RIETI Report June 12, 2026

The impact of emissions trading systems on manufacturing installation productivity: Evidence from Japan

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Dear Readers,

Welcome to RIETI Report. This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition, we feature topics related to environmental issues and firm behavior. Environmental policies are sometimes seen as a burden on firms. However, in their recent column on Japan’s regional emissions trading systems (ETS), RIETI Faculty Fellow Prof. Toshi H. Arimura and his co-authors demonstrate that while productivity does not improve during the transition period, regulated manufacturing installations experience gains in productivity during the initial compliance period.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / X: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

The impact of emissions trading systems on manufacturing installation productivity: Evidence from Japan

LU GuanyuAssistant Professor at the Faculty of Political Science and Economics, Waseda University

TANAKA KentaProfessor at Musashi University

ARIMURA Toshi H.Faculty Fellow, RIETI

Emissions trading systems have been widely studied globally, but less attention has been paid to their impacts on the productivity of the regulated facilities. This column examines the impact of Japan's regional emissions trading systems on productivity during both the pre-compliance transition period and the compliance period. The findings indicate that although no evidence supports total factor productivity increases during the transitional period, installations improve their productivity during the initial compliance period.

>>>To download full text:
https://www.rieti.go.jp/en/columns/v01_0239.html

Related Papers

The Impact of Emissions Trading Systems on Manufacturing Installation Productivity: Evidence from Japan
LU Guanyu (Waseda University) / TANAKA Kenta (Musashi University) / ARIMURA Toshi H. (Faculty Fellow, RIETI)
https://www.rieti.go.jp/en/publications/summary/25060018.html

Effect of a European Carbon Border Adjustment Mechanism on the APAC Region: A structural gravity analysis
Aline MORTHA (Waseda University) / ARIMURA Toshi H. (Faculty Fellow, RIETI) / TAKEDA Shiro (Kyoto Sangyo University) / Tatyana CHESNOKOVA (Waseda University)
https://www.rieti.go.jp/en/publications/summary/23080002.html

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Robert J R ELLIOTT (University of Birmingham) / KUAI Wenjing (Hunan University) / OKUBO Toshihiro (Faculty Fellow, RIETI) / Ceren OZGEN (University of Birmingham / IZA)
https://www.rieti.go.jp/en/publications/summary/26020013.html

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Japanese Emissions Trading System Set to Launch — Ensuring Liquidity of Emission Allowances is the Challenge
ARIMURA Toshi H. (Faculty Fellow, RIETI)
https://www.rieti.go.jp/en/papers/contribution/arimura-toshihide/02.html

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