Abstract
Tokyo ETS is the first emissions trading scheme to control GHG emissions from office buildings. Although the Tokyo government claimed that Tokyo ETS had been successful, some argued that the emission reduction under Tokyo ETS was actually the result of electricity price increases triggered by the Great East Japan Earthquake in 2011. Using a facility-level data set for Japanese office buildings, we conducted an econometric analysis to examine the impact of Tokyo ETS. We found that half of the emission reduction is a result of the ETS, while the rest of the reduction is due to the electricity price increase. Another unique feature of Tokyo ETS is that an accurate permit price is not publicly available due to its design. Using our estimated model, we found that the price is approximately $50 per ton of CO2 in the early phase.
Highlights
Carbon pricing has become a popular economic instrument used to help mitigate greenhouse gases (GHGs), which cause climate change
This paper empirically investigates the effects of the Tokyo emissions trading schemes (ETSs) to clarify the cause of emission reduction in Tokyo using facility-level panel data
Because the price elasticity in the model 1 was estimated at 0.52%, our estimation results imply that the emission reduction due to the electricity price increase is approximately 6.4%
Summary
Carbon pricing has become a popular economic instrument used to help mitigate greenhouse gases (GHGs), which cause climate change. Emissions trading schemes (ETSs) have gained attention. The European Union Emissions Trading Scheme (EU ETS) was the first comprehensive ETS to control carbon dioxide (CO2) emissions. In the US, the Regional Greenhouse Gas Initiative (RGGI) started in 2009, followed by the California system. Among Asian countries, Korea was the first country to introduce a cap-and-trade scheme at the national level. China, the largest emitter of GHG, implemented seven regional ETSs in a pilot scheme and announced that it would introduce a national level ETS starting with the power sector (Duan 2019)
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