Regional economic effects of renewable energies - comparing Germany and Japan

Abstract

Background: Renewable energy (RE) creates opportunities for sustainable, socioeconomic development of local communities as fossil fuel-based energy imports are substituted with local RE sources. Established methods such as input–output (I/O) analysis face limitations when assessing these regional effects due to insufficient model integration of RE sectors. For Germany, regional value-added modeling based on RE value chain analysis is recognized as a viable alternative approach. The international transferability of this model is tested for the case of Japan. Methods: The model of regional value-added developed by the Institute of Ecological Economy Research (IÖW model) is adapted to Japan for five representative RE technologies. The estimate of regional value-added for Japan is based on standardized, technology-specific value chain structures with Japan-specific cost and revenue data for individual RE technologies, and applies Japanese statistical sources and tax schemes. Results: The transferability of the IÖW model to other countries requires modifications to reflect country-specific industry structures, tax codes, and policy frameworks. The comparative analysis between Germany and Japan reveals substantial differences in the economics of individual RE technologies and the distribution of regional value-added. RE has a comparable high potential for regional economic development in Japan but depends largely on local ownership of RE sources. Conclusions: The IÖW model offers a powerful tool for regional planners and policymakers to analyze and capture the potential of RE for regional economies. Its application for a comparative analysis between countries provides indications to enhance the effectiveness of RE-related policies for regional economic development.