Environmental Policy
Table3 : Quantitative Model and Impacts of Global Warming Prevention Measures on Japan's Macroeconomy
Table3 : Quantitative Model and Impacts of Global Warming Prevention Measures on Japan's Macroeconomy
| Source | Outline of model | Annual growth rate based on a standard scenario | CO2 reduction scenario and carbon tax rate | Impact on macroeconomy following CO2 reduction | Future points of debate |
|---|---|---|---|---|---|
| [1] Kokichi Ito (1988) |
Linking a simple energy model to an ordinary macroeconomics model and simulating the impacts on energy prices and energy conservation investments. The model period is 1988-2010. |
GNP average growth rate: 3.8 percent (by the year 2000), 2.8 percent (by the year 2010) CO2 emission increase rate: 1.8 percent (by the year 2000), 1.4 percent (by the year 2010) |
Stabilizing the emission of CO2 to the 1989 level by the year 2000 by implementing a 100 percent coal tax, an 80 percent petroleum tax, and a 60 percent Liquefied Natural Gas (LNG) tax beginning in 1995 (conversion into CO2 tax amounts averaged 28,000 yen/CO2 ton during the period). | The maximum decrease in GNP within the period based on the above tax scheme will be 6 percent. The decrease in the GNP growth rate will be a maximum of 0.6 percentage points (as opposed to the standard scenario, including tax revenue restoration). | As a result of energy conservation measures, it becomes necessary to consider the effects on industrial structure adjustment and technological innovations. |
| [2] Kenji Yamaji (1990) |
A medium-term economy forecast model based on the world energy model, the multi-sector model, the inter-energy competitive model, and 9 local models. 13 industries and 10 energy forms. The model period is 1988-2005. | GNP average growth: 3.9 percent (by the year 2000), 3.1 percent (by the year 2005) CO2 emission increase rate: 2.2 percent (by the year 2000), 0.9 percent (by the year 2005) |
Stabilize CO2 emission to the 1988 level by the year 2005 by implementing a carbon tax of 4000 yen/carbon ton in 1990, and increasing it by 4000 yen every year, ultimately charging 64,000 yen/CO2 ton by the year 2005 (average of the period will be 31,500 yen/carbon ton). | The maximum decrease of GNP due to this tax scheme will be 6 percent in case revenue is not recycled, and a maximum of 5 percent when revenue is recycled. The decrease in the GNP growth rate will be 0.4 percentage points without revenue recycling and 0.3 percentage points with recycling. | It becomes necessary to consider the impact of subsidies, international adjustments in industrial structure, new technologies, and natural energy sources. |
| [3] Noriyuki Goto (1991) |
The dynamic market equilibrium model consists of a detailed energy section. 5 types of primary energy and 9 types of secondary energy. The demand section consists of 9 industries and general households. The model period is 1990-2040. | GNP average growth: 3.42 percent (by the year 2000), 3.18 percent (by the year 2010) CO2 emission increase rate: 2.73 percent (by the year 2000), 1.53 percent (by the year 2010) |
Stabilizing CO2 emission to the level in 1990 by the year 2000 and after by implementing a carbon tax of 25,000 yen/carbon ton (average of next 50 years). | The GNP decrease due to this tax scheme will be about 0.5 percent (this decrease is in relation to the average scenario, the average of the whole period, and revenue recycling), the GNP growth rate decreases less than 0.03 percentage points per year. | It becomes necessary to to consider substitute sources such as development of new energy and increasing efficiency in energy use. |
| [4] Shigeki Yamazaki (1991) |
Revising the general macroeconomics model taking into account energy prices and investment for energy conservation. Analyzing the effects of charges and the effects of revenue recycling on energy conservation. The model period is 1990-2010. |
GNP average growth: 3.7 percent (by the year 2000), 3.5 percent (by the year 2010) CO2 emission increase rate: 0.9 percent (by the year 2000), 0.4 percent (by the year 2010) |
Stabilizing CO2 emission to the 1990 level by the year 2000 by imposing a 50 percent energy charge and use the revenue as a 1/3 subsidy for energy conservation investment (conversion to a CO2 tax will amount to 17,000 yen/CO2 ton by the year 2000). | The GNP decrease from this tax scheme is about 6 percent by the year 2000. The annual average of GNP growth rate decrease will be 0.3 percentage points. | There is a need to consider technological support for energy conservation efforts and conformation of the heavy energy-consuming industry. |
