This paper aims to analyze the impact of ETS on the potential competitiveness of Korean manufacturing sectors by applying potential Value at Stake(VAS) and Trade Intensity. The empirical analysis indicates various results;  hile most manufacturing sectors are expected to experience only mild impacts, some energy-intensive sectors such as refined petroleum, chemical, non-metallic mineral, and iron & steel are likely to have significant negative impacts on the potential competitiveness against their foreign competitors. In addition, different policy options, Such as free allocation, border adjustment and sectoral agreement were discussed to minimize competitive disadvantages and to distribute fair share of burdens between industries. It is believed that the result of this paper will contribute to appropriate policy decision-making to strengthen green competitiveness of Korean industries.

Keywords : Climate Change, Climate Policy, the ETS, Competitiveness Impacts