The impact of a carbon tax implementation on non-CO2 gas emissions: the case of Japan

ABSTRACT Carbon taxation affects carbon dioxide (CO2) emissions through the price of fossil fuels, and hence can also affect emissions of air pollutants. Based on this fact, this study aims at exploring the impact of the carbon tax in Japan on various pollutants’ emissions, using a regression-based approach. The main contribution of this study is to assess the impact of a tax that is mainly directed at cutting CO2, on other gases, namely sulphur dioxide (SO2), suspended particulate matter (SPM), carbon monoxide (CO) and nitrogen oxide (NOX), as well as analyzing the impact of this tax on different sectors of the Japanese economy. Our results imply that the introduction of the carbon tax in Japan effectively reduced non-CO2 greenhouse gases (GHGs) and pollutants, even when controlling for demographic and economic variables. The results of this study can be explained by a partial decoupling of fossil fuel consumption and GHG emissions, possibly through investment in anti-pollution measures.