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Development of renewable electricity in ASEAN countries: socio-economic and environmental impacts

Abstract

There has been a significant increase in electricity consumption per capita amongst ASEAN Countries in the last two decades. This consumption will most likely continue to increase in the future, indicating the importance of a reliable provision for electricity supplies in the region. ASEAN Countries, however, are concerned that continuing to utilise fossil fuels to generate electricity will increase their carbon emission contributions. Therefore, ASEAN Countries are considering to invest in renewable energy for the generation of electricity. However, few studies have been conducted on the socio-economic and environmental impacts of renewable electricity development in this region. Using an inter-country social accounting matrix analysis for the East Asia Region, this paper compares the socio-economic and environmental impacts of increasing electricity generated from fossil fuels with electricity generated from renewable resources, namely wind, hydro and solar. The results indicate developing renewable electricity can lead to a higher GDP, higher positive spillover to non-energy sectors and lower carbon emissions than developing electricity based on fossil fuels. However, the incidence of poverty in several ASEAN Countries developing renewable electricity can be relatively higher than if they continue utilising fossil fuel electricity.

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Notes

  1. 1.

    The inter-country CFPM approach is relatively different to the standard inter-regional SAM multiplier. The explanation and derivation of the standard inter-regional SAM multiplier, for example, can be found in Resosudarmo, Nurdianto and Hartono (2009).

  2. 2.

    GTAP Power 9 was the latest available GTAP Power dataset when this paper was written. It is a global database that describes bilateral trade patterns, production, consumption, and intermediate uses of commodities and services.

  3. 3.

    Fossil fuels-based electricity here includes nuclear, coal, oil, and gas electricity plants.

  4. 4.

    There are some countries without any particular renewable electricity. Using IC-CFPM, this paper can impose an increasing output in these countries for non-existent renewable electricity. However, the main implication is that the economic impacts are almost equal to zero.

  5. 5.

    In the IRSAM/ICSAM used in this paper, amounts of electricity trading among ASEAN countries or between any ASEAN countries and any country outside ASEAN are relatively small. In any simulation conducted in this paper, hence, trading electricity among countries are trivial. These simulations will not represent any recent electricity agreements among countries in the region, such as the ASEAN Energy Trading Plan.

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Appendix

Appendix

Derivation of the inter-country constrained fixed price multiplier (IC-CFPM)

This section explains in detail on the derivation of the inter-country constrained fixed price multiplier (IC-CFPM) following Lewis and Thorbecke (1992), Resosudarmo and Thorbecke (1996, 1998) and Hartono and Resosudarmo (2008). Table 2 can be expressed in the matrices operation as follow.

$$\left[ {\begin{array}{*{20}c} {Y_{{\text{C}}}^{1} } \\ {Y_{{{\text{NC}}}}^{1} } \\ {Y_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]\, = ~\,\left[ {\begin{array}{*{20}c} {\begin{array}{*{20}c} {A_{{\text{C}}}^{{11}} } & {R^{{11}} } & {R^{{12}} } \\ {Q^{{11}} } & {A_{{{\text{NC}}}}^{{11}} } & {A_{{{\text{NC}}}}^{{12}} } \\ {Q^{{21}} } & {A_{{{\text{NC}}}}^{{21}} } & {A_{{{\text{NC}}}}^{{22}} } \\ \end{array} } \\ \end{array} } \right]~\left[ {\begin{array}{*{20}c} {Y_{{\text{C}}}^{1} } \\ {Y_{{{\text{NC}}}}^{1} } \\ {Y_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]\, + \,~\left[ {\begin{array}{*{20}c} {X_{{\text{C}}}^{1} } \\ {X_{{{\text{NC}}}}^{1} } \\ {X_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]$$
(4)

The matrices in Eq. (4) can be transformed into a linear system of equations as presented in Eqs. 5, 6, and 7.

$$Y_{{\text{C}}}^{1} ~\, = \,~~A_{{\text{C}}}^{{11}} .~Y_{{\text{C}}}^{1} \, + \,R^{{11}} .~Y_{{{\text{NC}}}}^{1} ~\, + ~\,R^{{12}} .~Y_{{{\text{NC}}}}^{2} \, + \,X_{{\text{C}}}^{1}$$
(5)
$$Y_{{NC}}^{1} = ~Q^{{11}} .~Y_{C}^{1} + ~A_{{NC}}^{{11}} .~Y_{{NC}}^{1} + ~A_{{NC}}^{{12}} ~.Y_{{NC}}^{2} + X_{{NC}}^{1}$$
(6)
$$Y_{{NC}}^{2} = ~~Q^{{21}} .~Y_{C}^{1} + ~A_{{NC}}^{{21}} ~.Y_{{NC}}^{1} + ~A_{{NC}}^{{22}} .~Y_{{NC}}^{2} + X_{{NC}}^{2}$$
(7)

