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The Association of Southeast Asian Nations (ASEAN) region consists mostly of developing countries experiencing rapid economic growth and industrialisation, resulting in rising energy demand primarily met using fossil fuels. Emissions abatement technologies and economic instruments like carbon trading are pivotal in transitioning towards a low-carbon trajectory. Despite its status as a major ASEAN economy, the Philippines has yet to set a net-zero emissions target to achieve climate goals established under Paris Agreement. This study compares two policy-based transition pathways for the Philippines' Luzon power grid to achieve net-zero emissions by 2054, integrating a domestic emissions trading system into a long-term optimisation framework, and assessing their economic viability, policy alignment, and technological feasibility. Using mixed-integer nonlinear programming (MINLP) version of the DECarbonisation Options Optimisation (DECO2) software, two scenarios are simulated: NZES-I, without carbon capture and storage (CCS) retrofit in fossil plants, and NZES-II, with CCS retrofit. Both scenarios integrate renewables, alternative fuels, negative emission technologies (NETs), and a multi-stage carbon trading mechanism. The results show that NZES-II achieves lower electricity prices, improved alignment with national renewable energy targets, and optimal utilisation of the Philippines’ limited carbon storage capacity (32 % below the storage limit of 251 Mt CO 2-eq). By 2050–2054, carbon trading revenues exceed 40 billion/y in NZES-II, surpassing the investment required for renewables and emission reduction technologies. In contrast, NZES-I reaches net-zero but falls short on renewable targets and incurs higher electricity prices due to its greater dependence on costly NETs. The study highlights the critical role of integrated carbon trading, CCS, and policy alignment in achieving net-zero emissions, and provides a policy-informed roadmap for the Philippines and comparable economies to achieve net-zero while ensuring economic resilience and energy security under realistic constraints. • Net-zero transition pathways for the Philippines' power grid are optimised. • NZES-II pathway aligns with the Philippines' national renewable targets. • Carbon trading and CCUS lowers power prices, enhancing energy security/affordability. • Afforestation plays a critical role in CO 2 removal and restoration of forests. • Carbon trading revenues reach 40 billion annually by 2050, funding green investments.
Hameed et al. (Wed,) studied this question.