Economic impacts of Japan’s renewable energy sector and the feed-in tariff system: using an input–output table to analyze a next-generation energy system

Abstract

We construct an input–output table to analyze a next-generation energy system. Based on this table, we estimate the effect of using renewable energy on Japan’s economic structure as well as the feed-in tariff’s contribution to the cost structure. The results clearly show that, induced by demand, existing power generation options and the production of existing passenger vehicles would be reduced and replaced by electric vehicles (EVs), plug-in hybrid vehicles (PHVs), and the renewable energy sector. Furthermore, the demand for production in the supply chain of these sectors would change. While the feed-in tariff seems to benefit the overall Japanese economy, the benefits are not divided equally among the sectors because the positive effect of the feed-in tariff system is greater than the negative effect in energy and energy-intensive industries, while the negative effect is greater in the service sectors, on which the cost of the feed-in tariff system is levied. However, renewable-energy-induced service activities, such as research and business services, are becoming more pervasive. Therefore, this inequality may be resolved in the long term and could be assisted by policies that accelerate this change.