In 2020, Korea was the world"s 12th-largest energy consumer and had the 30th-largest energy productivity (GDP divided by energy consumption) of the 35 OECD countries. In addition, the share of energy consumption in the industrial sector increased rapidly from 81 million TOE in 2013 to 102 million TOE in 2022, with an average annual growth rate of 3.1%. Here, energy efficiency improvement in the industrial sector was not as fast as that of most of the main industries. Therefore, it is essential to improve energy efficiency in highly energy-consuming industrial sectors. This study investigates the effect of energy intensity on a firm’s performance and demonstrates how environmental policy affects energy intensity. This study also examines the relationship between energy intensity and financial performances of firms participating in the Korean Emission Trading Scheme (KETS) from 2011 to 2022. The results showed that improvement in energy intensity did not have a significant effect on the short-term financial performance of firms. However, it did have a significant effect on Tobin"s Q. In addition, it was also tested whether the KETS is accelerating the impact of improved energy intensity on a firm’s financial performance by inducing voluntary energy efficiency improvement technologies of market participants. Based on the estimation results, it is concluded that the current KETS is not accelerating the effect of energy intensity on a firm"s short- and long-term financial performances. Based on the estimation results, this study suggests redesigning KETS so that the emission trading market can attract participants to develop various technologies related to voluntary energy efficiency improvement.