Low Carbon Economy, 2011, 2, 193-199
doi:10.4236/lce.2011.24023 Published Online December 2011 (http://www.SciRP.org/journal/lce)
1
Prospective on Policies and Measures for Realizing
a Secure, Economical and Low-Carbon Energy
System
——Taking the Effects of the Great East Japan Earthquake into Consideration
Ryuji Matsuhashi1,2, Kae Takase1,2, Koichi Yamada2, Yoshikuni Yoshida1,2
1Department of Electrical Engineering and Information Systems, Graduate School of Engineerin g, The Uni versity of To kyo, Toky o,
Japan; 2Center for Low Carbon Society Strategy, Tokyo, Japan.
Received August 26th, 2011; revised September 20th, 2011; accepted October 10th, 2011.
ABSTRACT
The Great East Japan Earthquake devastated the eastern regions of Japan on this March. Due to the nuclear accident
caused by the earthquake, Japan’s Cabinet stated to revise energy policies. This article aims at investigating whether
we could establish a secure, economical and low-carbon energy system taking account of the serious situation after the
Earthquake. For this purpose, we first evaluated possible technology options along with economic options. Then we
integrated these options in a computable general equilibrium model for Japan so as to evaluate the impacts to national
economy. As results, we quantified the relationships between energy security, quality of life and CO2 emissions.
Keywords: The Great East Japan Earthquake, Energy Policies, Computable General Equilibrium Model, Technology
Options, Quality of Life, CO2 Emissions
1. Introduction
The basis of sound energy policy is to realize a secure,
economical and environmentally sound energy system. In
the Basic Plan of Energy put forward by the Japanese
Cabinet in 2010, nuclear energy is anticipated to play a
significant role in ensuring a stable supply of energy and
reducing CO2 emissions in Japan. The Basic Plan of En-
ergy proposes to build 14 new nuclear power plants, and
to increase the average operating rates of these plants to
90% by 2030. However, on March 11, 2011, the Great
East Japan Earthquake devastated the eastern regions of
Japan. This earthquake, and the subsequent tsunami, cut
off all power, including emergency backup power, to
Tokyo Electric Power Company’s Fukushima Dai-ichi
Nuclear Power Plant, causing a critical situation. At pre-
sent, the situation remains uncertain, and we can only
hope for a speedy resolution and recovery. This nuclear
accident, the most serious in Japanese history, will inevi-
tably affect the country’s future plans for nuclear energy,
and the government of Japan may have to revise the Ba-
sic Plan of Energy itself. This article aims at investigating
future energy scenarios and CO2 emissions quantitatively.
2. Evaluation of Energy Policies by Using
Computable Genera l Equilibrium Model
We developed a computable general equilibrium (CGE)
model for Japan, on the basis of Ichioka’s analysis [1,2].
We used this model to evaluate the effects of various
scenarios on the national economy. In this CGE model,
households choose between present consumption and sav-
ings to maximize their utility. The goods and services avai-
lable for present consumption are grouped into 19 cate-
gories, as shown in Figure 1. The utility of consuming
these 19 types of goods and services is expressed by using
the Cobb-Douglas function given in Equation (1). The
present utility, consisting of the present consumption and
leisure, is expressed by a constant elasticity of substitu-
tion (CES) function given in Equation (2). Finally, the
utility integrating the present and future consumption is
expresse d by a nothe r CES func tion gi ven i n Equation (3).
19
1
ij
ii
j
j
X
X


 (1)
Xi: Composite consumption of goods and services by
the ith income bracket.

