Monetary and Economic Studies vol.41 / November 2023

Energy Efficiency in Japan: Developments in the Business and Household Sectors, and Implications for Carbon Neutrality

Kosuke Aoki, Jouchi Nakajima, Masato Takahashi, Tomoyuki Yagi, Kotone Yamada

Recently the efforts toward decarbonization are spreading both in Japan and abroad. In this paper, we examine the developments in Japan's energy intensity, a measure of energy efficiency, and their background at the aggregate and sectoral levels. The main results are as follows. Energy efficiency in Japan improved considerably between the 1970s and the 1980s, mainly due to the progress in energy-saving technical changes in the business sector. Although the pace of improvement decelerated on the whole from the 1990s to the first half of the 2000s, Japan's energy efficiency has returned to a moderate improving trend, particularly in the household sector, in recent years. Our estimate using a simple model of the household sector shows that the recent improvement in aggregate energy efficiency may reflect households' purchases and utilization of energy-saving goods produced by the business sector. Further efforts are expected to be made in each sector to achieve carbon neutrality.

Keywords: Climate change; Carbon neutrality; Energy efficiency; Technical change

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

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