An Empirical Study of Tokyo Emission Trading Scheme: An Ex-post Analysis of Emissions from Office (Commercial Buildings) and University Buildings

Transcription

1 An Empirical Study of Tokyo Emission Trading Scheme: An Ex-post Analysis of Emissions from Office (Commercial Buildings) and University Buildings Toshi H. Arimura & Tatsuya Abe Research Institute for Environmental Economics & Management Waseda University (Japan) June 21st, 2017 Singapore

2 Outline 1. Background 2. Research Question 3. Data 4. Econometric Model 5. Estimation Result 6. Conclusion 2

3 Manufacturing &Commercial Residential Transportation Share of Emissions by Sector 50.6 million ton (4% of Japan) Large Scale Facilities 40% (1,300) S&M Size Facilities 60% Year of 2013 (630,000) Tokyo ETS Large Scale Facilities Facilities that consume energy more than 1500kL of crude oil equivalent or more per year. Mandatory Emission Reduction and Emission Trading Scheme Small and Medium Size Facilities Japan s first cap-and-trade emissions Mandatory Emission Reporting program, which started in FY Overall GHG reduction target: By 家庭の節電 省エネを進める 2020: -25% below 2000 GHG levels 自動車部門のCO2 削減 Absolute cap at facility-level. Energy Audit Subsidies 既存住宅の断熱性能の向上 太陽光発電 太陽熱利用の促進 家庭用燃料電池の普及促進など 燃料電池車 電気自動車など次世代自動車の普及促進 交通 輸送における省エネルギー対策の推進など Majority of Large Scale Facilities are in Commercial Sectors (Office Buildings) 環境都市づくり制度の導入 強化 新築建築物の環境性能の評価と公表 マンション環境性能表示 大規模都市開発での省エネ性能の条件化 地域でのエネルギーの有効利用など Matsuoka (2016) 3

4 Emission Reduction Target Two Phases in Emission Targets Base Emission Phase I ( ) Phase II ( ) 6% Emission Reduction (5 year average) 15% Emission Reduction (5 year average) Matsuoka (2016) 4

5 The Tokyo Cap-and-Trade Program (TMG ETS): Appraisal of results by Tokyo Government ETS Did ETS work? Reduction by ETS? Impacts of Rolling Blackout? Economic Downturn? Anything else? Great East Japan Earthquake & Fukusima Nuclear PowerAcccident Shortage of Power Supply Rolling Blackout by Tokyo Power Company ( ) Incentives to invest in energy efficiency & Behavioral Change

6 Electric Power Price Changes over Time Tokyo Power Company 6

7 ETS and Rolling Blackout The area faced Rolling Blackout by Tokyo Electric Power Company ETS ETS Gunma Saitama Tokyo Kanagawa Tochigi Ibaraki Chiba

8 2.Research Questions What causes the emission reduction from commercial buildings(office) and universities in Tokyo? Tokyo ETS Rolling Blackout Economic Downturn? Electricity Price Increases? 8

9 Existing literatures regarding ex-post assessment EU-ETS (European Union Emissions Trading System): Author Country Period Findings Anderson and Di Maria (2011) Calel and Dechezlepretre (2016) Patent Chan, Li and Zhang (2013) Comeptitiveness / Cost During the pilot phase ( ) we find over-allocation of approximately 280 million EUAs and total abatement of 247 Mt CO2. EU ETS has increased low-carbon innovation among regulated firms by as much as 10%. While no impacts are found on three variables (unit material costs, employment, revenue) in cement and iron industries, a positive effect on both material costs and revenue in the power sector. Ellerman and Buchner (2008) The program decreased emissions from as much as 8% to as little as 0.5% across the continent. Petrick and Wagner (2014) Wagner, Muuls, Martin and Colmer (2014) Germany Emission Reductions France Emission Reductions Treated firms abated one-fifth of their CO2 emissions relative to non-treated firms during Treated firms reduced emissions by an average of 15-20% from phase II in 2008.

