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An Estimation of Market-Based Carbon-Emission Prices Using Comparative Analogy: A Korean Case

Abstract:
In 2015, Korea became one of the pioneering countries to implement ETS nationwide in Asia. The purpose of this paper is to estimate the market-based prices of carbon credits in Korea by using a comparative analogy approach. In this paper, the comparative analogy is applied as follows: Based on the assumption that the factors affecting carbon prices would be same with the those of EU ETS which is the most matured market in the world, we attempt to estimate the market-based carbon prices of Korea with the estimation model obtained by using the data from EU ETS. After estimating the market-based price of carbon in Korea, we compare the estimated price to the actual observed prices and analyze the reasons why there existed the gap between both prices. Furthermore, we examine the properties of the estimated market-based price with respect to the changes of factors affecting the carbon price through sensitivity analysis

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Keywords: Carbon Price Korea Emission Trading System EU Emission Trading System Comparative Analogy

DOI: 10.5547/01956574.40.SI1.smoo

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Published in Volume 40, The New Era of Energy Transition of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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