Implementation of an emission trading scheme in Japan: Some food for thought

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In its Action Plan for Achieving a Low-carbon Society, Japan has committed itself to the long-term goal of halving total global greenhouse gas (GHG) emissions by 2050 from its current level of emissions. Under the 2009 Copenhagen Accord, the government made the commitment to reduce the Japanese GHG emissions by 25% between 1990 and 2020.

The aim of this paper is to quantitatively assess different design options for an ETS in Japan, especially their impact on carbon leakage as well as on industrial production. We develop a model, called CASE-ASIA, which represents several Japanese industrial sectors which would be strongly impacted by implementing a CO2 constraint. With this model, we analyse different design options of a mandatory ETS as well as different “anti-leakage” options. Then, we provide a quantitative assessment how these different schemes impact on the activity of the different industries included in the model. The results show that there is not a best option and that the Japanese government should decide where its priorities lie. The analysis makes explicit the trade-offs implied by the different schemes and provides food for thought for the policy-makers.

This paper is organised as follows: Section 1 briefly introduces some elements of context; Section 2 presents the model CASE-ASIA and Section 3 the different simulations made; Section 4 discusses the results.

Author: St
Year: 2011
Type: Working papers
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