Implications of East Asia electricity market integration on Southeast Asian economies and CO2 emissions

Abstract

It has been argued that East Asia’s electricity market integration would contribute in resolving energy security and CO2 emission issues in Southeast Asia. Few studies, however, have analyzed the impacts of an integrated electricity market in East Asia on socio-economy and the environment in Southeast Asia. This chapter utilizes three methods related to an inter-regional social accounting matrix, namely, inter-regional constrained fixed price multiplier, household income microsimulation, and CO2 emission simulation methods, aiming to estimate the socioeconomic and environmental impacts of East Asia’s electricity market integration on Southeast Asian countries. The results indicate that, if there is an increase in electricity demand of an East Asian country outside Southeast Asia, an East Asia integrated electricity market may economically benefit several Southeast Asia countries, but increase CO2 emissions from the region. If the increase in electricity demand is in a country in Southeast Asia, an East Asia electricity market integration may not economically benefit most Southeast countries. Furthermore, the integration may not reduce CO2 emissions from the region.