Causal effects of the Tokyo emissions trading scheme on energy consumption and economic performance. (September 2022)

• Record Type: Journal Article
• Authors: Abe, Tatsuya; Arimura, Toshi H.
• Is Part Of: Energy policy. Volume 168(2022)
• Publication Date: 2022-09
• Subjects: Emissions trading -- Policy evaluation -- Energy consumption -- Employment -- Difference-in-differences -- Matching; Q52 -- Q54 -- Q58; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2022.113151
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: The Tokyo emissions trading scheme (ETS) is the first regional ETS in Japan, where a national ETS has not been introduced. In this study, we estimate the policy impacts of the Tokyo ETS on energy usage and economic activities during the scheme's first phase (2010–2014) and the first four years of its second phase (2015–2018) using business establishment-level panel data from 2007 to 2018. From the matching-based difference-in-differences (DID) estimation results, we find that while regulated business establishments reduced their energy usage beyond their reduction targets set by ETS regulation, the unregulated business establishments chosen by the matching strategy as a comparison group also decreased their energy usage to the same extent. Additionally, the Tokyo ETS did not have a negative impact on the economic activities of regulated business establishments during phases I and II. These results suggest that the emissions cap levels in each phase may not have been sufficiently demanding to induce regulated business establishments to implement additional energy use reduction practices. Highlights: Tokyo ETS business establishments reduced their electricity use beyond their targets. Meanwhile, the unregulated also decreased their electricity use to the same extent. The Tokyo ETS did not negatively impact employment during phases I and II.