The Japanese Parliament Passed a Bill to Introduce a Carbon Tax / 地球温暖化対策税の導入と効果試算

日本語解説は後述されております/Japanese message follows

The House of Representative of Japan has just passed a bill to introduce a carbon tax, and the Senate is also expected to pass it easily by the end of March with a bipartisan support. The bill will establish a nationwide taxation on fossil fuel based on its carbon content, starting in October 2012.

photo credit: news.com.au

The base rate is at 289 yen per CO2-ton, or about US $3.5 per CO2-ton in 2015. This is relatively small compared to $30 per CO2-ton in British Columbia, Canada, but Japan already has one of the most expensive energy taxes on fossil fuel such as fossil fuel tax, tarrif, electricity tax, and gas tax. Unlike most other developed nations, a sales tax also applies to fuel, whose rate is slated to double to 10%

The major intent of the tax is to mitigate climate change by investing its revenues on various R&D and rebate programs, but higher fuel costs are also expected to give incentives to adopt energy saving technologies and behaviors. The Ministry of the Environment (MOE) estimates that a carbon tax can reduce Japan's CO2 emissions by 1%.

I did an extensive research on a carbon tax at graduate school, and I developed an analysis tool called the C-TAM, which stands for the Carbon Tax Analysis Model. I further refined the C-TAM when I worked for the Washington State Department of Commerce, which examined the feasibility of a state carbon tax in the Washington State Energy Strategy.

I am a strong proponent of a carbon tax as it is the only economy-wide solutions to curb the GHG emissions. I however believe that the MOE underestimates the impacts of a carbon tax on the GHG emissions and thus its overall importance. The MOE's analysis is based on a model called the AIM (Asia-Pacific Integrated Model), which is a type of general-equilibrium model but quite different from its counterparts overseas such as the NEMS (National Energy Modeling System) in the US.

Although the AIM's details are not available for public, its analysis on a carbon tax seems to focus on technology choice, meaning that higher fuel costs would promote the adoption of more energy efficient products. For instance, higher gas price encourages people to purchase more fuel efficient cars, and higher electricity charge results in increased sales of energy efficient air conditioners. As I said earlier, however, a carbon tax does also induce behavioral changes. For instance, it is well-known that higher gas price causes model shift from automobiles to trains and buses, and in the long run, it even affects housing choice and land use.

I believe that the analysis must look at both technological and behavioral effects, and that the C-TAM can be a tool to quantify both effects in theory. C-TAM is based on a price elasticity, which is an economic indicator on how the fuel consumption changes with a given price change. Although some argue that an elasticity is not sufficiently sophisticated to model complex energy dynamics, the World Bank report shows that the results of elasticity-based models are compatible to the general-equilibrium models such as the AIM and NEMS. The C-TAM is fairly complex as an elasticity-based model, and it can account for the impacts on fuel mix for electric generation.

I am using my limited time on weekends to modify the C-TAM, so it may take several months to calculate the results. When I get the results, I will post it on this blog sometime in the spring, and probably draft a report or thesis over the summer. I am hoping such analysis will provide better information on a carbon tax and could play a role in combating climate change.








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My First Baseball Game in Japan

It's been very long since I updated this blog at the end of last year. I've been quite busy, and my both work and private schedule are deeply affected by the political football in the central government. This is inevitable for public sector consultants in this time of a year in Japan. lol

Anyhow, this week has been fairly peaceful, and I went to watch a baseball game last night. It was a friendly charity match between Japan and Taiwan for the earthquake victims. Despite my addiction to baseball back in Seattle, it was my first game ever to go watch in Japan!

For being charity game, the players obviously don't play hard to avoid injury risk. So, the game itself was not so great, but I found lots of uniqueness in a ballpark in Japan. Some of them could be just individual differences between Tokyo Dome and Safeco Field in Seattle, so correct me if wrong.

First and foremost, all the food vendors were pretty girls, unlike a bunch of old dudes selling pricey stuff in the US. It was quite amazing to see these pretty girls carrying such a heavy basket of drinks, and they serve as they sit on their knees not to block the view. It must be quite painful, but they kept smiling for the whole time. I think this is an effective sales tactics, and although I am not a drinker and never bought a beer from a vendor in American ballparks, it made me feel like buying one!

Second, the ballpark was structurally very different, for having turf instead of grass in an enclosed dome. Ok, this is not a country or cultural difference, but many of the Japanese ballparks have this structure, so let me not this. Although I hadn't had a good impression on a dome stadium, I actually liked it because it is not only weatherproof but also comfort the crowd. The drawback is of course that the structure and turf are a sort of eyesore. But to be honest, I went to watch so many games at Safeco Field which I had to wear jacket even on a summer night, so it was comforting to be in a dome.

Now the bad part of a ballpark in Japan. Overall, the food and beverage are reasonably priced, but the food was horrible. This was totally odd to me because meals are generally much better in Japan. The ballparks also didn't have a good efforts on entertainment. There was no music to tell people the status of the game, no entry song for batters, no little games like the "Hat Trick" in Safeco Field, and no singing like "Take Out to the Ball Game." The game went on basically very quietly, with occasional cheers, claps, and sighs. Maybe because it was a charity game, but I think the ballpark can do better in entertaining people. I will go watch another game at the end of March, a Mariners game against Oakland A's (Yes, it is a MLB game in Japan), but I will try to go watch a regular baseball game in Japan to see if I can be a fan of it.

The next update shouldn't be too far!