Economic Impacts of an Electric Vehicle Society in Toyohashi City, Japan-A CGE Modelling Approach

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1 IOSR Journal of Busness and Management (IOSRJBM) ISSN: Volume 2, Issue 4 (July-Aug. 22), PP Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE Modellng Approach Yuzuru Myata, 2 Hroyuk Shbusawa, 3 Shamsunnahar Khanam,2 Graduate School of Archtecture and Cvl Engneerng, Toyohash Unversty of Technology 3 Graduate School of Envronmental and Lfe Scence, Toyohash Unversty of Technology Abstract: In ths paper we eplore economc mpact of promoton and realzaton of an electrc vehcle socety (EVS). More concretely, ths paper emphaszes on a CGE -modellng approach to evaluate the followng ssues: entre economc mpacts of subsdes for promoton of an EVS, the possblty of carbon dode (CO 2 ) emssons and prces reducton, ndustral structure change towards an EVS, and model shft occurs towards an EVS. Our smulaton results demonstrate that after applyng 2% subsdes to fve ndustres, such as electrc vehcles (EVs) manufacturng and transhpment, solar, cogeneraton, and other transhpment the total ndustral output and cty GDP ncrease. A large growth rate s found n ndustres subsdes are ntroduced alone wth non-ferrous metal ndustry. However, t s motvatng that decreasng proportons are found n ol, coal product, mnng, supply and gasolne vehcles (GVs) transhpment ndustres. Moreover, all the commodty prces decrease though n ndustres subsdes are presented prces shrnk apprecably. Hence, Toyohash Cty s economy shows a drecton the demand for conventonal vehcles and energy use are decreased, conversely, the demand for EVs and renewable energy are ncreased that dsplays dfferent lfestyles from the current. Thus, ntroducng 2% subsdes to EVs manufacturng and transhpment, solar, cogeneraton, and other transhpment can really represent a realstc alternatve socety to EVS, both n terms of economc development and CO 2 emssons reducton. In ths study therefore t s clear that model shft occurs to EVS, and thus we suggest for promoton of new ndustral structure to ntroduce an EVS n Toyohash cty, Japan. The proposed model even can be epanded to the other ctes n Japan and other countres n the world whch are smlar to ths area. Keywords: CGE model, electrc vehcle socety, electrc vehcle, Toyohash Cty, Ja pan I. Introducton Recently CO 2, whch mostly forms the largest and growng fracton of greenhouse gas (GHG) emsson from transportaton sector, presents a maor challenge to global clmate change mtgaton efforts []. Worldwde transportaton ranks second after electrc power as the largest source of emssons, contrbutng about 2% of the total n recent trends and future proectons [6]. In the case of Japan, smlar to the world trend transportaton, the country s transportaton sector accounts for more than one-ffth of CO 2 emsson [7]. Especally, emssons generated from passenger and freght cars domnate 9% of the sector [8], whle personal vehcles alone contrbute 5% of transportaton emssons n Japan [9]. In addton, t s epected that CO 2 emsson wll be ncreasng because of ependng personal vehcle fleets, partcularly n the sub -urban areas lke Toyohash Cty n Japan. Thus t has become mperatve to ntroduce a new socety based on envronmental frendly transportaton and renewable energy sources that does not negatvely affect the envronment. In ths study, we am to ntroduce an EVS hope to shft demand to EVs and solar energy to reduce CO 2 emssons. The study of EVS has been a consderably uneplored feld n envronmenta l economcs despte the fact of potentally attractve and mportant theme though there have been lttle attempts for ths topc n envronmental economcs. For eample, t would be sgnfcantly worth to eamne how the economc mpact of both producton and polcy mplementaton for promoton and realzaton of an EVS. From ths pont, prevously we have appled a CGE model to nvestgate the economc mpacts of EVs producton. However, promoton of an EVS not only depends on EVs producton, t s requred to acquant wth new ndustres lke EVs transhpment as small mleage s the man problem of EVs. It s epected that the spread of EVs would greatly reduce the CO 2 emsson, however t only depends on nternalzng electrcty generated from renewable sources of energy lke solar. Thus, t s also mperatve to consder ndustres lke solar energy generaton to ntroduce an EVS. Moreover, 29 Page

