The “Japan voluntary emission trading scheme (JVETS)”, the “Credit trading scheme between the large companies and the small/medium companies”, the “Kyoto mechanism credit acquisition program (KMCAP)”, the “Experimental Nationally-Integrated Market for Emissions Trading” and the “Offset Credit Scheme (J-VER)” were evaluated and compared from the viewpoints of policy formulation process, allocation method, cost-efficiency and impact on the achievement of the target defined in the Kyoto Protocol. It was found that: 1) a robust infrastructure for the emission trading scheme is being constructed in Japan, 2) the difference of cost-efficiency between credit acquisition from overseas and from domestic GHG emission abatement projects may not be so large, 3) system design of the domestic mitigation scheme will have a substantial influence on the achievement of Kyoto targets both for large companies in Japan and for Japan as a whole, and 4) considering the co-benefits, mitigation measures utilizing approaches such as a domestic emission trading scheme should be supported for further development.

Allocation methods in the EU Emissions Trading Scheme (ETS) are examined with respect to the conditions to be met in order for the scheme to achieve its goal of efficient reduction of CO₂ emissions. To achieve efficient CO₂ reduction, marginal costs for emissions reduction must be equalized not only among the direct abatement means but also among the reductions in the consumption of the products with CO₂ emissions at the production stage. The effects of five kinds of allocation methods on the efficiency of emissions reduction activities are analysed under three kinds of product market conditions. The five allocation methods are (i) allocation independent of output or emissions, (ii) allocation based on present output, (iii) allocation based on present emissions, (iv) allocation based on past output, and (v) allocation based on past emissions. The three product market conditions are (i) perfect competition (ii) Cournot model oligopoly, and (iii) oligopoly under full-cost pricing. In the light of the results, the actual allocation methods in the EU ETS are examined. It is made clear that the marginal abatement costs in the direct abatement activities in a few sectors which receive allowances on the basis of present or past output level would be equal to the allowance price, but the marginal costs of emissions reduction in the other activities would be much lower and not equal to each other. The allocation methods in the EU ETS are interpreted as seeking to maintain the competitiveness of the EU industries as well as avoiding the problem of fairness with free allocation, at the cost of giving up efficiency of the emissions trading scheme.

We consider matching agreements as models for transboundary environmental agreements, and investigate their effectiveness. Matching agreements do not fix the level of pollution abatement, instead fixing a “matching rate” for each country. In the first stage the matching rate for each country is fixed by negotiation; and in the second stage, an unconditional flat abatement is decided non-cooperatively taking the value of the matching rate as given. Each country is subjected to an additional abatement obtained by multiplying the total of all the other countries’ flat abatements by its matching rate. The analysis of a matching agreement game with symmetric countries as players suggests the existence of a self-enforcing set of matching rates leading to an efficient and equitable outcome, and thus shows that matching agreements are effective. Even if an individual country refuses to participate in a matching agreement, as long as all the other countries participate that country cannot increase its payoff, and therefore no incentive to defect from the agreement is generated. However, we must note that when multiple countries defect from the agreement simultaneously, free-riding by those countries cannot be prevented.

This paper analyzes the cost structure for municipal waste collection in Japan. Since municipalities in Japan are responsible for dealing with garbage generated by households, data regarding municipal waste is more readily available than data regarding waste from firms. Nevertheless, few studies have been published which analyze the end-of-life product logistics of municipal waste. Here this research aims to reveal some structural features of such end-of-life product logistics by using the SUR model.

The main results are as follows. First, it is shown that the degree of scale economy between the end-of-life product logistics and other processes of waste treatment is quite different. Especially, some local governments are large enough to eliminate the scale economy of the logistics process while all local governments possess scale-economy regarding the other processes.

Secondly, the analysis shows that monopoly is not the best approach for the Japanese case even though similar research in other countries supports monopoly as the best approach. Based on more than 1,700 samples, this paper statistically shows that, in Japan, subcontracting reduces the cost, but using only one contractor makes things worse. This means that there are inefficiencies that are larger than the advantage proffered by economy of scale.

The Clean Development Mechanism (CDM) has dual objectives-to assist developed countries in achieving compliance with their quantified emission reduction targets, and to assist developing countries in achieving sustainable development. CDM has successfully made a substantial contribution to reducing greenhouse gases (GHG), but most of the current projects are failing to promote local sustainable development at the desired level. The purpose of this article is to point out problems that lie in the decision-making process of CDM rules. It analyses how the notion of “sustainable development” was treated in CDM rule-setting at the international level. In addition, it looks at whether developing countries’ voices were properly reflected in the rules. These aspects are analysed by the partnerships approach, specifically focusing on each actor’s participation and discursive practice.

The analysis shows significant evidence that the notion of sustainability and the voices of developing countries and their local communities were not reflected properly in the CDM rule-making process. First, the COP7 decision allowing every developing country to set up sustainable development criteria based on its own preferences has in practice resulted in the CDM Executive Board (EB) being able to make CDM rules only in terms of GHG mitigation. Thus, the COP decision automatically marginalised the notion of sustainable development from CDM rule-setting discussion at the international level. Second, the rule that the EB members represent the regional groups that they belong to is not put into practice. Members develop rules in such a way as to represent their own countries’ interests. This means that the EB members from countries that have a high potential of implementing CDM projects have a stronger influence over the rule-setting process. In addition, no EB member was elected from environment or development NGOs that consider CDM to be an opportunity for sustainable development; members instead see it as a chance for GHG mitigation. Third, although NGOs succeeded in affecting political agreements, they were unable to make full use of opportunities to criticise technical agreements, which were mainly proposed by the private business sector.

It is very meaningful to discuss how to spur new technologies useful for solving global warming issues. In order to resolve the global issues resulting from the consumption of fossil fuels, it is necessary to control the amount of fossil fuels consumed, and to reduce the emission of greenhouse gases. It is useful to induce innovation related to energy saving, such as innovation in substitute energies and equipment usable for such energies.

The induced innovation theory of John R. Hicks (1932) holds that the rising price of production factors leads to the development of new technologies for reducing consumption of the expensive factor. From this theory, it can be considered that the rising price of fossil fuels provides an incentive to research and develop new technologies for energy saving or substitution. The purpose of this paper is to analyze how the rise of oil prices influences the development of technologies for energy conservation. It gives an empirical analysis of the relationship between the number of patent applications for new technologies for energy-efficiency and energy price rises in Japan. To analyze whether price inflation after the oil crises of 1973 and 1978 spurred innovation aimed at saving crude oil and other fossil fuels, this study employs the empirical model of Popp (2002), using Japanese patent data.

Oil price rises were found to have a positive and significant effect on the number of patent applications for energy saving technologies such as waste heat utilization and heat pumps, whereas the stock of patents and R & D expenditure have a positive and significant effect on substitute energy technologies such as fuel cells and hydrogen gas. This paper concludes that oil price rises could spur technical change in energy saving, but could not influence innovation in energy substitution. To induce innovation in energy substitution, it is necessary to increase the accumulation of R & D and R & D expenditure.