As one of the CO2 emission reduction programs, the carbon banking
program is designed to encourage individual efforts to reduce CO2 emissions.
In this program, consumers earn eco-points that can be used to buy other
goods and services if they reduce consumption on electricity, town gas, and
source water. We estimated household electricity demand for Gwangju and
examined if the carbon banking program affected significantly the household
electricity demand. We found that monthly time series on electricity demand,
electricity price, town gas price, population, and per capita gross regional
income have cointegration relations. Thus we used fully modified error
correction model (FMOLS) to examine the effect of carbon banking program
on the household electricity demand. We found that the carbon banking
program reduces significantly electricity demand.