2 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE cogeneraton s also mportant to shft the demand to renewable energes from the conventonal. Besde, beforehand, we dd not consder subsdes, but subsdes may be requred to overcome the ntal prce dfference of the new ndustral productons. Takng these backgrounds nto account, ths artcle ams to apply a CGE model smlar to author s prevous study concernng ths feld [5] to evaluate the possblty and economc mpacts of an EVS takng Toyohash Cty, Japan as a study regon. More concretely, ths paper emphaszes a CGE-modellng approach to evaluate the followng contents: entre mpacts of subsdes for promoton of an EVS, the possblty of CO 2 emssons and prces reducton, model shft occurs towards an EVS, ndustral structure change towards an EVS. Toyohash Cty s consdered as a study regon for three reasons: () the number of vehcles n the cty s ncreasng rapdly, thus, CO 2 emsson s seen as an ncreasng trend, (2) the cty has many motor vehcle manufacturers that nclude the Toyota Motor Company, whch s one of the world s largest automoble manufacturers by producton, and (3) ths cty s potental to generate solar energy. The rest of the paper s organzed as follows. In Secton 2, the study area and method of the study are descrbed. Secton 3 eplans the assumptons of the model and behavours of the economc agents. In Secton 4, smulaton cases are gven, as Secton 5 presents the results of the smulaton. Fnally, Secton 6 summarzes the concluson. II. Study Area And Method Of The Study 2. Study area Toyohash Cty (see Fgure ) s located n the central part of Japan and falls n the prefectural boundary of Ach. The Pacfc Ocean s n the south of the cty and the cty opens onto Mkawa Bay n the west. Mkawa Port s a maor port for worldwde trade, and ts presence has made Toyohash an mportant cty as the bggest mport and eport hub n Japan for automoble n volume term. The area and populaton sze of the cty at foundng n 96 was 9.69 square klometres and 9,9 persons []. At present the sze of the cty s square klometres wt h populaton of,977 (densty stands at 462 persons per square klometre) []. Attractve economc actvty, especally heavy ndustres and a large scale sea -port, s attractng mgraton to the cty and data of Statstcs Bureau, Japan provdes that, 749 persons mgrated to Toyohash n 28, 9,779 persons n 29, and 8,577 persons n 2. As a result, the cty s eperencng vertcal epanson as the land area s remanng unchanged snce 96 []. There are many motor vehcle manufacturers n Toyohash Cty, ncludng Toyota Motor Company (one of the world s largest automoble manufactures by producton), Mtsubsh and Suzuk Motors. Fgure : Locaton of Toyohash Cty n Japan [2]. 2.2 Methodology The underlyng approach of ths study s the CGE model. In ths study we have appled a CGE model smlar to our prevous study [5] to nvestgate the economc mpact of EVS n Toyohash Cty, Japan. In constructng the model, the authors referred to the lterature of Myata and Shbusawa [2], Shoven and Whally [3], and Shbusawa and Sugawara [4]. In our model the economc agents are households, the frms n ndustres, the government and the eternal sector. A total of 4 markets are consdered comprsng commodty markets (see Table ), one labour market and one captal market. These are assumed to be perfectly compettve and n equlbrum n Page

3 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE Table. Classfcaton of ndustres. ndustres ndustres. agrculture, forestry & fshery 2. mnng 2. arcraft 2. other transportaton equpment 3. food processng 22. precson equpment 4. tetle product pulp, paper & wooden product 24. constructon 6. chemcal 25. electrc power 7. coal & petroleum product 8. plastc product ceramc cogeneraton. ron & steel product 3. water supply & santary servve fnancal & nsuance servce 4. general machnery electrcal machnery 34. GVs transhpment 6. nformaton & communcaton electronc equpments 35. Evs transhpment 7. electronc component 36. other transhpment 8. gasolne vehcles (GVs) 37. telecommuncaton & broadcastng 9. electrc vehcles (EVs). servce III. Assumptons of the Model 3. Man Assumptons The man assumptons made n our model are as follows: () The 25 Toyohash Cty s economy s eamned. The economc agents are households, the