We use facility-level panel data on CO2 emissions to investigate within-firm carbon leakage associated with Japanese regional emission trading systems (ETSs) at large-scale facilities in Tokyo and ...Saitama prefectures. A difference-in-difference analysis reveals that, relative to entities with no facility under ETSs, entities with regulated facilities have reduced emissions not only from these regulated facilities but also from unregulated facilities outside Tokyo/Saitama. This result indicates that regional ETSs serve as a turning point for entities to bridge the energy-efficiency gap. The data also suggest that a larger entity is more capable of reducing emissions from facilities in regions with less stringent regulations.
•Japan introduced emission trading schemes (ETSs) in two out of 47 prefectures.•Panel facility-level data are used to examine Japanese ETSs' carbon leakage.•DID estimations reveal the negative leakage within firms.•Firms reduce CO2 in both regulated prefectures and unregulated regions.•Japanese ETSs contribute to bridging the energy-efficiency gap.
Tokyo ETS is the first emissions trading scheme to control GHG emissions from office buildings. Although the Tokyo government claimed that Tokyo ETS had been successful, some argued that the emission ...reduction under Tokyo ETS was actually the result of electricity price increases triggered by the Great East Japan Earthquake in 2011. Using a facility-level data set for Japanese office buildings, we conducted an econometric analysis to examine the impact of Tokyo ETS. We found that half of the emission reduction is a result of the ETS, while the rest of the reduction is due to the electricity price increase. Another unique feature of Tokyo ETS is that an accurate permit price is not publicly available due to its design. Using our estimated model, we found that the price is approximately $50 per ton of CO
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in the early phase.
An energy audit is a popular policy instrument for improving energy efficiency in facilities. However, it is unclear whether they serve to improve energy efficiency, because even under energy audits, ...several barriers to energy efficiency exist. Additional practices such as information provision, target setting, or reward by governments can make energy audits more effective. This study investigates the complementarity of energy audits and these practices by focusing on the Emission Reduction Program, an energy audit unique to Japan. Using municipality-level data, we show that target setting, inspection of planning, information provision, reward, and designating the department responsible for tackling climate change, complementarily reduce CO2 emissions via facilities under the Emission Reduction Program. Our results suggest that energy audit is more effective in reducing CO2 emissions when combined with additional policy instruments.
•Evaluates effectiveness of local government energy audits of CO2 emission reduction•Difference-in-difference approach uses comprehensive municipality-level panel data•Energy audits reduce CO2 emissions in the Japanese manufacturing sector•Target setting, inspection, information provision, and reward are complementary with energy audits•Departmental/divisional responsibility for tackling climate change also reduces CO2
The Tokyo emissions trading scheme (ETS) is the first regional ETS in Japan, where a national ETS has not been introduced. In this study, we estimate the policy impacts of the Tokyo ETS on energy ...usage and economic activities during the scheme’s first phase (2010–2014) and the first four years of its second phase (2015–2018) using business establishment-level panel data from 2007 to 2018. From the matching-based difference-in-differences (DID) estimation results, we find that while regulated business establishments reduced their energy usage beyond their reduction targets set by ETS regulation, the unregulated business establishments chosen by the matching strategy as a comparison group also decreased their energy usage to the same extent. Additionally, the Tokyo ETS did not have a negative impact on the economic activities of regulated business establishments during phases I and II. These results suggest that the emissions cap levels in each phase may not have been sufficiently demanding to induce regulated business establishments to implement additional energy use reduction practices.
•Tokyo ETS business establishments reduced their electricity use beyond their targets.•Meanwhile, the unregulated also decreased their electricity use to the same extent.•The Tokyo ETS did not negatively impact employment during phases I and II.
•ISO 14001's effectiveness at reducing pollution varies across countries.•ISO 14001's effectiveness at reducing pollution varies across environmental impact.•Standard instrumentation approaches to ...address endogeneity may not be sufficient.•ISO 14001 may be more effective when there are clear cost-saving opportunities.•ISO 14001 may be more effective at reducing indirectly regulated impacts.
The outcome of household choice depends on the private information available to an agent, particularly in terms of costs and benefits. This study examines the role of information in the adoption of ...clean cooking fuel in Bhutan. We use a rural subsample of nationally representative data from the 2012 Bhutan Living Standard Survey (BLSS) conducted in all twenty districts. We estimate a bivariate probit model to control for the potentially endogenous information variable. The results indicate that households that have access to information are approximately 39% more likely to adopt clean cooking fuel. Similarly, households are 49% less likely to adopt dirty fuel (firewood) when exposed to information. Other factors such as education, the electricity supply, access to liquidity and the distance to the market are important factors that contribute to adopting clean cooking fuel. The results also show that the effect of information varies depending on the level of education of the household heads, thus highlighting the importance of accounting for the level of education of information recipients when designing a similar information provision.