10 Existing literatures regarding ex-post assessment RGGI (Regional Greenhouse Gas Initiative): Author State Period Findings Hibbard and Tierney (2011) Implementation of RGGI in the first compliance period resulted in a net benefit of $1.6 billion to the 10 RGGI states. Murray and Maniloff (2015) Emission Reductions Paul et al. (2010) Maryland After the introduction of RGGI in 2009 the region's emissions would have been 24% higher without the program. Larger investments of Maryland's portion of RGGI CO2 allowance revenue in electricity end-use efficiency improvements would result in significant reductions in electricity demand and a commensurate reduction in electricity bills.

11 3.Data Data Mail Survey toward commercial buildings (office) and universities in 2015 Fiscal year from 2009 to 2013 (five years) Targets: Facilities listed in Greenhouse Gas Reporting Rule (National Level) Commercial Buildings Population Response Response Rate(%) Universities Key variables Cooling Degree Days & Heating Degree Days: IEEJ Data Book Vacancy Rates: capture economic downturn and boom Rolling Blackout Dummy: Impacts of Rolling Blackout Energy Consumption ( kl) CO2 Emission (t-co2) CO2 Coefficients (t-co2/kwh) Electrici ty (Gj) Floor Space ( m2 ) # of Employ ees # of Students Share of Eng. Students (%) CDD HDD Rolling Blackout Dummy CB Univ. 11

12 Average CO2 Emissions (t-co2) Average CO2 Emissions(Commercial Buildings) Year Tokyo (S.D.) Other Regions (S.D.) Reduction Increase in Tokyo elsewhere Average CO2 Emissions(University) Year Tokyo (S.D.) Other Regions (S.D.) Small Large Increase Increase Excludes Saitama, which introduced ETS 14

13 Average Electricity Consumption Average Electricity Consumption(Commercial Buildings) Year Tokyo (S.D.) Other Regions (S.D.) Larger Reduction in Tokyo Intorudction of ETS Average Electricity Consumption(University Buildings) Year Tokyo (S.D.) Other Regions (S.D.) Larger Reduction in Tokyo Excludes Saitama, which introduced ETS 15

14 Econometric Model Dependent Variable E ijt Emissions, Electricity Consumption or Energy Consumption X 1, it 1 X 2, it 2 X 3, it 3 i it Policy Variables Facility Variable Other Controls ETS Dummy Year Dummy X ETS Dummy Dummy for Rolling Blackout Electricity Prices Floor Space # of Employees (Office) # of Students (Univ.) Science Students(Univ.) Year Dummy Cooling Degree Days Heating Degree Days Vacancy Rates E:Emissions(Electricity) i:office ID β:paremeters μ i : Fixed Effect ε:error terms t:year 16

15 Estimation Results(Commercial Buildings): CO2 emissions model 1 model 2 model 3 model 4 model 5 model 6 Tokyo ETS dummy ** * * (0.033) (0.033) (0.036) (0.036) (0.411) (0.117) Tokyo ETS dummy * y (0.039) (0.039) (0.039) Tokyo ETS dummy * y2012 Reduction by both ETS and by power (0.044) (0.044) (0.044) Tokyo ETS dummy * y2013 price increase (0.054) (0.054) (0.054) Tokyo ETS dummy * Log(floor space) (0.037) Tokyo ETS dummy * Log(employee) No Impacts of Rolling Blackout ** (0.014) Log(power price) *** *** (0.258) (0.215) (0.550) (0.574) (0.567) (0.573) Log(power price) * TEPCO *** ** *** ** (0.228) (0.267) (0.265) (0.267) Log(floor space) ** * * * * (0.157) (0.149) (0.149) (0.149) (0.147) Log(employee) *** *** *** *** *** (0.116) (0.103) (0.104) (0.104) (0.103) Interactions between region and year YES YES YES YES YES YES Num. obs Note1)Upper row : coefficient, lower row : standard error in parenthesis Note2)Significance level : ***1%,**5%,*10% Note3)Sample size : 1204 Note4)Excluded other variables (e.g. floorspace, cooling degree days, etc.) in this table 17