frms n ndustres, the government and the eternal sector. (2) 4 markets are consdered comprsng commodty markets, one labour mark et and one captal market. These are assumed to be perfectly compettve and n equlbrum n Behavour of ndustres In ndustres, ntermedate nput, labour and captal are nputted to produce goods. I ndustres have the Cobb-Douglas technology wth respect to ntermedate nput and labour and captal nputs, and Leontef technology wth value added nputs (see Fgure 2). Constant returns to scale are assumed n the technology, n whch the cost mnmzaton problem can be wrtten as follows: p ( tp )( wl rk )(,..., ) () mn wth respect to, L and K subect to mn[ f ( L, K ),,..., a a ',..., ] (2) ' a a ' 8 ' 25 ' 27 ' f ( L, K ( 8 9 ( ) ) ( ( a (a ) ) ) ) A L K (7) p : prce of commodty I : ntermedate nput of ndustry 's product n ndustry tp : net ndrect ta rate mposed on ndustry s product (ndrect ta rate - subsdy rate) w : wage rate r : captal return rate L : labor nput n ndustry K : captal nput n ndustry : output n ndustry a : value added rate n ndustry (3) (4) (5) (6) 3 Page

4 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE a : share parameter on ntermedate nput A,α : techncal parameters n ndustry household utlty ndustral output current consumpto CES lesure savng nvestment Cobb-Douglas ntermedate nput types of ndustres Leontf value added labor captal Cobb-Douglas Cobb-Douglas Fgure 2: Herarchcal structure of the CGE model Condtonal demands for ntermedate goods, labour, and captal n producton process are as follows: a (8) p 8 9 p ' 8 a8 (9) p8 8 9 p p ' 9 a8 () p9 8 9 p p ' 25 a25 () p p p ' 26 a25 (2) p p p p ' 27 a27 (3) p p p p ' 28 a27 (4) p p p p ' 29 a27 (5) p p p p ' 34 a34 (6) p p p p ' 35 a34 (7) p Page

5 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE p p p ' 36 a34 (8) p ( ) r LD w a aw KD ( a) r A (a ) a A (9) (2) LD : condtonal demand for labour n ndustry, KD : condtonal captal demand n ndustry Zero proft condton s realzed n the ndustres under a perfect competton. (2) proft p p ( tp )[ w. LD r. KD ] 3.3 Behavour of households The households n Toyohash Cty are assumed to be ho mogeneous wth the fed number of households. Thus, one can consder that the households share an aggregate sngle utlty functon. To eplan the household behavour, frst, dervaton of future good s descrbed here. The future good mples the future consumpton whch s derved from the household savng, however, the savng formulates captal nvestment. Therefore, captal good can be regarded as savng good. Investment s made by usng produced goods, and let ther portons n nvestment be deno ted by b P b p. Denotng the prce of nvestment good by p I s realzed. Then, the prce of nvestment I good s epressed as, p I p I. Ths can be regarded as the prce of savng good p s. s o I r ( ty)( k )( k ) r / p r (22) s ty: drect ta rate mposed on households k o : rate of transfer of property ncome to the eternal sector k r : captal deprecaton rate δ: rato of captal stock measured by physcal commodty unt to that by captal servce unt. Then, the dervaton of demands for composte consumpton and lesure tme from the current good G s descrbed. The current good G s a composte of consumpton and lesure tme, and G s obtaned from the followng optmzaton problem: / v ( )/ / 2 /( 2 ) 2 v2 v v v v ma G C ( ) F (23) C, F whch s subected to p C ( ty)( l ) w F ( ty) FI TrHO SH (24) o By solvng ths utlty mamzaton problem, the demand functons for composte consumpton, lesure tme and labour supply are obtaned. [( ty) FI TrHO SH] C (25) v2 p ( )[( ty) FI TrHO SH ] (26) F v2 [( ty)( l o ) w] LS E F (27) ( v2 ) (v2 ) p ( )[( ty)( l ) w] (28) o LS: household labour supply β: share parameter v 2 : elastcty of substtuton between composte consumpton and lesure tme C: composte consumpton F: lesure tme p: prce of composte consumpton good SH : household nomnal savng (=P S S ) By substtutng the composte consumpton (25) and lesure tme (26) nto (23), the prce nde of the present good s derved as follows: 33 Page