•Information leverages households to adopt clean cooking fuel.•The effect of information is even stronger for more educated households.•Lower level of education is associated with low demand for information.•Information provision targeted at illiterate households may be effective.•Bridging the information gap can maximize overall household welfare.
Using Japanese facility-level data, we estimate the effects of ISO 14001 certification on the promotion of more advanced practices, namely green supply chain management (GSCM). Our results show that ...ISO 14001 promotes GSCM practices. Facilities with environmental management systems (EMS) certified to ISO 14001 are 40% more likely to assess their suppliers' environmental performance and 50% more likely to require that their suppliers undertake specific environmental practices. Further, government programs that encourage voluntary EMS adoption indirectly promote GSCM practices. These programs increase the probabilities that facilities will assess their suppliers' environmental performance and require suppliers to undertake specific environmental practices by 7% and 8%, respectively. Combined, these findings suggest that there may be significant but previously unnoticed spillover effects of ISO 14001 and government promotion of voluntary action.
Environment, social, and governance (ESG) reporting guidelines are institutional rules that can enhance the credibility of firms' publicly disclosed information related to ESG. Reporting is often ...voluntary and global ESG reporting guidelines typically rely on process‐focused third party verification. However, in developing its reporting guidelines, the Japanese government gave firms the unusual option of pursuing either process‐ or content‐focused verification. This paper draws on the unique Japanese setting to examine whether firms that use ESG reporting guidelines increase their quantity of disclosed sustainability information. Furthermore, it assesses whether, given the option, (1) firms tend to pursue process‐ or content‐focused verification, and (2) which type of verification leads to greater information disclosure. We show that firms that follow ESG guidelines disclose 39% more sustainability information compared to firms that publish sustainability reports but do not follow ESG reporting guidelines. Content‐focused verification leads to greater information disclosure than process‐focused verification in that firms publish 23% more text in their sustainability reports. Moreover, given the option, firms prefer to use content‐ over process‐focused verification. However, most global ESG reporting guidelines endorse process‐focused verification and this verification is less effective than content‐focused verification at encouraging firms' information disclosure. Our findings raise a timely and relevant question about the movement by global ESG standard developers to promote process‐ rather than content‐focused verification. They also suggest that firms that wish to create sustainability distinction by way of ESG reporting may benefit by advocating for more robust forms of verification.
Technological innovation has recently become more essential than ever. To examine the factors that might induce environmental technological innovation, we focus on ISO 14001, a voluntary approach to ...environmental management, and scrutinise how the proficiency or maturity level of ISO 14001 in facilities influences environment-related research and development (R&D) expenditures that promote environmental technological innovation. We measure the maturity level based on the length of time since a given facility adopted ISO 14001. Using Japanese facility-level data from “Environmental Policy Tools and Firm-Level Management and Practices: An International Survey” (OECD Survey), we estimate two Tobit models by addressing an endogeneity issue in ISO 14001. The estimation results provide empirical evidence that as the ISO 14001 is improved in facilities, those facilities are likely to spend more on environmental R&D. The facility age and market concentration also positively affect environmental R&D. These findings suggest that the maturity level of ISO 14001 is an important factor influencing the investment in environmental R&D.
•We scrutinise how the maturity level of ISO 14001 influences environmental R&D.•Using Japanese facility-level data, two Tobit models are estimated.•In the models, we address the potential endogeneity problem.•The facilities with improved ISO 14001 are likely to invest in environmental R&D.•The maturity of ISO 14001 is an important factor to encourage environmental R&D.
From 1997 to 2012, 114 Japanese industry associations implemented voluntary action plans, which are not enforced by laws or regulations, to reduce carbon emissions. This paper investigates whether ...the establishment of these voluntary action plans by industry associations contributed to the adoption of a carbon emissions target at the firm level within the associations. Using a survey of approximately 1000 firms in Japan, this paper finds that small and medium-sized firms in sectors with voluntary action plans were 2–4 times more likely to establish their own carbon emissions targets than were firms belonging to industry associations without voluntary action plans. In contrast, the paper finds that voluntary action plans did not affect the establishment of emissions targets among firms with more than 3000 employees. This result is consistent with the survey responses, which found that periodic follow-ups under a voluntary action plan helped small firms to obtain important pieces of information and that industry associations played an important role in this process. In general, small firms have relatively large potential for energy saving, but the lack of information prevents its realization. The results confirm the importance of voluntary action plans in removing the information barriers of relatively small firms and encouraging them to implement carbon emissions targets.
•This paper examines the influence of industry voluntary action plans on firms' environmental behavior.•This paper focuses on the timing of emissions target establishment using a duration analysis.•These plans strongly influence small and medium-sized firms, but not larger firms.
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