Applying trade mechanisms to quantify dynamic GHG emissions of electricity consumption in an open economy - The case of Switzerland

Quantifying greenhouse gas (GHG) emissions from electricity consumption presents a significant challenge due to the variable nature of the generation mix throughout the year and the complex dynamics of cross-border electricity trade. In this paper, we introduce an innovative methodology designed to accurately capture the hourly GHG emissions linked to electricity imports, and thus electricity consumption. Contrary to conventional approaches, our methodology identifies the relevant generation technologies in exporting countries which are activated for export. This selection is based on (i) the classification of the technologies according to their dispatch cost (merit order), and (ii) considers trade mechanisms from economic theory. We apply this methodology to Switzerland, a country characterized by a low-carbon electricity generation mix, which however heavily relies on imports from neighbouring countries, particularly during the winter months. Over the period from 2017 to 2021, we find that 88 % of Switzerland's domestic electricity demand is met by its own generation-primarily hydro and nuclear-while the remaining 12 % is imported, mainly from fossil-fuel-based sources. Consequently, the average annual GHG emission factor for electricity consumption in Switzerland is 98 g-CO2eq/kWh, with 29 % attributed to domestic generation and 71 % to imports. This figure is 40 % higher than the 70 g-CO2eq/kWh estimated using a conventional approach, which typically underestimates the specific impacts of electricity imports. The disparity between these approaches becomes even more pronounced when considering the seasonal and hourly variations in the electricity mix and the resulting emission factors. These insights are particularly crucial in the context of emerging electricity demands, such as heat pumps and electric vehicles, where accurate GHG accounting can significantly influence policy and investment decisions.