6 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE v 2 v2 } /( v2 ) p { p ( )[( ty)( l ) w] (29) G o Moreover, composte consumpton good s dsaggregated nto produce goods through the mamzaton of a Cobb-Douglas sub-utlty functon gven the household ncome and lesure tme. ma C subect to ( ) (3) C p C ( ty) Y TrHO SH (3) C : household consumpton good produced by ndustry I p : prce of good I Y: household ncome (=(-l o )w LS+LI+(-k o )(-k r )r KS+KI+TrGH+TrOH ) From ths optmzaton problem, consumpton good s derved. C [( ty) Y TrHO SH] (,,) (32) p The prce of composte consumpton s calculated as follows: p p 3.4 The government The government sector n ths study conssts of the natonal and local governmental actvtes n Toyohash Cty. Thus, the concept of the government corresponds to the defnton of SNA framework. The government obtans ts ncome from drect and net ndrect taes of Toyohash Cty, and current transfers from the eternal sector, and then t epends the ncome on government consumpton, current transfers to households, and current transfers to the eternal sector. The dfference between ncome and ependtures s saved. Nomnal consumpton ependtures on commodtes/servces are assumed to be proportonal to the government revenue wth constant sectoral share. These are epressed as the followng balance of payments: p CG TrGH TrGO SG ty Y tp ( w LD r KD ) TrOG (34) CG : government consumpton ependtures on commodty I TrGH: current transfers to households TrGO: current transfers to the eternal sector SG: government savngs TrOG: current transfers from the eternal sector 3.5 The eternal sector The eternal sector gans ts ncome from Toyohash Cty s mports, cur rent transfers from the government, labour ncome transfers and property ncome transfers. Then, t epands the ncome on eports and transfer of Toyohash, current transfers to households and the government, labour (employees to Toyohash) and property ncome transfers. These are also descrbed as the followng balance of payment: (35) p E TrOH TrOG KI LI SO p EM TrHO TrGO KIO LIO E : eport of commodty I, EM : mport of commodty I, SO: savngs of the eternal sector (= natonal current surplus) LIO: labour ncome transfers to the eternal sector (= l o w LS ) KIO: property ncome transfers to the eternal sector (= k r KS) 3.5 Balance of nvestment and savngs Household, government, the area department s savngs, and the total consumpton of fed captal determne the total nvestment. (33) 34 Page

7 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE p I SH SG SO DR (36) I : demand for commodty by other nvestments, DR : consumpton of fed captal amount of ndustry 3.5 Prces of commodty Cost conssts of the followng, whch s derved from the zero proft condton of the ndustry: p p ( tp )[ w LD r KD ] (37) Gven a wage and a captal return rate, we can formally calculate the commodty prces as follows: P ( I A) [( tp )( wld. r kd )] () P: vector of commodty prces, A': transposed matr of ndustres' nput coeffcents, [ ]:column vector whose elements are n parentheses ld LD / and kd KD / 3.5 Dervaton of equlbrum The equlbrum condton n the model can be summarzed as follows: Commodty Market a a a a 33 Labour Market LS LD Captal Market KS KD 3 C C 3 CG CG 3 I I 3 E E 3 EM EM 3 (39) (4) (4) IV. Smulaton cases and smulaton results 4. Smulaton cases Two cases are smulated n ths study as follows: () Case one (busness as usual). The smulaton of ths part has done by smply calculatng the nput- output (I-O) table of Toyohash Cty, Japan. (2) Case two (ntroduces 2% subsdy to the ndustres ncludng EVs manufacturng and transhpment,, cogeneraton, and other transport). 4.2 Smulaton results In ths secton, we present the smulaton results by referrng to some mportant economc varables, as eplaned n the followng Industral outputs The changes n ndustral outputs are shown n Fgures 3 and 4. Industres wth large producton are found n servce,, GVs manufacturng, and constructon sectors. It s seen that ndustres related to automoble are large n Toyohash Cty because Toyota Motor Company (one of the world s largest automoble manufactures by producton) s located n ths area. The number of new ndustres of whch the growth s epected ths tme s few. In partcular, a large ncrease rate s found n ndustres lke solar energy (.42%), cogeneraton (.85%), EVs manufacturng and transhpment (.46%) and (.8%), respectvely, other transhpment (.73%), and non -ferrous metal (.54%). The balance of the growth between ndustral changes depends on the subsdy polcy. The reason behnd large ncrease rate n non-ferrous metal corresponds to the demand for producng batteres used n EVs. Because non-ferrous metal s necessary for producng batteres used n EVs. Thus, the rse of non-ferrous on s ndrectly nfluenced by the subsdy polcy on EVs producton. Decreasng tendency s found n some ndustres, for nstance, ol, coal product ( -.3%), mnng (-.6%), supply (-.39%), and the GVs transhpment (-.%). And ths stuaton s consdered as a postve factor of ths study. The reason behnd the large decrease of ol, 35 Page

