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The effects of alternative carbon mitigation policies on Japanese industries

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  • Sugino, Makoto
  • Arimura, Toshi H.
  • Morgenstern, Richard D.

Abstract

To address the climate change issue, developed nations have considered introducing carbon pricing mechanisms in the form of a carbon tax or an emissions trading scheme (ETS). Despite the small number of programmes actually in operation, these mechanisms remain under active discussion in a number of countries, including Japan. Using an input–output model of the Japanese economy, this article analyses the effects of carbon pricing on Japan′s industrial sector. We also examine the impact of a rebate programme of the type proposed for energy-intensive trade-exposed (EITE) industries in U.S. legislation, the Waxman–Markey Bill (H.R. 2454), and in the European Union′s ETS. We find that a carbon pricing scheme would impose a disproportionate burden on a limited number of sectors – namely, pig iron, crude steel (converters), cement and other EITE industries. Out of 401 industries, 23 would be eligible for rebates according to the Waxman–Markey-type programme, whereas 122 industries would be eligible for rebates according to the E.U.-type programme, if adopted in Japan. Overall, despite the differences in coverage, we find that the Waxman–Markey and E.U. rebate programmes have roughly similar impacts in reducing the average burden on EITE industries.

Suggested Citation

  • Sugino, Makoto & Arimura, Toshi H. & Morgenstern, Richard D., 2013. "The effects of alternative carbon mitigation policies on Japanese industries," Energy Policy, Elsevier, vol. 62(C), pages 1254-1267.
    • Handle: RePEc:eee:enepol:v:62:y:2013:i:c:p:1254-1267
    DOI: 10.1016/j.enpol.2013.06.074
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    1. Adkins, Liwayway & Garbaccio, Richard & Ho, Mun & Moore, Eric & Morgenstern, Richard, 2012. "Carbon Pricing with Output-Based Subsidies: Impacts on U.S. Industries over Multiple Time Frames," RFF Working Paper Series dp-12-27, Resources for the Future.
    2. Morgenstern, Richard D. & Ho, Mun & Shih, J.-S.Jhih-Shyang & Zhang, Xuehua, 2004. "The near-term impacts of carbon mitigation policies on manufacturing industries," Energy Policy, Elsevier, vol. 32(16), pages 1825-1841, November.
    3. Ho, Mun S. & Morgenstern, Richard & Shih, Jhih-Shyang, 2008. "Impact of Carbon Price Policies on U.S. Industry," RFF Working Paper Series dp-08-37, Resources for the Future.
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    2. Shiro Takeda & Toshi Arimura & Hanae Tamechika & Carolyn Fischer & Alan Fox, 2014. "Output-based allocation of emissions permits for mitigating the leakage and competitiveness issues for the Japanese economy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(1), pages 89-110, January.
    3. Thollander, Patrik & Kimura, Osamu & Wakabayashi, Masayo & Rohdin, Patrik, 2015. "A review of industrial energy and climate policies in Japan and Sweden with emphasis towards SMEs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 504-512.
    4. Fournier Gabela, Julio G. & Freund, Florian, 2022. "Potential carbon leakage risk: A cross-sector cross-country assessment in the OECD area," Conference papers 333468, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Donatella Baiardi & Maria Gaia Soana, 2021. "Macroeconomic and microeconomic environmental and energy policies: are they effective for improving the environmental performance of listed companies?," Working Papers 478, University of Milano-Bicocca, Department of Economics, revised Aug 2021.
    6. Hao Xiao & Shuquan Li & Julien Chevallier & Bangzhu Zhu, 2017. "Electricity-Savings Pressure and Electricity-Savings Potential among China?s Inter-Provincial Manufacturing Sectors," Working Papers 2017-006, Department of Research, Ipag Business School.
    7. Xiping Wang & Hongdou Zhang, 2018. "Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 8(5), pages 863-875, October.
    8. Sadayuki, Taisuke & Arimura, Toshi H., 2021. "Do regional emission trading schemes lead to carbon leakage within firms? Evidence from Japan," Energy Economics, Elsevier, vol. 104(C).
    9. Satoshi Nakano & Ayu Washizu, 2022. "A Study on Energy Tax Reform for Carbon Pricing Using an Input-Output Table for the Analysis of a Next-Generation Energy System," Energies, MDPI, vol. 15(6), pages 1-20, March.
    10. Chang-Jing Ji & Yu-Jie Hu & Bao-Jun Tang, 2018. "Research on carbon market price mechanism and influencing factors: a literature review," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 92(2), pages 761-782, June.
    11. Wu, Qunli & Ma, Zhe & Meng, Fanxing, 2022. "Long-term impacts of carbon allowance allocation in China: An IC-DCGE model optimized by the hypothesis of imperfectly competitive market," Energy, Elsevier, vol. 241(C).
    12. J. G. Fournier Gabela & F. Freund, 2023. "Potential carbon leakage risk: a cross-sector cross-country assessment in the OECD area," Climatic Change, Springer, vol. 176(5), pages 1-21, May.
    13. Chiu, Fan-Ping & Kuo, Hsiao-I. & Chen, Chi-Chung & Hsu, Chia-Sheng, 2015. "The energy price equivalence of carbon taxes and emissions trading—Theory and evidence," Applied Energy, Elsevier, vol. 160(C), pages 164-171.
    14. Tang, Ling & Wang, Haohan & Li, Ling & Yang, Kaitong & Mi, Zhifu, 2020. "Quantitative models in emission trading system research: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    15. Donatella Baiardi & Maria Gaia Soana, 2021. "Macroeconomic and microeconomic environmental and energy policies: are they effective for improving environmental performance of listed companies?," Working Paper series 21-17, Rimini Centre for Economic Analysis.
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