16 Estimation Results of Major Variables(Commercial Buildings) model 2 model 3 model 4 Tokyo ETS dummy ** * * (0.033) (0.036) (0.036) Log(power price) *** (0.215) (0.550) (0.574) Log(power price) * TEPCO *** ** Interactions between region and year (0.228) (0.267) YES YES YES Num. obs Note1)Upper row : coefficient, lower row : standard error in parenthesis Note2)Significance level : ***1%,**5%,*10% Note3)Sample size : 1204 Note4)Excluded other variables (e.g. floorspace, cooling degree days, etc.) in this table Reduction buy ETS are From 6.2 to 7.4% Price Elasticity ranges from to

17 Estimation Results(universities): CO2 Emissions model 1 model 2 model 3 model 4 model 5 model 6 Tokyo ETS dummy ** ** ** *** (0.018) (0.019) (0.018) (0.017) (0.218) (0.096) Tokyo ETS dummy * y Tokyo ETS dummy * y2012 (0.023) (0.023) (0.023) Reduction due to ETS as well as the power (0.028) (0.029) (0.028) Tokyo ETS dummy * y2013 price increase (0.034) (0.034) (0.034) Tokyo ETS dummy * Log(floor space) (0.019) Tokyo ETS dummy * Log(student) No Impacts of Rolling Blackout Note1)Upper row : coefficient, lower row : standard error in parenthesis Note2)Significance level : ***1%,**5%,*10% Note3)Sample size : 1113 Note4)Excluded other variables (e.g. # of students, cooling degree days, etc.) in this table (0.011) Log(power price) *** ** (0.127) (0.128) (0.204) (0.208) (0.207) (0.208) Log(power price) * TEPCO *** *** *** *** (0.100) (0.118) (0.118) (0.118) Log(floor space) *** *** *** *** *** (0.126) (0.114) (0.113) (0.113) (0.113) Log(student) ** * * * * (0.089) (0.068) (0.068) (0.068) (0.068) Interactions between region and year YES YES YES YES YES YES Num. obs

18 Estimation Results of Major Varibles (universities): CO2 Emissions model 1 model 2 model 3 model 4 Tokyo ETS dummy ** ** ** *** Log(power price) (0.018) (0.019) (0.018) (0.017) *** ** Reduction by ETS are from 3.9 to 4.4% Log(power price) * TEPCO (0.127) (0.128) (0.204) (0.208) Price Elasticity *** *** ranges from to Interactions (0.100) (0.118) between region and YES YES YES YES year Num. obs Note1)Upper row : coefficient, lower row : standard error in parenthesis Note2)Significance level : ***1%,**5%,*10% Note3)Sample size : 1113 Note4)Excluded other variables (e.g. # of students, cooling degree days, etc.) in this table 20

19 Impacts of Tokyo ETS and Power Price on Emission Reducion Electric power price (yen / Wh) average annual growth rate in price ( ; TEPCO) is 12.4% Tokyo Hokkaido Tohoku Chubu Causes of Emission Reduction Hokuriku Kansai Chugoku Shikoku ETS 6.01% 3.82% In regression tables, model 3 shows that in TEPCO regions power price increases by 1% CO2 emission decreases by 0.731% (office), 0.395% (universities). Therefore, actual impact of power price increase on CO2 emission reduction is Commercial Buildings Kyushu Okinawa 12.4*0.731=9.06% (office), 12.4*0.395=4.90% (universities), respectively. On the other hand, abatement effect of Tokyo ETS is 6.01% (office), 3.82% (universities), respectively. University Buildings Electricity Price Increase 9.06% 4.90%