8 total agrculture,forestry & mnng food processng tetle product chemcal plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce total agrculture,forestry & mnng food processng tetle product chemcal coal & petroleum product plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & santary fnancal & nsuance servce GVs transhpment EVs transhpment other transhpment telecommuncaton & servce total agrculture,forestry & mnng food processng tetle product chemcal coal & petroleum product plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & santary fnancal & nsuance servce GVs transhpment EVs transhpment other transhpment telecommuncaton & servce total agrculture,forestry & mnng food processng tetle product chemcal coal & petroleum product plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE coal product ndustry s accordng to an ncrease n share of EVs, solar energy, and cogeneraton, moreover, fallng trend n mnng s related to reduce of ol, coal producton. And a declne n the supply ndustry s found because of growng share of cogeneraton. The total ndustral output ncrease.7% ,246, Case One Case Two Fgure 3. Industral output %.85% Fgure 4. Change rate of ndustral output Cty s GDP The cty s GDP s defned as the gross value added accordng to the ndustral output. Toyohash Cty s total real GDP grows by.8%. Cty GDP depends on ndustral output shown n Fgures 5 and 6. In general net ndrect ta decreases by subsdy polcy, and ndustres wth a hgh decrease rates are found n photovoltac generaton (-.78%), EVs manufacturng (-.9%), cogeneraton (-.5%), EVs transhpment (-.88%), other transhpment (-.%), and supply ndustry (-.3%) subsdes are ntroduced. However an ncreasng trend s found n ndustres lke non-ferrous metal (.54%) and constructon (.3%) oppostely ,876,928,876,92 Case One Case Two Fgure 5: Cty s GDP..5.54% Page

9 total agrculture,forestry & mnng food processng tetle product chemcal plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & santary fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce total agrculture,forestry & mnng food processng tetle product chemcal coal & petroleum product plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE Fgure 6: The change rate of cty s GDP Labour demand Lookng at the changes n labour demand by sector n Fgures 7 and 8, t can be seen that the changes n labour demand n ndustry corresponds to the epense of the subsdy polcy. That s labour demand has rsen n ndustres whch an addtonal subsdes are epended. A large ncreasng trend n labour demand s found n solar ener gy (5.84%), cogeneraton (4.5%), other transhpment (2.44%), and EVs manufacturng and transhpment (.74%) and (.8%) respectvely. The total labour demand ncreases (.8%). Takng nto account the current serous stuaton of ob opportunty and ncrease n labour demand may be nterpreted as a postve fact. However, ths reduces lesure tme mplyng that the household utlty would show a decrease n some cases ,273 95,475 Case One Case Two Fgure 7: Labour demand n ndustres % 4.5% Fgure 8: The change rate of labour demand n ndustres Captal demand Snce the total captal endowment by household s fed n ths model, therefore, the total demand for captal does not change ether. Lookng at the changes n captal demand by ndustry as, shown n Fgures 9 and, the manner of changes s consderable dfferent from the labour demand n ndustres. It s natural that after ntroducng the new producton, the demand for captal tends to ncrease resultng n an ncrease n the captal return rate. To avod ths s tuaton we ntroduces2% subsdes, as a result decreasng trend of captal demand s found n all ndustres to whch an addtonal subsdes have been epended, such as other transhpment ( -.2%), EVs manufacturng and transhpment (-.9%) and (-.86%), respectvely, cogeneraton (-.5%), supply (-.3%). However a large decrease rate of captal demand s seen n solar energy ( -.8%). Therefore, the substtuton n factor of producton from captal to labour wll be transformed n these ndustres. On the other hand, an ncrease n captal demand s seen n non -ferrous metal ndustry (.56%) and constructon (.33%) whch correspondence to an ncrease the amount of producton Page