| A 150 percent charge and all tax revenues will be used for energy conservation restoration | No GNP decrease from this scheme | ||||
| [5] Jinkichi Chikui (1991) |
Dynamic industry-related planning model; the consumption turnpike model that maximizes the consumption flow during the designated model period. 22 industries. The model period is 1989-2010. | GNP average growth: 3.8 percent (by the year 2000), 2.7 percent (by the year 2010) CO2 emission increase rate: 2.0 percent (by the year 2000), 1.5 percent (by the year 2010) |
Stabilizing emission levels to that of 1990 by the year 2000 and after by reducing industry production. | The GNP growth rate decreases by 2 percentage points (until the year 2000), and by 1.2 percentage points (in and after the year 2000) | The model needs to be revised to incorporate the relationship between industry structure and price changes. It is impossible to discern the impact of energy transfers. |
| In addition to the above, cutting the growth of energy consumption of household spending in half through energy conservation. | The GNP growth rate decreases by 1.5 percentage points (until the year 2000), and by 0.9 percentage points (in and after the year 2000) | ||||
| In addition to the above, lowering the energy consumption of industry to the level during the Oil Shock Period. | No GNP decrease with this tax scheme | ||||
| [6] Kanami Ban (1991) |
The macroeconomics- gauging model uses primarily the consumption demand model, which dynamically determines the best action, the industry model, which determines substitute elements and technological developments according to energy prices. The model period is 1991-2000. |
GNP average growth: 3.5 percent (by the year 2000) CO2 emission increase rate: 2.2 percent (by the year 2000) |
Stabilizing CO2 emission to the 1990 level by the year 2000 by implementing a 30 percent coal tax, a 24 percent petroleum tax, and a 16 percent LNG tax. | The effect of these taxes will be a decrease in GNP from 1.1 percent in 1991 to 0.3 percent by the year 2000. The average decrease in GNP growth rate during the model period will be about 0.1 percentage points (as opposed to standard model, tax revenue recycling). | There is a need to consider the technological basis as an impact on prices. |
| [7] Shunsuke Mori (1991) |
This simplified economy-gauging model analyzes surplus consumer changes according to energy prices and supply restrictions. 5 types of primary energy, 8 types of secondary energy. Establishment of implementation of cogeneration. The model period is 1988-2020. | GNP average growth: 3.6 percent (by the year 2000), 2.4 percent (after 2000) CO2 emission increase rate: 1.4 percent (by the year 2000), 0.5 percent (after the year 2000) |
Stabilizing CO2 emission to the 1990 level after 1993 by imposing a 17,500 yen/carbon ton carbon tax (average of entire model period). | The maximum GNP decrease during the period due to this tax system is about 3.6 percent, the average GNP growth rate decrease is less than 0.01 percentage points during the period (as opposed to the standard scenario, no restoration of tax revenue). | There is a need to consider the international adjustment mechanism as well as segmentation of the demand sector. |
| [8] OECD/ GREEN (Burniaux and others 1992) |
The general dynamic equilibrium model divides the globe into 12 portions. 4 types of primary energy, 2 types of secondary energy. This model also takes into consideration the complete trade link and changes in trade terms. The forecast is until the year 2050. | GNP average growth: 3.7 percent (by the year 2000), 2.7-2.2 percent (after 2000) CO2 emission increase rate: 2.8 percent (by the year 2000), -0.4 percent-1.4 percent (after 2000) |
Stabilizing CO2 emission world-wide, including Japan, to the 1990 level by the year 2000 by implementing a CO2 tax of US$221 per carbon ton by the year 2000, and US$259 per carbon ton by the year 2005, and a US$1 carbon tax by the year 2010 (based on the 1985 price, the average rate will be US$ 148 per carbon ton). | The GNP decrease due to this tax scheme will be about 0.5 percent by the year 2000, 0.7 percent by the year 2005 and 0.8 percent by the year 2010. On average, the annual GNP growth rate decrease will be less than 0.04 percentage points ( standard scenario, with tax revenue recycling). | There is a need to consider various models to discern the impact of energy conservation investment and the detailing function of consumption. |
| [9] Masahiro Kuroda and Kazunari Shinbo (1992) |
