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The Impact of Emissions Trading Systems on Manufacturing Installation Productivity: Evidence from Japan

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  • Guanyu LU
  • Kenta TANAKA
  • Toshi H. ARIMURA

Abstract

This study examines the impact of the Tokyo and Saitama regional emissions trading systems (ETSs) on the productivity of Japan’s manufacturing installations. Utilizing data from the Economic Census for Business Activity and the Census of Manufacture, we measure the total factor productivity (TFP) of both regulated and unregulated manufacturing installations. Subsequently, we estimate the extent to which the ETSs impact the TFP of regulated manufacturing installations. Our findings indicate that the TFP of regulated installations increases after the implementation of ETS compared to that of unregulated installations. Furthermore, the results of factor analysis suggest that investment trends in equipment differ between regulated and unregulated installations. These findings underscore the interaction between environmental regulations and installation productivity in Japan, contributing to policy discussions on effective climate change mitigation strategies.

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  • Guanyu LU & Kenta TANAKA & Toshi H. ARIMURA, 2025. "The Impact of Emissions Trading Systems on Manufacturing Installation Productivity: Evidence from Japan," Discussion papers 25063, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25063
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