10 agrculture,forestry & mnng food processng tetle product chemcal plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & santary fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce agrculture,forestry mnng food processng tetle product pulp, paper & chemcal plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton servce total agrculture,forestry & mnng food processng tetle product chemcal coal & petroleum product plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & santary fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce total agrculture,forestry & mnng food processng tetle product pulp, paper & chemcal plastc product ceramcs ron & steel product general machnery electrcal machnery nformaton & electronc component gasolne vehcles (GVs) electrc vehcles (EVs) arcraft other transportaton precson equpment constructon electrc power cogeneraton water supply & fnancal & nsuance GVs transhpment EVs transhpment other transhpment telecommuncaton & servce Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE ,379 8,379 Case One Case Two Fgure 9: Captal demand.5.56% % Fgure : The change rate of captal demand Commodty prces The commodty prces are determned by the prce of factor of producton. Snce the numerare s set up as labour n ths model, the captal return rate s adusted for equlbrated the market. Because the benchmark data set doesn t equlbrate n ths model, all prces do not become n Case one though the captal return rate s determned so as to equlbrate the total captal supply and demand. In Case two, wth an addtonal subsdy the prce of ndustry decreases. That s why, observng Fgure and Fgure 2, the prce of solar energy ( -.53%), other transhpment (-.9%), EVs manufacturng and transhpment (-.42%) and (-.%), cogeneraton (-.32%) decreases greatly. The prce of other transhpment decrease sgnfca ntly, however the prce of GVs transhpment decrease a lttle (-.%). The decreasng trend of all the commodty prces are found due to ntroduce subsdes n some ndustres, thus the consumer prce nde s fall (.5%)..2 Case one Case two.98 Fgure : Prces of commodty % Fgure 2: The change rate of commodty prces. -.8% Page

11 ndustral producton cty GDP net ncome household ncome household consumpton lesure savngs drect ta ndrect ta Govt. revenue Govt. consumpton TRGH TRGO Govt. savng total nvestment labour supply captal supply wage rate captal rate future prce EVs/person EV ndustral cty GDP net ncome household ncome household lesure savngs drect ta ndrect ta Govt. revenue Govt. consumpton TRGH TRGO Govt. savng total nvestment labour supply captal supply wage rate captal rate future prce EVs/person EV Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE Other varables Let us look at Fgures 3 and 4 to see the changes n other varables. Large ncrease rates are found n the total nvestment (.29%), EVs purchase (.33%), and labour supply (.8%). The ncrease n the labour supply corresponds to a growth n the labour demand assocated wth the ncrease n the gross value added rate. Besdes, decreasng trend s found n some varables, especally n household ncome. A decrease n household ncome relates to reduce of captal return rate and that stage producton factor and savngs wll be decreased. Moreover, decreasng trend s also found n net ndrect ta, and n all sector of government, such as annual revenue, government savngs. The consumer prces decreases plus there was an ncome effect, as a result decrease household ncome and lesure tme. Toyohash Cty s economy shows a drecton the prmary consumpton s surely decreased; t s consderably as a postve factor and k ey ssue that s dfferent from the present lfestyle Case One Case Two Fgure 3: Other varables Note: TRGH : current transfer from the government to households TRGO : current transfers from the government to the rest of the world EV : equvalent varaton Fgure 4: The change rate of other varables. V. Concludng Remarks In ths artcle we have appled a CGE model to evaluate the possblty and economc mpacts of an EVS takng Toyohash Cty, Japan as a study regon. By employng the CGE model, the two numercal smulatons have been mplemented. From the smulaton results, some nterestng conclusons have been made. The results demonstrate that after ntroducng subsdes, total ndustral output ncreases.7%. A large ncrease rate s found n ndustres lke solar (.42%), cogeneraton (.85%), EVs manufacturng (.46%), transhpment and (.8%), other transhpment (.73%), and non -ferrous metal (.54%). However, conversely decreasng tendency s seen n ol, coal product ( -.3%), mnng (-.6%), supply (-.39%), and the GVs transhpment (-.