Assessment of the Japanese Energy Efficiency Standards Program

Japanese energy efficiency standards program for appliances is a unique program which sets and revises mandatory standards based on the products of the highest energy efficiency in the market. This study assessed the cost-effectiveness of the standard settings for an air conditioner as a major residential appliance or typical example in the program. Based on analysis of empirical data, the net costs and effects from 1999 to 2040 were estimated. When applying a discount rate of 3%, the cost of abating CO2 emissions realized through the considered standards was estimated to be -13,700 JPY/t CO2. The sensitivity analysis, however, showed that the cost turns into positive at a discount rate of 26% or higher. The authors also revealed that the standards' "excellent" cost-effectiveness largely depends on that of the 1st standard setting, and the CO2 abatement cost through the 2nd standard was estimated to be as high as 26,800 JPY/t CO2. The results imply that the government is required to be careful about the possible economic burden imposed when considering introducing new, additional standards.