Do regional emission trading schemes lead to carbon leakage within firms? Evidence from Japan

Taisuke Sadayuki*, Toshi H. Arimura

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We use facility-level panel data on CO2 emissions to investigate within-firm carbon leakage associated with Japanese regional emission trading systems (ETSs) at large-scale facilities in Tokyo and Saitama prefectures. A difference-in-difference analysis reveals that, relative to entities with no facility under ETSs, entities with regulated facilities have reduced emissions not only from these regulated facilities but also from unregulated facilities outside Tokyo/Saitama. This result indicates that regional ETSs serve as a turning point for entities to bridge the energy-efficiency gap. The data also suggest that a larger entity is more capable of reducing emissions from facilities in regions with less stringent regulations.

Original languageEnglish
Article number105664
JournalEnergy Economics
Volume104
DOIs
Publication statusPublished - 2021 Dec

Keywords

  • Carbon leakage
  • Difference-in-difference
  • Emission trading scheme
  • Energy efficiency gap
  • L14
  • Policy evaluation
  • Q41
  • Q54
  • Q58
  • R52

ASJC Scopus subject areas

  • Economics and Econometrics
  • Energy(all)

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