The general dynamic equilibrium model targets Japan and divides assets, services, and production into 17 categories. 4 types of energy change. The model internalizes the foreign exchange rate and balance of international payments is exogenous. The model period is 1990-2100. | GNP average growth: 3.8 percent (by the year 2000), 1-0.3 percent (after 2000) CO2 emission increase rate: 3.48 percent (by the year 2000), 1.13 percent (after 2000) |
Stabilizing CO2 emission per individual to the 1990 level by the year 2000 by implementing a CO2 tax of 1700 yen /carbon ton in 1991, 63,000 yen/carbon ton by the year 2000, and 98,000/carbon ton by the year 2030. | The GNP decrease due to this tax system will be about 7.3 percent by the year 2000 and 20-25 percent after the year 2000. The GNP growth rate will decrease at a rate of less than 0.5 percentage points on average per year until the year 2050 (as opposed to the standard scenario, no tax revenue recycling). | There is a need to consider various models to discern the impact of energy conservation investment and the detailing function of consumption. |
| [10] Noriyuki Goto and Takamitsu Sawa (1993) |
This model is based on Goto's 1991 model and adds a more detailed section division and discerns forms of energy use and rigidity of short-term substitution. The model period is 1990-2010. | GNP average growth: 3.26 percent (by the year 2000), 3.03 percent (by the year 2010) CO2 emission increase rate: 2.49 percent (by the year 2000), 2.24 percent (by the year 2010) |
Stabilizing CO2 emission per individual to the 1990 level by the year 2000 by imposing a carbon tax of 18,500 yen/carbon ton (average for the entire period). | The GNP decrease due to this tax system will be about 0.04 percent (decrease compared to average scenario, average of whole period, with revenue restoration). The GNP growth rate will decrease at a rate of less than 0.01 percent points per year. | There is a need for a detailed estimate of an energy conservation investment cost. |
| [11] Noriyuki Goto (1994) |
Based on the Goto/Sawa model of 1993, this model divides the sections into more detail and evaluates the impact of the implementation of new energy conservation technologies. The model period is 1990-2010. | GNP average growth: 2.93 percent (by the year 2000), 2.67 percent (by the year 2010) CO2 emission increase rate: 1.83 percent (by the year 2000), 1.54 percent (by the year 2010). |
Stabilizing CO2 emission to the 1990 level by implementing a carbon tax of 22,680 yen/carbon ton, and implementing a carbon tax of 18,050 yen/carbon ton when considering the impact of energy conservation technology (average for the entire period according to the 1990 price). | The GNP decrease due to this tax scheme is about 0.11 percent (decrease compared to average scenario, average of whole period, revenue recycling). However, the merit of implementation of energy conservation technologies amounts to about 0.10 percent (same as above); the economic loss caused by the taxation will be neutralized. | There is a need to avoid a double accounting for the impact of the implementation of energy conservation technologies, and a need to create a model for inter- national impact. |
| [12] AIM Development Project Team (Morita, Matsuoka and others, 1994) |
This is a Japanese module of a world model for analysis of global warming. It is an end-use model taking into consideration over 100 alternatives for energy conservation technologies. | The GNP average growth: the model arrives at individual scenarios for each scheme such as production volumes and transportation volume CO2 emission increase rate: 0.56 percent (by the year 2000), 0.64 percent (by the year 2010) |
Stabilizing the CO2 emission to the 1990 level by the year 2000 by imposing a carbon tax of 30,000 yen/carbon ton . If the revenue from the carbon tax is reinvested as subsidies for implementation of energy conservation technology, it will be possible to lower the tax to 3,000 yen/carbon ton. | When the cost of this tax system is calculated as direct fees for the total payment of carbon tax, it will amount to 0.17 percent of GNP by the year 2000 (strategically investing tax revenue). The GNP decrease due to this tax system has not been calculated in relation to the top-down style economic model. | There is a need to expand the menu for energy conservation technology, to forecast the change in the set cost for energy conservation technology, and to evaluate the general public's views on energy conservation investment. |
- Source:
- Second Interim Report by the Research Panel on Economic System in Global Warming