The Impacts of the Tokyo and Saitama ETSs on the Energy Efficiency Performance of Manufacturing Facilities

Author Name LU Guanyu (Waseda University) / TANAKA Kenta (Musashi University) / ARIMURA Toshi H. (Faculty Fellow, RIETI)
Creation Date/NO. February 2023 23-E-007
Research Project Studies on Transformations of International Systems and their Impact on Japan's Mid- & Long-term Competitiveness
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First draft: February 2023
Revised: April 2023


This study aims to reveal how much the Tokyo and Saitama emissions trading schemes (ETSs) affect the energy efficiency of manufacturing facilities based on the Economic Census for Business Activity and Census of Manufacture. In this analysis, we estimate the energy efficiency of facilities in Japan using stochastic frontier analysis (SFA). Then, we estimate how much the facilities’ energy efficiency is influenced by the Tokyo and Saitama ETSs. Our results show that the energy efficiency of targeted facilities decreased during the announcement period. Our estimation results show no difference in energy inefficiency between targeted and nontargeted facilities in the implementation period of the ETSs. Additionally, the estimation results imply that carbon leakages through outsourcing did not occur during the implementation period.