedtraffic management through transport demand measures includingcongestion pricing, and reduced driving per-vehicle itself, as wasexperienced in Japan with the increase in the number of private cars

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

5GDP/capita [thousand 2000$ at PPP]

Fuel

Use

/ C

apita

, 100

0 Li

ters

Gas

olin

e Eq

uiv

US cars/householdlight trucks 1970-2007

Australia 1971-2007

w. Germany1970-1994 / Germany1995-2006UK 1970-2007

Italy 1970-2005

France 1970-2007South Korea 1986-2007Japan19702007

10 15 20 25 30 35 40

Fig. 6. Per capita fuel use vs. per capita GDP.

50%

100%

150%

200%

250%

300%

350%Actual Intensity Structure Activity

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Fig. 7. Decomposition of energy use trends of passenger transport in South Korea

(1990 is base year).

per household, will bring down per capita fuel use in the future.Leveling off or even flattening of fuel use/capita in most othercountries may be a harbinger of what is to happen in South Korea. Inthe sections to follow, we scrutinize the trend of energy use for roadtravel in South Korea and thereby discuss about challenges faced bythe sector as well as opportunities to promote efficiency in its roadtravel Fig. 7.

4. Passenger transport energy use in South Korea

Fig. 8 provides time series of activity-structure-intensitydecomposition for passenger transport energy consumption. Asshown, before the Asian Financial Crisis, the rising activity,structure, and intensity effects all contributed to the overallincrease in actual energy consumption. After the Crisis, while thesteadily rising activity effect was in part offset by both thedeclining structural effect (i.e., modal shift from car to bus) andthe nearly stagnant intensity effect, the net effects still resulted inthe overall increase in actual energy consumption. That is, theactivity effect has been the most dominant factor in passengertransport energy use in South Korea, and the structural andintensity effects have not been significant enough to counteractthe activity effect. In particular, the nearly stagnant intensityeffect, even with steadily increasing on-road fuel intensity sincethe mid-1990s as shown in Fig. 5, suggests that the other majormode of travel, bus, has become much more efficient.

Given that transport activity will continue to increase with SouthKorea’s economic growth, the other two effects, the structural effectand the intensity effect, need to be given more attention as ways ofslowing down ever increasing passenger transport energy use.Passenger activities must be based more on efficient modes of traveland these modes must utilize energy in a more efficient manner. Tooffer more useful insights into the sector, we investigate changes inthe structure and intensity of passenger transport over the lastseveral decades in the following section.

4.1. Transitions in the structure of passenger transport

Fig. 8 shows the trends in the passenger-km for differentmodes of travel. Passenger travel activity has kept increasingexcept for a temporary fall around the Financial Crisis in 1997. In2007, buses accounted for 55% of total passenger-km traveled;cars 36%; rail 8%; and air and ships combined 1%. The contributionof air and ship travel remained virtually negligible, and the shareof rail travel has steadily declined over the past decades.

0

100

200

300

400

500

600

700

800

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

[109

pas

seng

er-k

m]

BusesAirShipsRailCars

Fig. 8. Passenger activity by mode.

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0%

50%

100%

150%

200%

250%

300%

350%

400%

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Actual Intensity Activity

Fig. 9. Decomposition of energy use trends of car travel in South Korea (1990 is

base year).

0.0

0.5

1.0

1.5

2.0

2.5

RailBusesCars

MJ

/ pas

seng

er-k

m

19861989199219951998200120042007

Fig. 10. Energy intensity of travel by mode.

0

2

4

6

8

10

12

14

1.4

1.5

1.6

1.7

1.8Buses (w/o adjustment)BusesCars (w/o adjustment)Cars

1986 1989 1992 1995 1998 2001 2004 2007

Fig. 11. Load factors of car and bus travel (with and without the adjustment in the

current vehicle classification).

