Embarking on the Asia Supergrid: Trade impact of carbon pricing on regional sustainability in northeast Asia

Abstract

Under the rising pressure for low carbon energy transitions in Northeast Asia (NEA), interconnecting local power grids for interstate power trade allows to share reserve capacity and to redistribute intermittent renewable energy across time zones, contributing to regional sustainability. Using a linear programming model that minimizes total energy system costs to meet hourly power demand, we build a hypothetical electricity transmission model for three urban demand centers interconnecting China, South Korea, and Japan to test economic and environmental competitiveness of the trilateral power trade with carbon pricing. In the economic perspective our results indicate that interstate electricity trade enables cost savings at all levels of CO2 prices tested (0–180USD/ton of CO2 emitted) through more efficient fuel consumptions on an hourly basis at the NEA regional level. However, ambitious carbon pricing (above 90 USD/ton CO2 emitted) is still essential for trade to ensure equitable trade impacts for all participating nodes. While trade utilizes gaps in resource availabilities and technology costs across nodes in cost minimization, results show inadequate carbon pricing leads to extra thermal combustions at the local level although regional total emissions reduce.