Assessing the impact of Saitama Emissions Trading Scheme on energy consumption and economic performance at the facility level

This study investigates the impact of the Saitama Emissions Trading Scheme (ETS) on energy usage and economic activity among regulated facilities during its first phase (2011–2014) and the first 4 years of its second phase (2015–2018). Focusing on electricity, city gas, and heavy oil, as well as the number of employees as a proxy for economic activity, we apply a difference-in-differences (DID) method to evaluate the impact of Saitama ETS on regulated facilities. The annual average energy consumption indicates that a reduction in city gas and heavy oil consumption was observed after the ETS was implemented, while no notable change was observed in electricity consumption. The average treatment effect on the treated (ATT) estimates indicate that regulated facilities’ electricity consumption increased by approximately 3%–4%, city gas consumption rose slightly and then declined by 25.58%, and heavy oil use decreased by 5.69% and 34.82% across the two phases. Although differences in energy consumption between regulated and unregulated facilities are not statistically significant, the analysis of employee numbers suggests that the ETS did not negatively affect economic activity. For all facilities, we found a significant positive effect emerges in the second phase, showing a 5.67% increase in the number of employees.