Supply chain hotspot analysis of the Nexus between energy costs and CO2 emissions: Evidence from Japan

This study identifies cost-emission hotspots where rising imported energy costs and CO₂ emissions driven by final demand are most concentrated. To address these dual pressures, an integrated assessment framework was developed that combines the energy cost-push structure (forward-type unit structure) and CO₂ emission demand–pull structure (backward-type unit structure). A composite index was also introduced to evaluate the impact of energy costs and CO₂ emissions on industries, and a supply chain cluster analysis was used to identify industries that were closely interrelated within a cost-emission hotspot. The study reveals that (1) Japan’s industrial structure is strongly shaped by its dependence on imported crude oil, coal, and natural gas, as well as by final demand from retail trade, food services, and motor vehicles; (2) approximately 4% of all commodity transactions are subject to substantial combined impacts of both energy costs and CO₂ emissions and should therefore be prioritized in policy design; and (3) cost-emission hotspots are concentrated in clusters that are highly interconnected through electricity supply and iron and steel manufacturing, indicating the need for coordinated energy efficiency improvements within these clusters. Policymakers should prioritize decarbonization efforts within cost-emission hotspots to alleviate energy cost pressures while advancing sustainability.