J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–3607 3603

Interestingly enough, car and bus travel evolved largely in asubstitutive manner. Fig. 8 indicates that the steep increase in cartravel (with the annual average increase of 13% in passenger-kmbetween 1991 and 1997) before the Financial Crisis is coupledwith the moderate but consistent decline in bus travel (with theannual average decrease of 2%); and the very slow increase in cartravel after the Crisis (with the annual average increase of 3% inpassenger-km between 1998 and 2007) comes with the unpre-cedented increase in bus travel (with the annual average increaseof 15%).3 All of these suggest that car and bus travel have been themost attractive modes of travel and the other modes—rail, air,and ship travel—have not been much regarded as substitutes forcar and bus travel to South Korea passengers.

While the share of car travel dropped sharply during1997–2007, as discussed, this structural shift was not sufficientenough to slow down steadily increasing passenger transportenergy use. According to our analysis, cars are still consuming amajority of passenger transport energy: in 2007, car travel accou-nted for 67% of total passenger transport energy; bus travel 30%,rail travel 2%, and ship and air travel combined 1%. This dominanceof car travel in total energy use may be attributable to its relativelyhigh energy intensity, that is, high energy use per loaded transportactivity. To fully take advantage of the favorable structural shifttoward bus travel, car travel should not have experienced anincrease in its energy intensity, which turned out to be not the case.Over the past decade, although South Koreans started to decreasetheir relative use of cars in total passenger travel, energy use of cartravel became more intensified. This is demonstrated by Fig. 9,which provides time series of activity–intensity decomposition forcar travel energy use. Before the Crisis, the activity effect propelledcar energy use to keep increasing despite the existence of the minorcounterbalancing intensity effect. After the Crisis, however, whilethe increasing activity effect started to moderate, the intensityeffect went to the opposite direction: the energy intensity effect ofcar travel started to contribute to the increase in its energy use.

4.2. Transitions in the energy intensity of passenger transport

Fig. 10 compares energy intensities of the three most popularmodes of travel, i.e., car, bus, and rail travel, in South Korea. Althoughdomestic ship travel is found to be most energy intensive (4.3 MJ perpassenger-km in 2007), its contribution to total energy use is notsignificant because of the negligible share of ship travel activity

3 This predominant role of bus travel after the Crisis is still observed even

without removing the bias associated with the 2001 vehicle reclassification:

during 2001–2007, bus travel increased at the annual rate of 5%, whereas car travel

increased at the annual rate of 3%.

(0.1% in 2007). As shown, the most energy intensive travel mode ofthe three modes is car travel, followed by bus and rail travel: In2007, energy intensity of car travel was 2.4 MJ per passenger-km,and those of bus and rail travel were 0.6 and 0.2 MJ per passenger-km, respectively. It should be noted that energy intensity of cartravel fell a little in the 1990s and then started to rise in the early2000s. Meanwhile, energy intensity of bus travel exhibited exactlythe opposite trend: A steady increase in the 1990s, followed by adecline in the 2000s. Energy intensity of rail travel remainedvirtually stagnant. These contrasting trends in car and bus energyintensity requires a careful attention due to their significance in totalpassenger transport energy use and their potential opportunities forpromoting efficiency of the entire sector. The rest part of this sectionexamines this issue in more detail.

The trends in energy intensity of car and bus travel can beexplained in part by changes in their load factors: A mode’s loadfactor is defined as the average number of loaded passengers perkilometer traveled by the mode. Fig. 11 illustrates how load factorsof car and bus travel have changed over the last two decades. Whilethe load factor of car travel increased from 1.4 in 1986 to 1.6 in 1997and then declined to 1.5 in 2007, the load factor of bus travelsteadily declined from 12.5 in 1986 to 6.5 in 2001 and then bouncedback to 9.1 in 2007. That is, an average car was used by increasingly

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0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000SUV/Minivan> 2000cc< 2000cc< 1500cc< 800cc

1990 1995 20012000 2002 2003 2004 2005 2006 2007

Fig. 12. Domestic sales of passenger cars produced by South Korean automakers

(calculated from sales data reported by KAMA).

