11.4.3.4 Policy studies for Japan

Masui et al. (2005) examine the effects of a carbon tax in Japan to meet the Kyoto target using the AIM (Asia-Pacific Integrated Model). By 2010, a carbon tax with lump-sum recycling leads to an average GDP loss of 0.16% and a tax of 115 US$/tCO₂. A tax and subsidy regime with carbon tax revenue used to subsidize CO₂ reduction investments leads to an average GDP loss of 0.03% and a tax of 9 US$/tCO₂. By contrast, Hunt and Ninomiya (2005) look at emission trends and argue that as long as growth is less than 1% per year, and the carbon intensity of energy does not rise, Japan should be able to achieve its target, for example through the Kyoto Target Achievement Plan. If growth is closer to 2% per year, the plan will not suffice.