Economic impacts of power supply and CO2 emission reductions of Japan after the Fukushima nuclear power accident

This paper discusses the energy strategies of Japan after the severe accident of the Fukushima-daiichi nuclear power plant. Firstly, this paper presents the economic analyses of the three options of “Options for Energy and Environment”, proposed by the Energy and Environmental Council of the Japanese government. This paper presents the quantitative analysis on economic impacts of Japan by sector in 2020 and 2030 for CO2 emission reduction targets on the consideration of international industrial relationships using DEARS (Dynamic Energy-economic Analysis model with multi-Regions and multi-Sectors). From the simulation results, the GDP losses in all the three scenarios are beyond 4% relative to the reference case while the marginal abatement costs are beyond $400 per ton of CO2. However, these analyses on the options are at least three controversial issues. The first is the drastic energy savings even in the baseline. The second is the considerable increases in renewable energies beyond 25%. The third is the deep CO2 emission reductions targets. In terms of marginal abatement costs, the reductions targets of all the options are much larger than those of the literature on economic analysis such as IEA-WEO. In order to improve these issues, we assume the revised baseline with higher consistency between economic growths and electricity consumptions. We also assume the alternative options with more modest extensions of renewable energies and with the moderate levels of the CO2 emission reductions, where the marginal abatement costs in 2030 are about $150 per ton of CO2. Our results reveal that the GDP losses in 2030 are within about 2% relative to the revised baseline, where the economic growths can reach the government’s growth scenario of 1.0%/year for 2010-2030. These analyses help further discussions on a more realistic strategy.