J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–36073604

more passengers, followed by increasingly less passengers, whereasan average bus was used by increasingly less passengers, followedby increasingly more passengers. These unusual transitions in theload factors in the early 2000s were also observed even withoutmaking any adjustment in the current vehicle classification: notethat the effect of the adjustment is greater for buses than carsbecause bringing a relatively large number of big cars (38% of overallbuses but 6% of overall cars in 2007) back to buses affects the loadfactors of buses more than it affects the load factors of carsthemselves.4

Consistent with the load factor trend, the rate of increase in percapita car ownership fell sharply from annual average increaserate of 13% during 1992–1998 to 4% during 1998–2004. Oneexplanation for the load factor trend is that in the 1990s,increasingly more passengers were switching from bus to cartravel, and this transition may have been rapid enough toovertake the increase in car ownership; but in the 2000s,increasingly more car passengers were returning back to bustravel. All other market circumstances held constant, these loadfactor trends would explain the contrasting trends in energyintensity of car and bus travel (see Fig. 10).

The analysis of load factor itself, however, does not offer muchuseful lessons to energy and transport policy makers. The load factoris neither exogenously given nor a single determinant of energyintensity. Effects of test fuel intensity [MJ/km] of on-road vehicles oroperational efficiency loss (i.e., the increase in the fuel intensity dueto road conditions or driving patterns) may be also taken intoaccount. More detailed discussion on South Korea’s passengertransport sector must be followed to answer the question of whatmade the changes in these effects possible and what are theopportunities for improvement. Indeed, there have been major shiftsin the markets for car and bus travel that could have influencedthose effects simultaneously. A closer examination of these marketswould reveal whether or not regulatory policies in South Korea hasbeen effective in reducing the energy intensity of the passengertransport sector over the last two decades.

4.2.1. Energy intensity of car travel

Between 1995 and 2007, the energy intensity of car travel [MJ/passenger-km], increased by almost 30%. A simple Laspeyresdecomposition of this change indicates that, during the sameperiod, the increase in test fuel intensity [MJ/km] accounted forabout 85% of the increase in energy intensity, while the increasein the inverse of load factor (i.e., [vehicle/passenger]�1) accountedfor nearly 15%. An additional factor that led to the increase in on-road fuel intensity, and ultimately in energy intensity, is theworsening of traffic. Comparison of observed on-road fuelintensity with an approximate model of the stock turnover andthe average test fuel intensity of each year’s cars suggests that theworsening of traffic caused about 5–10% increase of on-road fuelintensity in the 2000s.5

4 Recall that the 2001 vehicle classification reform in South Korea reclassified

buses with 7–10 maximum passenger seats (e.g., minivans and large SUVs) as cars,

leading to a disproportionate increase in the number of cars since 2001 reported in

the KECS. By subtracting the numbers of would-be buses from those of cars during

2001–2007 and counting them in bus registration, we got more time-consistent

dataset and used it for this study.5 Based on our simple vehicle stock turnover model, we decomposed the

trends in the energy intensity of car travel into changes in the inverse of load

factor, test fuel intensity, and operational inefficiency (i.e., the increase in fuel

intensity due to road conditions or driving patterns). In the model, we assumed

that the sales-weighted average test fuel intensity of cars sold by South Korea’s

automakers in each year is representative of the fuel intensity of the vintage and

that their lifetime spans between 7 and 20 years. To derive operational inefficiency

effect, we simply divided each year’s average test fuel intensity of car stock by

reported on-road fuel intensity of that year. Due to lack of vintage-level data on

bus, we could not do the same analysis for bus travel.

The increase in the fuel intensity of on-road car stock isattributable, first, to the automobile tax reform, which promotedthe purchase of larger cars with higher fuel intensities: Effects oftax systems on car ownership are discussed in Hayashi et al.(2001). The South Korean government started to remove afinancial burden on the purchase of mid-to-large size cars (over1500cc), which tend to be more fuel intensive, by graduallylowering the excise tax from 25.0% in 1989 to 10.5–14.0% in 1998and 5.0–10.0% in 2003; and in 1999 the government abolished theexemption of acquisition and registration taxes for second minicars (under 800cc). Combined with the automobile tax reformwas the preferential tax treatment for LPG and diesel fuels, whichmust have induced consumers with less income in the aftermathof the Crisis to switch rapidly to large LPG and diesel cars: Fuelprice ratio of gasoline, diesel, and LPG was 100:49:29 in 2000 and100:52:35 in 2002, although it was adjusted to 100:75:51 in 2005and 100:82:50 in 2007 (KEEI, 2007b, 2008).

