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Analyses on impacts of ETS on industries of Japan

Author

Listed:
  • Lu, Xiangchun
  • Asuka, Jusen
  • Monjon, Stephanie
  • Quirion, Philippe

Abstract

From 2013, EU-ETS entered its third phase, free allocation of emission permits for energy intensive industries will continue, and Border Adjustment will be adapted to mitigate carbon leakage and risk of losing competitive edge. Following with EU, Japan is planning to introduce Emission Trade Schemes. With a multi-region model, we analyzed the possible impacts of ETS on industries, especially energy intensive industries in Japan. Comparing with full auction scenario, grandfathering (GF), output-based (OB) and border adjustment (BD) scenarios are also considered for their effects of “anti-leakage” and mitigating risk of losing competitive edge. We found that the carbon leakage ratio in the case of full auctioning in the ETS of Japan is not very much different from the GF and OB scenarios. We can find that the “best” anti-leakage option depends on the policy objective and on the sector. Although the output-based allocation variants lead to a generally higher carbon leakage ratio than border adjustments, leakage remains very limited. The most efficient variant in this respect is the one with auctioning in the power sector and output-based allocation in the cement, iron and steel and petroleum chemical products sectors, covering both direct and indirect emissions.

Suggested Citation

  • Lu, Xiangchun & Asuka, Jusen & Monjon, Stephanie & Quirion, Philippe, 2013. "Analyses on impacts of ETS on industries of Japan," Conference papers 332314, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332314
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    File URL: https://ageconsearch.umn.edu/record/332314/files/6604.pdf
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