US-Japan Workshop on Climate Policies
towards a Low Carbon Future

Assessment of Japan’s Emission Trading Initiatives:
Effectiveness, Efficiency andConcern on the Carbon Leakage
Jusen ASUKA
Tohoku University, Japan
asuka@cneas.tohoku.ac.jp
11 May 2009
Washington DC, USA

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Contents
1. Effectiveness
2. Efficiency
3. Value at stake in Japan
4. Price difference and trade pattern:case of Steel industry
5. China specific factors
6. Conclusion2

1. Effectiveness3

1. EffectivenessBorn to be ineffective ?
Voluntary, not stringent and no penalty
No verification of emissions needed if theregulated companies will not sell the allowance
Questionable (?) quality of the domestic offsets
Only JVETS and J-VER keep the integrity42. Efficiency

52. Efficiency

Born to be inefficient ?
Free allocation
Intensity target
Up-dating of the allocation
Price control (guidance?) by the government
Competition between domestic credits
63. Value at stake in Japan7

3. Value at stake in Japan

Impacts of ETS on Industrial Sector(case of Japan)
VAS and GDP

CO2＠1500 JPY/tonSource:Asuka and Kanemoto (2008)93. Value at stake in Japan

Impacts of ETS on Industrial Sector(case of Japan)
VAS and trade intensity

CO2＠1500 JPY/tonSource:Asuka and Kanemoto (2008)8

3. Value at stake in Japan

Impacts of ETS on Industrial Sector(case of Japan)
VAS and GDP

CO2＠2000 JPY/tonSource:Asuka andKanemoto (2009)9

3. Value at stake in Japan

Impacts of ETS on Industrial Sector(case of Japan)
VAS and trade intensity

CO2＠2000 JPY/tonSource:Asuka andKanemoto (2009)8

4. Price difference and Tradepattern: case of steel

104. Price difference and trade pattern: case of steel

Will carbon leakage really happen?
Price difference（domestic price -Case of flat steel(1998-2007)

import price), export
ratio and import ratio

Domesticproduction, importfrom abroad

Export fromJapan

1. Japan’s competitors
are Korea, Taiwan, andChina
2. So far, no clear
relationship between
price difference andtrade pattern
Source:Asuka and Kanemoto (2008)11

5. China specific factors

125. China specific factors

Rapidly changing economical/political/business environment

Energy conservation
Voluntary self-restriction on export
Economic integration in the Asian region
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5. China specific factorsEfficiency: Better than Japan’s average
Comparison of the energy intensity among steel making plants
both in China and in Japan (MJ/ton, as of 2004)
Energyconsumption
intensity

Cokes
makingprocess

Sinter making
process

Iron making
process

Steel making
process withconverter

Casting
process withrolling mill①

China bigenterprises

20.64

4.16

1.94

13.65

0.99

2.72

②

China small
enterprises

30.59

6.71

3.18

17.32

2.20

8.40

③

China bestenterprise

17.45

2.58
(Bao steel)

1.52(Hanzousteel)

11.57(Bao steel)-0.11(Wuhangsteel)

1.57④Japan average

19.20

2.78

1.55

11.59

-0.08

1.81

②-①

9.95

2.54

1.24

3.68

1.21

5.68

②-③

13.14

4.13

1.65

5.75

2.31

6.83

①-③

3.19

1.58

0.42

2.07

1.10

1.15

①-④

1.43

1.38

0.39

2.05

1.07

0.90

②-④

11.39

3.93

1.63

5.73

2.28

6.58

③-④

-1.76

-0.20

-0.03

-0.02

-0.03

-0.24

Differences
inside ofChina

Differences
betweenJapan andChina

Source: Ning Yandong and Tonooka Yutaka (2008) “Study on Production Formation and Energy Consumption in Chinese Iron and Steel Industry”,
Energy and Resources, Vol.29, No.5, 313-318.

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5. China specific factors

Effects of the voluntary self-restriction
Change of the steel export ratio of China

Source:PetersonInstitute (2008)17

6. Conclusion

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6. Conclusion

Bumpy ride ahead...be optimistic!
Substantial infrastructure has been built
Post-2012 target is crucial for the real
implementation/improvement
Domestic constituency is still problematic
Myth of carbon leakage?
Methodology for the benchmarking

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