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Impact of the Feed-in-Tariff Exemption on Energy Consumption in Japanese Industrial Plants

Author

Listed:
  • Aline Mortha
  • Naonari Yajima
  • Toshi H. Arimura

Abstract

To promote renewable energy deployment, Japan introduced a feed-in tariff policy in 2012, financed through a surcharge on electricity prices for consumers. The Japanese government also offered a discount system for electricity-intensive industrial plants, exempting them from paying full surcharges. Using monthly plant-level data from 2005 to 2018, this study evaluated the exemption system's impact on electricity and fossil fuel consumption for plants in the iron and steel, chemical products, and pulp and paper sectors. Our results show that the exempted iron and steel plants increased electricity purchase and consumption by 1.06% and 1.04%, respectively. The introduction of electricity efficiency as a new requirement for exemption applications after 2017 did not curb the rebound, as iron, steel, and pulp and paper plants increased their electricity consumption by 1.49% and 0.69%, respectively, after the reform. This result may call for the reform of the exemption system, with the possibility of a lower discount rate or tighter requirements for electricity efficiency.

Suggested Citation

  • Aline Mortha & Naonari Yajima & Toshi H. Arimura, 2022. "Impact of the Feed-in-Tariff Exemption on Energy Consumption in Japanese Industrial Plants," Working Papers e169, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e169
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    More about this item

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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