Rearranging Eqs. 5, 6, and 7

$$X_{C}^{1} = ~ - R^{{11}} .~Y_{{NC}}^{1} + ~(I - ~A_{C}^{{11}} ).~Y_{C}^{1} - ~R^{{12}} .~Y_{{NC}}^{2}$$
(8)
$$~\left( {I - A_{{{\text{NC}}}}^{{11}} } \right).~Y_{{{\text{NC}}}}^{1} \, = \,~Q^{{11}} ~.~Y_{{\text{C}}}^{1} \, + \,~A_{{{\text{NC}}}}^{{12}} .~Y_{{{\text{NC}}}}^{2} \, + \,X_{{{\text{NC}}}}^{1}$$
(9)
$$(I\, - \,A_{{{\text{NC}}}}^{{22}} ).~Y_{{{\text{NC}}}}^{2} \,~ = \,~Q^{{21}} .Y_{{\text{C}}}^{1} \, + ~\,A_{{{\text{NC}}}}^{{21}} .Y_{{{\text{NC}}}}^{1} \, + \,X_{{{\text{NC}}}}^{2}$$
(10)

Rearranging Eqs. 8, 9, and 10:

$$- R^{{11}} .~Y_{{{\text{NC}}}}^{1} \, - \,~X_{{\text{C}}}^{1} \, - \,R^{{12}} .~Y_{{{\text{NC}}}}^{2} \, = ~\, - ~(I - ~A_{{\text{C}}}^{{11}} ).~Y_{{\text{C}}}^{1} ~$$
(11)
$$\left( {I - A_{{{\text{NC}}}}^{{11}} } \right).~Y_{{{\text{NC}}}}^{1} \, - \,~A_{{{\text{NC}}}}^{{12}} .Y_{{{\text{NC}}}}^{2} ~\, = \,~Q^{{11}} .~Y_{{\text{C}}}^{1} \,~ + \,X_{{{\text{NC}}}}^{1}$$
(12)
$$- ~A_{{{\text{NC}}}}^{{21}} .~Y_{{{\text{NC}}}}^{1} \, + \,~(I - A_{{{\text{NC}}}}^{{22}} ).Y_{{{\text{NC}}}}^{2} \,~ = \,~Q^{{21}} .Y_{{\text{C}}}^{1} \, + \,X_{{{\text{NC}}}}^{2}$$
(13)

Translate Eqs. 11, 12, and 13 into matrices form:

$$\left[ {\begin{array}{*{20}c} { - R^{{11}} ~} & I & { - R^{{12}} } \\ {\left( {I - A_{{{\text{NC}}}}^{{11}} } \right)} & 0 & { - ~A_{{{\text{NC}}}}^{{12}} ~} \\ { - ~A_{{{\text{NC}}}}^{{21}} } & 0 & {(I - A_{{{\text{NC}}}}^{{22}} )~} \\ \end{array} } \right]\left[ {\begin{array}{*{20}c} {Y_{{{\text{NC}}}}^{1} } \\ {X_{{\text{C}}}^{1} } \\ {Y_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]\, = \,~\left[ {\begin{array}{*{20}c} {\begin{array}{*{20}c} { - ~(I - ~A_{{\text{C}}}^{{11}} )} & 0 & 0 \\ {Q^{{11}} } & I & 0 \\ {Q^{{21}} } & 0 & I \\ \end{array} } \\ \end{array} } \right]~\left[ {\begin{array}{*{20}c} {Y_{{\text{C}}}^{1} } \\ {X_{{{\text{NC}}}}^{1} } \\ {X_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]$$
(14)
$$\left[ {\begin{array}{*{20}c} {Y_{{{\text{NC}}}}^{1} } \\ {X_{{\text{C}}}^{1} } \\ {Y_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]\, = \,\left[ {\begin{array}{*{20}c} { - R^{{11}} } & I & { - R^{{12}} } \\ {\left( {I - A_{{{\text{NC}}}}^{{11}} } \right)} & 0 & { - ~A_{{{\text{NC}}}}^{{12}} ~} \\ { - ~A_{{{\text{NC}}}}^{{21}} } & 0 & {(I - A_{{{\text{NC}}}}^{{22}} )~} \\ \end{array} } \right]^{{ - 1}} ~\left[ {\begin{array}{*{20}c} {\begin{array}{*{20}c} { - ~(I - ~A_{{\text{C}}}^{{11}} )} & 0 & 0 \\ {Q^{{11}} } & I & 0 \\ {Q^{{21}} } & 0 & I \\ \end{array} } \\ \end{array} } \right]~\left[ {\begin{array}{*{20}c} {Y_{{\text{C}}}^{1} } \\ {X_{{{\text{NC}}}}^{1} } \\ {X_{{{\text{NC}}}}^{2} } \\ \end{array} } \right]$$
(15)

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Effendi, Y., Resosudarmo, B.P. Development of renewable electricity in ASEAN countries: socio-economic and environmental impacts. Asia-Pac J Reg Sci (2021). https://doi.org/10.1007/s41685-021-00206-7

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Keywords

  • Renewable electricity
  • Carbon emissions
  • Inter-country social accounting matrix
  • ASEAN

JEL Classification

  • E16
  • E17
  • I32