Success and Failure of the Voluntary Action Plan: Disaggregated Sector Decomposition Analysis of Energy-related CO2 Emissions in Japan

Guanyu Lu, Makoto Sugino, Toshi Arimura and Tetsuya Horie
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Guanyu Lu: Graduate School of Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo, 169-8050, Japan.
Makoto Sugino: Faculty of Literature and Social Sciences, Yamagata University, 1-4-12 Kojirakawa-machi Yamagata-shi, Yamagata, 990-8560, Japan
Tetsuya Horie: Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo 169-8050, Japan

RIEEM Discussion Paper Series from Research Institute for Environmental Economics and Management, Waseda University

Abstract: To accomplish the goal of greenhouse gas (GHG) emissions reduction, the Japanese Business Federation (JBF) has implemented the voluntary action plan (VAP), a unique feature of which does not penalize industrial firms or organizations, even if they fail to meet the CO2 emissions or energy consumption reduction goals. This study evaluates the role of VAP in emission reduction by analyzing highly disaggregated data from 1980 to 2015 of approximately 400 sectors using the logarithmic mean Divisia index (LMDI) method. The results indicate that the increase in CO2 emissions among Japanese industries is mainly caused by the increase in indirect CO2 emissions. Moreover, the energy consumption structure has progressively shifted from fossil fuels to electricity. The decomposition analysis highlights two key points. (1) The VAP is ineffective in reducing emissions in sectors with low market concentration. (2) The energy intensity target of the VAP does not lead to a significant reduction in CO2 emissions. Thus, this study concludes that the contribution of the VAP in reducing CO2 emissions is limited. Evidence from our research suggests three directions for future policy design and implications.

Keywords: Voluntary action plan; Decomposition analysis; Japan (search for similar items in EconPapers)
JEL-codes: L16 Q40 Q53 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2021-06
New Economics Papers: this item is included in nep-ene and nep-env
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Journal Article: Success and failure of the voluntary action plan: Disaggregated sector decomposition analysis of energy-related CO2 emissions in Japan (2022)
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