Second, in the 2000s, automatic transmission cars, which areless fuel-efficient than manual transmission cars, have penetratedinto the market with a surprising rate. The domestic sales share ofautomatic transmission cars steadily increased from 56% in 1999to 89% in 2003 and to 97% in 2008, which is markedly higher thanEuropean countries’ share of 13% in 2008 (MKE, 2009).

Consistent with the tax reforms and the distinctive preferencefor automatic transmission cars, there was indeed an increasingmarket demand for larger and fuel-intensive cars and buses and,particularly in the early 2000s, for SUVs and minivans fueled bydiesel or LPG. Figs. 12 and 13 show changes in the types ofpassenger cars sold in the domestic market and their averagecharacteristics, respectively: We assume that the cars sold by theautomakers are representative of overall domestic car salesbecause South Korean cars have dominated the market (over99% until 2001, followed by 98% in 2003 and 94% in 2008). Fig. 12shows that the sales of mid-to-large size cars (over 1500cc) havesteadily increased, displacing mini-to-small size cars (under1500cc), and that the sales of SUVs and minivans increasedsubstantially by the early 2000s and then declined thereafter.Fig. 13 confirms this trend: average passenger cars becameheavier, larger, and more powerful by the early 2000s, followedby a moderate lessening of the trend. This trend is consistent withthe evolution of energy intensity of car travel (Fig. 10) andstrongly associated with the steady increase in on-road fuelintensity of cars (Fig. 13).

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750

1,000

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2,000

1990 1995 2001 2002 2003 2004 2005 2006 2007

Sales weighted size[cc]Sales weightedweight [kg]

Sales weighted power[10 hp]On-road fuel intensity[L/10000vkm]

Fig. 13. Sales-weighted average characteristics of domestically sold passenger

cars (calculated from sales data reported by KAMA) and their on-road fuel

intensity (calculated by the authors).

J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–3607 3605

The silver lining to the intensifying energy use and associatedCO2 emissions concerns is the increasing popularity of mini-to-small size cars (under 1500cc). Mini-to-small size cars have notgained much attention until 2006 due to relatively low oil prices,as well as safety concerns. With the significant increase in oilprices after 2007, however, the share of mini-to-small size carscontinues to increase, with the notable increase in 2008 (from 11%to 17%), when the government raised the engine-size standard formini cars to 1000cc from 800cc, which must have attracted theconsumer segment that prefers to drive small size cars whileseeking tax benefits of owning mini cars.

4.2.2. Energy intensity of bus travel

The energy intensity of bus travel steadily increased in the1990s and then declined in the 2000s (Fig. 10). As noted above,the decline is closely related to South Koreans’ shift to bus travelaway from car travel and the associated load factor increase in bustravel. One important regulatory policy that may have facilitatedthis transition was the public transit reform in South Korea,particularly in Seoul, which led to a non-trivial improvement inthe operational efficiency of bus travel.

In 2004, the city of Seoul reformed its public transit system withthe introduction of the central-lane bus rapid transit (BRT),combined with the implementation of integrated fare system, bus-priority traffic signals, and real-time passenger information systems(Cervero and Kang, 2009); by 2008, Seoul had installed 87.4 km ofcentral-lane BRT services spanning 11 corridors. Although thecurbside BRT was already in place in 18 metropolitan cities inSouth Korea, waiting and right-turning vehicles in side lanes haskept the curbside BRT from fulfilling its anticipated punctuality andrapidity. Seoul’s public transit reform not only promoted operationalefficiency of its urban buses but also improved convenience of farepayment with the citywide adoption of stored-value smart cardsystem, called ‘T-Money’. In less than six months of the implemen-tation, average bus operating speed rose by 33–100% (SDI, 2004).Not coincidentally, the passenger ridership of Seoul urban busesstarted to rebound since it touched the floor of 1456 millionpassengers in 2004 (this number accounted for as much as 33% of

