Why is Japan’s carbon emissions from road transportation declining?

Yoshifumi Konishi and Sho Kuroda

Japan and the World Economy, 2023, vol. 66, issue C

Abstract: Average fuel efficiency of vehicles improved substantially over the last three decades in Japan. Yet, the carbon emissions from on-road passenger vehicles continued to increase until 2000, and then turned to a steadily declining trend. We empirically investigate this disparity. To that end, we apply an analogue of the Copeland-Taylor decomposition, combined with an empirically estimated behavioral model of car ownership and utilization choice, to economically decompose vehicle carbon emissions into the scale, composition, and technique effects over our study period, 1990–2015. We find that exogenous demographic changes such as population size, driver’s license holdings, or labor migration across regions can only explain this disparity partially. After accounting for endogenous changes in household’s geographically-explicit transport demand by the estimated behavioral model, the predicted emissions match the time path of the observed emissions surprisingly well. Of all the factors in the behavioral model, the fuel cost per unit of driving accounts for the largest share of the total variation in the observed emissions. Our result indicates that 60% of the technique effect is offset by the perverse effect of induced transport demand due to the lower fuel cost. Importantly, the induced demand comes from both the intensive margin (driving) and the extensive margin (car ownership).

Keywords: Automobiles; Carbon emissions; Climate mitigation; Discrete-continuous choice model; Copeland-Taylor decomposition (search for similar items in EconPapers)
JEL-codes: H31 L62 Q54 Q55 R41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:66:y:2023:i:c:s0922142523000208

DOI: 10.1016/j.japwor.2023.101194

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