This project aims to examine how Japan’s regional Emissions Trading Schemes (ETSs) affect CO2 emissions at the installation level. Although the official government installation-level dataset is not currently accessible in this financial year, project has been made through related research showing that ETSs can affect productivity and innovation. These findings provide valuable insights into this project, guiding the design of further analyses, such as mechanism.

Given the staggered implementation of Japan’s ETSs, the project employs a staggered difference-in-differences approach based on the Callaway and Sant’Anna (2021) estimator. This method allows us to capture the treatment effect heterogeneity across different cohorts and over time. By defining treatment groups according to their specific adoption timing and comparing them to units not yet treated, we can derive a more accurate average treatment effect on the treated (ATT). This approach enhances the credibility and robustness of our estimates.

With the recent award of Grants-in-Aid for Scientific Research, I am able to apply for access to the official government installation-level dataset in the next financial year. Therefore, I can use installation-level data to empirically investigate the impact of ETSs on CO₂ emissions. Once the government data is obtained, I will extend the analysis to provide a more comprehensive assessment of how Japan’s ETSs mitigate CO₂ emissions at the installation level. Finally, the findings will offer valuable insights into the environmental efficacy of ETSs and inform policy discussions on enhancing market-based approaches to emissions reduction.