total urban bus ridership in South Korea). Also note that theridership of Seoul urban buses increased by 12% between 2004 and2005, while that of nationalwide urban buses increased only by 2%(MLTMA, various years). Although it is hard to know the extent towhich the reform influenced the change in nationwide bus energyuse, it is not unreasonable that the reform had some positive impacton the overall fuel efficiency of bus travel in South Korea. Indeed,nationwide on-road fuel efficiency of urban buses increased from2.49 km/L in 2001 to 2.57 km/L in 2004 and 2.85 km/L in 2007. Morethan offsetting the 5% increase in the average driving distance ofnationwide urban buses in this period, the on-road fuel efficiencyincrease resulted in 6% decline in average annual fuel consumption(from 36.9 kL per bus in 2004 to 34.8 kL per bus in 2007).

Along with the reform in urban transit system is thegovernment push for the dedicated bus lane services on highway.Since the early 2000s, the government has been expanding thegeographical and time coverage of the highway BRT, as culmi-nated by the start of the BRT services also for weekdays on thelongest and most populated Gyungbu highways. These measurescould have played an important role in economizing the bustransport system. For instance, the on-road fuel efficiency ofintercity buses increased from 3.32 km/L in 2001 to 3.67 km/L in2004 and 3.73 km/L in 2007; and the average fuel consumptiondeclined from 52.9 kL per bus in 2001 to 50.3 kL per bus in 2004and to 48.7 kL per bus in 2007, despite 8% increase in the averagedriving distance over the same period.

4.3. Summary of passenger transport in South Korea

Over the last two decades, passenger travel and associatedenergy use in South Korea have steadily increased with income,except for the period of the 1997 Financial Crisis. The modal mixof travel activity had shifted noticeably to cars from buses untilthe Crisis, and the trend was reversed thereafter; rail travel sharehas steadily declined, and ship and air travel shares haveremained virtually stagnant. While bus travel has become lessenergy intensive after the Crisis, car travel has become increas-ingly energy intensive, offsetting the effect of the recent structuralchange in passenger transport. Unless smart and coherentgovernment policies are introduced, the increase of energy usein passenger transportation may continue.

5. Discussion

To discuss opportunities for improving efficiency of passengertravel and thereby reducing its CO2 emissions, we are required toconsider a variety of socioeconomic, technological, and system-related factors and their interactions shaping passengers’ modalchoices and travel intensity. While in South Korea the activityeffect has been the major driver of passenger energy use, rolesplayed by the structural changes of travel modes and their energyintensity changes cannot be ignored: Without the structural shiftto less energy intensive bus travel and the decrease in the mode’senergy intensity, which took place after the Asian Financial Crisis,the energy situation for passenger travel in South Korea wouldhave been even worse. This also suggests that if the government isto stimulate improvements in energy use-efficiency for travelwhile sustaining its economic growth, it is well advised to takemore aggressive and orchestrated steps to promote energyefficiency of popular travel modes (i.e., car and bus travel) andto encourage a shift toward less energy intensive modes (i.e., busand rail travel).

One necessary condition for establishing more energy-efficientpassenger travel in South Korea is to promote public transport.Bus and rail travel offers significant opportunities for making the

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10

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100,00010,0001,000GDP/capita [2000$ at PPP]

Car

s an

d pe

rson

al li

ght t

ruck

s -

SUVs

/ 100

0 pe

ople

Japan 1965-2007South Korea 1966-2008China 1987-2007

Fig. 14. Per capita car ownership vs. per capita GDP for selected Asian countries

(Source: Schipper et al. (submitted)).

6 In fact, Schipper et al. (submitted) used South Korea as the model for

developing baseline projections for China. They used projections of China’s per

capita GDP for 2010 and 2020 and assigned China the level of motorization for

each level of per capita GDP that South Korea had at that per capita GDP.