20 (Tentative)Summary Impact of Tokyo ETS on CO2 emission reduction Commercial Buildings A decent impact of ETS of the emission reduction. However, more than half of the reduction is due to the electricity price increase. The effects may be smaller than what Tokyo government claim. Almost no impact of rolling blackout Universities About half of the eimission reduction is caused by ETS. But another half of the emission reduction is caused by electricity power price increase. Almost no impact of rolling blackout Future Work Propensity Score Matching? Large Price Elasticity? 22

21 Thank you! 23

22 Outcome Trends by Treatment Status (Commercial Buildings) Tokyo First Year of ETS Year Year The rest of Year Japan Year Year After excluding outliers 24

23 Outcome Trends by Treatment Status (Universities) Other Regions First Year of ETS Year Tokyo Year Year Year Year After excluding outliers 25

24 References Barry Anderson and Corrado Di Maria (2011) Abatement and Allocation in the Pilot Phase of the EU ETS, Environmental and Resource Economics, Vol.48, pp Toshi.H.Arimura (2015) "Japanese Environmental Policy," in the Routledge Handbook of Environmental Economics in Asia. Edited by Shunsuke Managi, pp Chris Böhringer and Andreas Lange (2005) Economic Implications of Alternative Allocation Schemes for Emission Allowances, Scandinavian Journal of Economics, Vol.107, No.3, pp Raphael Calel and Antoine Dechezlepretre (2016) Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market, The Review of Economics and Statistics, Vol.98 (1), pp Hei Sing (Ron) Chan, Shanjun Li and Fan Zhang (2013) "Firm Competitiveness and the European Union Emissions Trading Scheme," Energy Policy, Vol.63, pp A. Denny Ellerman and Barbara K. Buchner (2008) "Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the Emissions Data," Environmental and Resource Economics, Vol.41, pp

25 References (Cont.) Paul J. Hibbard and Susan F. Tierney (2011) "Carbon Control and the Economy: Economic Impacts of RGGI's First Three Years," The Electricity Journal, Vol.24, Issue 10, pp Brian C. Murray and Peter T. Maniloff (2015) "Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market, and Policy Factors," Energy Economics, Vol.51, pp Anthony Paul, Karen Palmer, Matthias Ruth, Benjamin F. Hobbs, Daraius Irani, Jeffrey Michael, Yihsu Chen, Kimberly Ross and Erica Myers (2010) "The Role of Energy Efficiency Spending in Maryland's Implementation of the Regional Greenhouse Gas Initiative," Energy Policy, Vol.38, pp Sebastian Petricky and Ulrich J. Wagner (2014) The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms Kiel Working Paper. No Ulrich Wagner, Mirabelle Muûls, Ralf Martin and Jonathan Colmer (2014) The Causal Effects of the European Union Emissions Trading Scheme: Evidence from French Manufacturing Plants presented at IZA Workshop: Labor Market Effects of Environmental Policies, Bonn, Germany. Matsuoko, K.(2016) Mandatory GHG Emission Reduction Target and Emission Trading Schemes at 2016 China-Japan-Korea Carbon Mechanism Meeting Beijing China

26 Base Emissions Base Emission is calculated based on the three year average emissions out of past five years prior to Commercial building owners can choose the three years to their advantage. 41

27 The Tokyo Cap-and-Trade Program (TMG ETS) : Appraisal of results by Tokyo Government CO2/tonnes (thousands) 13% Reduction 22% reduction 22% reduction 23% reduction Did Tokyo ETS work? Anything else? Base Emissions ( )

28 Research Methods We conduct an ex-post econometric analysis at facility level Dependent Variables: CO2 emissions, Electricity Consumption & Energy Consumption Explanatory Variables: Key Variables Compare commercial buildings in Tokyo and those in other regions. Note that Saitama, next to Tokyo, has ETS as well. We focus on commercial buildings(office buildings) and university buildings. 43