Policy implications for achieving the carbon emission reduction target by 2030 in Japan-Analysis based on a bilevel equilibrium model

Abstract

In Japan, the National Intended Determined Contributions (INDCs) towards post-2020 GHG emission reductions indicates a reduction of 26.0% is expected by the fiscal year 2030. However, regional emissions allowances have not been fully discussed based on Japan's INDCs target, which considers the regional socio-economic features. Given this, this study points out a soft-path for a fair and efficient quota allocation by proposing an integrated bilevel equilibrium model within a hierarchical structure consisting of the national government and 47 prefectural governments. This proposed model can be changed into a single level solvable equilibrium model, which can be solved by Particle Swarm Optimization (PSO) method. The major findings show that Hokkaido, Tokyo and Osaka were allowed the largest emissions quotas, while Tottori, Saga and Okinawa had the lowest emissions quotas. And the equity is necessary to be considered along with improving the emissions efficiency when reallocating carbon emission quotas, otherwise, the initiative to reduce emissions will not take place in prefectures with higher efficiency performance. Based on the findings, energy policy implications can be generated based on the above quantitative analysis to form a fair and efficient emission quota system at a sub-national level.