In our research, we studied the possibility of achieving Japan's mid-term target submitted to the Secretariat of the United Nations Framework Convention on Climate Change. We paid particularly close attention to how reducing greenhouse gas emissions by 25% from the 1990 level by 2020 would affect household utility. Our objective is to realize an affluent low carbon society, so we aimed at developing measures to enable the realization of mid-term targets while improving rather than negatively impacting household utility.
To do this, we developed a general equilibrium model for Japan to evaluate the effects of diverse energy-saving new technologies and economic measures. Regarding energy-saving new technologies, we studied the effects of improving the efficiency of electric appliances such as television sets, air conditioning units and refrigerators. We also considered solar power generation and other low carbon electric power generation technologies, including nuclear power.
As for economic measures, we studied the introduction of a global warming tax, emissions trading, and feed-in tariffs for renewable energy.
Using this general equilibrium model, we evaluated the impact of mid-term target reductions on Japanese household utility and on industries.
This clarified the effectiveness of measures and conditions for realizing mid-term targets while improving household utility. We discovered that improving the efficiency of electric appliances was particularly effective in improving household utility. Using the method of compensating variation to convert changes in utility into yen showed an increase in household welfare of over 8 trillion yen.
It will therefore be necessary to introduce measures to facilitate the spread of energy-saving electric appliances. We intend to conduct social experiments and develop policies to promote the spread of new, energy saving products that will contribute towards the realization of an eco-friendly but economically vigorous low carbon society.