Promotion of Energy Efficiency Through an Energy Audit in the Industrial Sector in Japan: An Examination of Information Provision, Disclosure, Target Setting, Inspection, Reward, and Organizational Structures

An energy audit is a famous policy instrument to improve the energy efficiency in facilities. Although energy audits have been adopted by many countries, it is unclear whether energy audits can improve the energy efficiency, since there are several barriers to energy efficiency under energy audits. For example, the facility does not need to evaluate the net benefit of energy efficiency is greater than its cost. Another possible barrier to energy efficiency is that an energy manager may have less information to improve their energy efficiency. Moreover, even if managers can find methods to improve their energy efficiency, organizational structures may be a barrier to adopting these methods. Therefore, additional practices such as information provision, target setting, or reward by governments can make an energy audit more effective. This paper investigates the complementarity of an energy audit and these practices by focusing on the Emission Reduction Program (ERP), which is a unique energy audit in Japan. Using municipality-level data, we show that target setting, inspection, and designating the department/division responsible for tackling climate change can complementarily promote the reduction in greenhouse gas emissions by facilities under the ERP