Abstract
This study analyses the potential implications of electricity trading to meeting the global emissions reduction targets. Global CO2 emissions reached 32.4 Gt in 2014. Though the overall trend has been increasing, significant emissions reductions from Kyoto parties with targets have been achieved. The primary instrument for accomplishing this, has been the emissions trading system. Some scholars suggest electricity trading as an alternative. Electricity imports grew from 88 TWh to 510 TWh in OECD countries from 1974 to 2015. In non- OECD countries, the same was 238 TWh in 2014. Specifically, in the ASEAN, this is seen as a solution to looming energy security and pollution issues. Plenty of grid interconnections are being planned in the region. Through this study, learnings and policy implications from the EU are sought for the ASEAN region. Using decomposition analysis, the effects of imports and exports are compared against other traditional drivers such as population growth, economic activity and energy intensity. It is found out that France, Switzerland and Sweden are currently in the best position to export electricity in the region, because of their relatively large export capacities and very low carbon intensity for electricity generation. The results also show that electricity imports and exports are responsible for significant changes in CO2 emissions from 1990 - 2014 in EU. Policy implications and learnings for ASEAN follow the results discussion.