J. Eom, L. Schipper / Energy Policy 38 (2010) 3598–36073606

entire sector more energy efficient. While bus travel is currentlymore energy intensive than rail travel, the bus travel may play amore important role at least in the short run due to its revealedsubstitutability with car travel and its currently high share intravel activity. The expansion and efficient settlement of the BRTsystem for dense urban areas and frequently congested roadswould facilitate a shift from car travel to bus travel.

In the long run, the share of rail travel should increase. Whileactivity of rail travel has increased over the last four decades, itsshare in passenger travel has been steadily declining from around30% in 1966 to 7% in 2007, mainly outstripped by growth inprivate car use. Rail travel is already the least energy intensivemode of travel in South Korea, even when the primary energyeffects of electric rail are taken into account. The Country haswell-established railway system including metro subway, inter-urban railway, and rapid transit: In 2008, they in total served 8.5million passengers per day with the shares of ridership being 67%,29%, and 4%, respectively (MLTMA, various years). In particular,the share of rapid transit has been steadily increasing since 2004with the opening of Korea Train Express, which is becoming anattractive mode for highway travelers. One of the most cost-effective ways of expanding the share of rail travel would be toconnect it to other modes of travel, preferably to bus travel (e.g.,subway to bus or interurban to bus). This can be made possible byrelocating points of rail or bus access, by introducing integratedfare system in favor of public transport users, or by efficientlyadjusting service schedules with, for example, the implementa-tion of intermodal transfer information system. These improve-ments should make rail travel a close and efficient complement tobus travel and ultimately make rail and bus travel as a whole anattractive substitute for car travel.

Even more importantly, energy efficiency of car travel shouldbe improved. South Korea may seek to induce behavioral changesby introducing voluntary programs. It has been implementing car-pooling and the 10th-day no-driving systems, which could lead tohigher energy efficiency of car travel through higher load factorsand decreased traffic congestion. However, these behavioralprograms involve significant inconvenience and thus havelimitations to broad-based participation: In South Korea, despitethe government’s strong push for their broad-based participation,the share of passenger cars that participated into car-pooling on aregular basis has steadily declined from 9% in 1995 to 4% in 2007and that for the 10th-day no-driving has remained almoststagnant at 16% since 1995 (KEEI, various years). Moreover,complexities associated with intermodal dependence must betaken into account. The improved road conditions may induce anunwanted modal shift to car travel away from bus and rail travel,which could lead to more energy intensive public transport due tolower load factors, ultimately resulting in increased energyintensity of the entire sector.

Therefore, long-term solutions for car energy use wouldrequire more fundamental and aggressive regulatory measures,which has not been the case in South Korea. The first fueleconomy regulation, the Average Fuel Economy Standard, wasintroduced in 2006 on the basis of the Energy Use RationalizationLaw of 1979. This standard mandated the average fuel economy of9.6 km/L (22.6 mpg) for non-LPG and non-mini cars over 1500ccand 12.4 km/L (29.2 mpg) for those under 1500cc—fuel economyof LPG and mini cars was not counted. Until now, all of SouthKorean automakers have far exceeded the standard (13.4 and10.6 km/L in 2006, and 13.7 and 10.8 km/L in 2007). Although thegovernment later strengthened this standard to 14.5 km/L(34.1 mpg) for cars over 1600cc and 11.2 km/L (26.4 mpg) forcars under 1600cc to be in effect as of 2012, the standard was stilllimited in that it only provides credits for superior performance,without stipulating penalties for substandard performance.

The South Korean government, however, started to takeserious steps to address the pressing need to reduce greenhousegas emissions in the transport sector. It substituted the 2012standard with a flexible standard that requires automakers tocomply either the average fuel economy of 17 km/L (40 mpg) orthe CO2 emission standard of 140 g/km by 2012 with a penaltyclause, as well as phase-in sales coverage: the sales coverageunder regulation starts at 30% in 2012 with a gradual increase to100% in 2015. This flexible standard may lead to diversification insales mix and reduction in overall compliance costs by allowingautomakers to produce LPG cars, which are more fuel intensivethan other cars relative to their CO2 emissions. Note that the fleetaverage fuel economy standard is a little stricter than those of theUS (16.6 km/L or 39 mpg by 2016) and Japan (16.8 km/L or39.5 mpg by 2015), and the emission standard is less stringentthan that of the EU (130 g/km by 2015).

