Emissions trading schemes in Japan: their potential and possible impact

Masaru Ichihashi and Shunsuke Yano
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Shunsuke Yano: Faculty of Integrated Arts and Sciences, Hiroshima University

No 6-4, IDEC DP2 Series from Hiroshima University, Graduate School for International Development and Cooperation (IDEC)

Abstract: This paper examines the impact of introducing an emissions trading scheme (ETS) in Japan using an input-output model. Using demand forecast data from the Ministry of the Environment (2012), we examined the impacts of two cases: one in which emissions were reduced without introducing a scheme (the business as usual (BAU) case) and one in which a scheme was introduced (ETS case). In both cases, the aggregate repercussion effects were negative, but the negative impact was significantly greater in the ETS case (1.3 trillion JPY, which is approximately 0.14% of GDP). The negative repercussion effects are consistent with the results from MOE (2012). However, our study showed positive repercussion effects on employment regardless of employment status. This occurs because the labor absorptive capacity is low in sectors such as steel, where demand will decline due to the introduction of a scheme, so there is a small impact on employment; in contrast, sectors that benefit from the adoption of the scheme have high labor absorptive capacities. Accordingly, the adoption of an ETS in Japan would be positive for jobs but would not have a significant impact in terms of stimulating output.

Keywords: Emissions Trading Scheme; Japanese Economy Growth; Input-Output model; Repercussion Effects (search for similar items in EconPapers)
JEL-codes: Q51 Q56 R11 R15 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2016-10
New Economics Papers: this item is included in nep-ene and nep-env
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