An economic assessment of carbon tax reform to meet Japan’s NDC target under different nuclear assumptions using the E3ME model

The aim of this study is to investigate the macroeconomic impacts of Japan meeting its 2030 NDC GHG emission reduction target, using a carbon tax, under different assumptions about the share of nuclear in the power sector. We further investigate different ways to recycle revenues raised from carbon tax. The analysis was carried out using the global macro-econometric Energy-Environment-Economy model, E3ME, combined with the Future-Technology-Transformation model of the power sector, FTT-Power. Our analysis shows that Japan can meet its NDC target even with zero nuclear in the power mix, while increasing GDP above baseline by recycling the revenues gained from carbon taxes.