Given this recent government push for technology, SouthKoreans should be concerned about how fast the technology-pushwill reduce overall energy intensity of on-road cars and to whatextent the enhanced fuel efficiency will affect on the composition oftravel modes and ultimately energy intensity of the entire sector.Future study may examine the effects of diverse car-related taxmeasures on the penetration and utilization of fuel-efficient cars andthe effects of fuel economy improvement on passenger choices oftravel modes in the specific context of South Korea.

The South Korean experience offers useful implications for otherdeveloping countries. As Fig. 14 shows, China is following closely themotorization rates (relative to GDP) of both South Korea and Japan.However, China introduced fuel economy standards in 2005. Thiswas when China’s per capita GDP and motorization were far behindthose South Korea has, as pointed out by Schipper et al. (submitted).Thus while China may follow South Korea’s motorization path, thecars appear to be headed towards lower fuel intensities at thebeginning of the rise in motorization.6 And many of China’s easternprovinces have higher population density than South Korea as awhole (LBNL, 2008). With car ownership more concentrated indense cities in China than in South Korea, future growth in carownership, or at least in use, may be limited by congestion. Seeinghow mini cars have boomed in Japan in part because of space

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constraints (Schipper, 2008), China’s rapid motorization may have totake a different course than that of South Korea’s.

Other Asian countries have followed paths of rapid motoriza-tion, but primarily based on two wheelers for now, such asIndia (Schipper et al., 2009a). Whether Asian countries will followSouth Korea is unclear; the overwhelming domination of VietNam’s urban roads by two wheelers (Schipper et al., 2009c)suggests that two wheelers may simply be more appropriate inthe Asia’s crowded cities. Latin America is very car oriented,relative to its GDP (Schipper et al., 2009b). While Mexico has notkept pace with South Korea in overall development, the streets ofits major cities are clogged with cars, although a new push forBRT that resembles Seoul’s recent reform may take some of thegrowth out of cars.

6. Conclusions

Several important findings emerge from the investigation ofthe South Korea transport sector. First, passenger transportactivity has been a major driver of the increase in transportenergy use in South Korea, and most of the increase was led byroad transport, i.e., cars and buses. Second, around the FinancialCrisis, there has been a dramatic structural shift toward bus travelaway from ever increasing car travel in passenger transport,which contributed to the decrease in the growth of passengertransport energy use. Third, the two dominant modes oftravel—car and bus travel—developed in the opposite direction:Bus travel has become less energy intensive since the Crisis,whereas car travel has become increasingly energy intensive,counteracting the favorable effect of the structural shift.

From our findings here, it is obvious that South Korea’s energyand transport policies must take even more aggressive steps inenhancing energy efficiency of the sector while promoting theshift toward public transportation. In addition to the new fueleconomy and emission standards directed toward South Koreanauto suppliers, the government is well advised to considerimplementing a feebate system or even a CO2-based vehicle taxsystem with reasonably high tax rates. Such a demand-sideregulatory prescription, which provides clear disincentives forusing large-sized vehicles, would have a more immediate effectthan the supply-side measure in enhancing energy efficiency ofthe car transport sector. Also importantly, the government shouldfurther promote the use of public transport. In particular, a publictransport management system based on information about busand rail operation, or even an integrated transit planning, couldreduce overall energy intensity of public transport while poten-tially displacing more car travel in South Korea.

This study stays away from some important policy questionsrelevant to the South Korea transport sector. We have notattempted to address the questions of to what extent thegovernment should promote energy efficiency and public trans-port and how we could devise feasible policy instruments thatreduce potential conflict of interests. Economic models based onthe understanding of domestic and international market circum-stances may allow us to gain some insights into those issues.

Acknowledgements

We would like to acknowledge the constructive comments andsuggestions made by anonymous reviewers. We also acknowledgethe help from specialists at the Ministry of Land, Transport, andMarine Affairs in Korea. The first author was financially supportedby the Precourt Energy Efficiency Center (PEEC) during thepreparation of this work.

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