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Do regional emission trading schemes lead to carbon leakage within firms? Evidence from Japan

Taisuke Sadayuki and Toshi Arimura

Energy Economics, 2021, vol. 104, issue C

Abstract: We use facility-level panel data on CO2 emissions to investigate within-firm carbon leakage associated with Japanese regional emission trading systems (ETSs) at large-scale facilities in Tokyo and Saitama prefectures. A difference-in-difference analysis reveals that, relative to entities with no facility under ETSs, entities with regulated facilities have reduced emissions not only from these regulated facilities but also from unregulated facilities outside Tokyo/Saitama. This result indicates that regional ETSs serve as a turning point for entities to bridge the energy-efficiency gap. The data also suggest that a larger entity is more capable of reducing emissions from facilities in regions with less stringent regulations.

Keywords: Carbon leakage; Emission trading scheme; Policy evaluation; Difference-in-difference; Energy efficiency gap (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.eneco.2021.105664

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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