Energy consumption in transition: Evidence from facility-level data

This chapter estimated the impact of the Tokyo emissions trading scheme (ETS) and Saitama ETS on energy consumption in the manufacturing sector using a facility-level panel data set compiled from the Current Survey of Energy Consumption, a nationwide survey on energy consumption conducted by the Agency for Natural Resources and Energy in Japan. To our knowledge, no study has used this rich data set to perform sophisticated econometric analyses. We found that the Tokyo ETS reduced electricity consumption by 16%. On the other hand, we did not find evidences of switching from dirty fossil fuel to cleaner fuel associated with the introduction of the Tokyo ETS. The impact of the Saitama ETS on energy consumption was not statistically confirmed based on our samples. Additional studies are needed to identify the different impacts of the ETSs between Tokyo and Saitama. We also found that Japan has been experiencing long-term decreasing trends in the number of manufacturing facilities and the volume of fossil fuel consumption, which may reduce Japanese CO₂ emissions in the long run.