%). The reason behnd the large decrease of ol and coal products s accordng to an ncrease the share of EVs, solar, and cogeneraton, and a decrease n mnng s relates to a declne of ol and the coal prod uct. Moreover, a decreasng trend n the supply ndustry s found because of ncreasng share of cogeneraton. A total ndustral output ncrease n.7%, as the cty GDP depends on ndustral output, thus the total real GDP also grows by.8% n Toyohash Cty. Besdes, a total labour demand ncrease.8%, however a large ncreasng trend n labour demand s found n solar energy (5.84%), cogeneraton (4.5%), other transhpment (2.44%), and EVs manufacturng and transhpment (.74%) and (.8%) respectvely. Takng nto account the current serous stuaton of ob opportunty an ncrease n labour demand may be nterpreted as a postve fact Page

12 Economc Impacts of an Electrc Vehcle Socety n Toyohash Cty, Japan-A CGE Moreover, all the commodty prces decreases though n ndustres subsdes are presented prces shrnk apprecably. For eample, solar energy (-.53%), other transhpment (-.9%), EVs manufacturng and transhpment (-.42%) and (-.%), cogeneraton (-.32%) decreases greatly. Hence, Toyohash Cty s economy shows a drecton the demand for con ventonal vehcles and energy are decreased, conversely, the demand for EVs and renewable energy are ncreased that dsplays dfferent lfestyles from the current. In ths study therefore t s clear that model shft occurs to EVS. For all these reasons, as a concluson of the study, t s authors opnon that presentng 2% subsdes to EVs manufacturng and transhpment, solar, cogeneraton, and other transhpment can really represent a realstc alternatve socety to EVS, both n terms of economc development and CO 2 emssons reducton. Thus we suggest for promoton of new ndustral structure to ntroduce an EVS n Toyohash cty, Japan. T he proposed model even can be epanded to the other ctes n Japan and other countres n the world whch are s mlar to ths area. VI. Acknowledgements The authors are grateful to Amano Insttute of Technology for offerng the fnancal supports of ths study. References [] J.K. Valere, Prospects for plug-n hybrd electrc vehcles n the Unted states and Japan: A General Equlbrum Analyss, Elsever, Transportaton Research, Part A 44, 2, pp [2] Y. Myata, H. Shbusawa, Does the ncrease n the Populaton Prevent a Sustanable Growth of an Envronmentally Frendly Cty?-A comparson of case of Decreasng and Increasng Populaton of Obhro Metropoltan Area, Japan by an Intertemporal CGE Modelng Approach, Interdscplnary Informaton scences, Vol. 4. No., pp [3] J. B. Shoven and J. Whalley, Applyng general equlbrum, Cambrdge surv ey of Economc Lterature, 27, Cambrdge Unversty Press. [4] H. Shbusawa and T. Sugawara, Evaluaton the Economc Impacts of the Producton of New Generaton Automobles wth Technologcal Innovatons. Studes n Regonal Scence, Vol 4, No., 2, pp [5 S. Khanam and Y. Myata (accepted), New Industral Structure Copng the Economc Impacts of Shftng Producton to Battery based Electrc vehcle n Toyohash Cty n Japan -A CGE Modelng Approach-, RSI Journal, Vol IV, No 3, Specal Issue, December, 22. [6] IEA (Internatonal Energy Agency), 26, World Energy Outlook, Pars, France. [8] MOE (Mnstry of Envronment, Japan), 27, Natonal Greenhouse Gas Inventory Report Japan. [7] MOE (Mnstry of Envronment, Japan), 27, Natonal Greenhouse Gas Inventory Report of Japan. [8] MOE (Mnstry of Envronment, Japan), 997, Kankyo Hakusho (Envronmental whte paper of Japan), 997. [n Japanese]. [9] GGIOJ (Greenhouse Gas Inventory Offce of Japan), (28), Natonal GHGs Inventory Report of Japan, < [] Toyohash Cty Statstcs (2): [] Toyohash Cty Web page (2): [2] Naohro, G., et al., (25), Envronmental Management System Based on Materal Flow Analyss to Establsh andmantanecotown,j.ind.eng.chem.,vol., No. 6. pp pdf> 4 Page