The carbon price in South Korea

Data generation

data <- read.table("C:/Users/Ag User/Desktop/AAEC/5. 2020 Spring/AAEC 8610/Homework/HW3/data.csv", header = TRUE, sep = ",")
e2015 <- mean(subset(data, year == 2015)$price.elec)
e2016 <- mean(subset(data, year == 2016)$price.elec)
e2017 <- mean(subset(data, year == 2017)$price.elec)
e2018 <- mean(subset(data, year == 2018)$price.elec)
a2015 <- mean(subset(data, year == 2015)$price.allowance)
a2016 <- mean(subset(data, year == 2016)$price.allowance)
a2017 <- mean(subset(data, year == 2017)$price.allowance)
a2018 <- mean(subset(data, year == 2018)$price.allowance)
year <- c(2015,2016,2017,2018)
elec.year <- c(e2015,e2016,e2017,e2018)
allowance.year <- c(a2015,a2016,a2017,a2018)
table.price.year <- data.frame(year, elec.year, allowance.year)

Welcome to the Korea Emission Trading Scheme

This web is about information on the relationship between a carbon price in the Korea Emission Trading Scheme(ETS) and the electricity price. Allowance prices are from KRX ETS Market Information Platform, and electricity prices are from Korea Energy Statistical Information System. The monthly data covers the period from 2015 to 2018. You can see the summary table of allowance prices(1,000 KW) and electricity prices(KW/kWh) like this :

summary(data)

##       year        price.elec     price.allowance 
##  Min.   :2015   Min.   : 96.70   Min.   : 9.201  
##  1st Qu.:2016   1st Qu.: 99.41   1st Qu.:12.475  
##  Median :2016   Median :113.88   Median :20.212  
##  Mean   :2016   Mean   :109.95   Mean   :17.729  
##  3rd Qu.:2017   3rd Qu.:116.92   3rd Qu.:21.959  
##  Max.   :2018   Max.   :128.43   Max.   :24.479

The summary table does not show any patterns. Also, so do the standard deviations of variables.

std.elect <- sd(data$price.elec)
std.allowance <- sd(data$price.allowance)
std.data <- cbind(std.elect, std.allowance)
std.data

##      std.elect std.allowance
## [1,]  9.707795      5.162467

Although allowance prices are continuously going up, electricity prices are decreasing!!

However, see the data by year.

table.price.year

##   year elec.year allowance.year
## 1 2015  111.3650       9.855104
## 2 2016  110.9225      17.258528
## 3 2017  109.1733      21.372476
## 4 2018  108.3392      22.430329

Generally, if allowance prices are increasing, electricity prices are decreasing because power plants pass the allowance costs on to consumers.Then, electricity consumptions get decreased. However, electricity prices did not decrease in S. Korea even though allowance prices have increased.

Plot the relationship b/w both prices.

You can look at the trend in more detail through the plot.

• the monthly data
• But, in case of the monthly data, we cannot indentify the negative relatioship b/w both prices. This may be becasue electricity prices have periodicity.

plot(data$price.elec, data$price.allowance, type = "p", main="The relationship b/w electricity price and allowance price",
     xlab="KW/kWh", ylab="1,000 KW")

Next, let’s see the plot through the annual data.

• the annual data
• We can see the decreasing pattern b/w both prices.

plot(table.price.year$elec.year, table.price.year$allowance.year, type = "p", main="The relationship b/w electricity price and allowance price",
     xlab="KW/kWh", ylab="1,000 KW")