Academy of Interdisciplinary Studies Division of Environment and Sustainability 232 Division of Environment and Sustainability Game-Theoretic Analysis of Markets Supervisor: Keith CHAN / ENVR Student: WONG Sze Wa / SGFN Course: UROP 1100, Fall This paper examines the concept of electricity interconnection, which involves linking different electricity markets to enable cross-border trading. Interconnection is crucial for stabilizing electricity prices and enhancing energy security, especially with the increasing integration of intermittent renewable energy sources like wind power and solar power. However, the impact of interconnections is not universally positive. Some studies indicate that interconnections can lead to price volatility spillovers between connected markets, potentially destabilizing smaller or less flexible markets. This paper highlights the dual nature of interconnections, emphasizing their importance in the net-zero transition while also acknowledging the complexities and potential drawbacks they introduce. Game-Theoretic Analysis of Markets Supervisor: Keith CHAN / ENVR Student: WU Yuk Hei / SGFN Course: UROP 1100, Spring The rapid development of sustainable finance taxonomies and climate-related regulations underscored a pressing need for a low-emission transition in the energy sector. However, while previous research has primarily focused on the transition from emission-intensive energies to zero-emission energies, there has been a methodological gap in assessing the role and contribution of low-emission energies in global energy transition. This article reviews the external benefits and the private asset stranding risks of low-emission energy production under the dynamic thresholds of sustainable finance taxonomies. Thus, we propose an economic model to quantify their overall externalities across countries at varying development levels. Our research not only aims to bridge this methodological gap but also offers policy insights on carbon pricing to integrate transitional activities into national energy transition strategies.
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