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System
194
1-200
2 200-250
3 250-300
4 300-350
5 350-400
6 400-450
7 450-500
8 500-550
9 550-600
10 600-650
11 650-700
12 700-750
13 750-800
14 800-900
15 900-1000
16 1000-1250
17 1250-1500
18 1500-
Bracket s by income
Dec re as e b y
Energy saving
Increased cost
Dec re as e b y
Energy saving
Increased cost
12
・・・ 18
1Food
2 Dwelling
3 Electricity
4Gas
5Light & Fuel
6Water & Sewage
7D urable goods
8Heating & Cooling
9Gener al furnature
s
10Other furnatures
11Cl ot hs and s hoes
1 2Medic al & Hea lth
13 Transport
14 Automobiles
15 Gasoline
16 Communication
17 Education
18 Entertainment
19Other consumtions
Figure 1. Consumption and production sectors in our CGE
model.
Xij: Consumption of the jth good or service by the ith
income bracket.


1
11
1
11i
i
ii i
iiii i
Hl X


 
  (2)
Hi: Present consumption by the ith income bracket.
li: Consumption of leisure by the ith income bracket.


2
21
1
11i
i
ii i
iiiiFi
UH C


 
  (3)
Ui: Utility of the ith income bracket.
CFi: Future consumption by the ith income bracket.
Households are classified into 18 brackets according to
their annual income, from the lowest bracket receiving
less than 2 million yen per year to the highest bracket
earning more than 15 million yen per year. This classifi-
cation is important in the current analysis for evaluating
the economic impact on each income bracket. Since re-
newable energy and products with improved efficiency
tend to be more expensive than ordinary products,
households in higher income brackets can more easily
afford these products than households in lower income
brackets. Consequen tly, the impact on a household depends
on annual income. We should exercise due care to mini-
mize the economic impact on lower income households.
On the other hand, firms determine the factors of pro-
duction, labor and capital inputs in order to maximize
their profit, as shown by Equation (4). At the same time,
intermediate demand in each industry is determined from
the Leontief product i o n fu nct i on gi ven in Equation (5), in
which the relations between 39 types of goods and ser-
vices are expressed in an input- output table (Figure 2).

1
,
jjj jjj
VALKA LK

 
 (4)
Lj: Labor input of the jth industry.
Figure 2. Industrial sectors in input-output tabl e .
Kj: Capital input of the jth industry.
VAj: Value-adde d pr o duct i o n of the jth industry.
α: Optimal share of labor cost in the factors of produc-
tion.




011
min,,, ,
j
jjjjjjnj nj
QVALKaXaXa (5)
Qj: Production of the jth industry.
aij: Input coefficient from the ith to the jth industry.
For the case where an industrial sector is deploying
energy-saving and renewable products for households,
production values increase in electric machinery, preci-
sion machinery, transportation and the like. In contrast,
households consume less electricity and gasoline as a
result of efficiency improvements, and thus the produc-
tion values in industrial sectors of electricity and petro-
leum products decrease. Consequently, complicated re-
percussion effects are observed in many industrial sectors.
An additional consideration is that governments will
impose various types of taxes in order to meet targets for
final demand and public investment.
Finally, we compute the equilibrium points, at which
the supply and demand of all goods and services, and of
factors of production, are equal (Figure 3).
3. Scenarios of Energy Supply, CO2
Emissions and Living Standards in 2020
and 2030
In this section, we describe five possible scenarios, and

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System
195
population and deepening maturity of economy leads to
the lower growth rate from 2020 to 2030.
Case 2: Increasing nuclear plants.
With the same GDP growth rate as in Case 1, in Case
2 we assume that 8 and 14 new nuclear power plants will
have been constructed by 2020 and 2030, respectively;
note that the 6 reactors at the Fukushima Daiichi Nu
clear Power Plant are assumed be decommissioned by
2020. We also assume that the operating ratio of all nu-
clear plants will have improved to between 85% and 90%
by 2020, in accordance with the Basic Plan of Energy.
Moreover, generation from solar power systems is as-
sumed to increase to 28 GW in 2020 and 53 GW in 2030.
Figure 3. Conceptual figure of general equilibrium. Case 3: Maintaining nuclear plants.
Assumptions are same as Case 2 except we assume
that no further construction of nuclear plants will occur
in future.
use the proposed CGE model to evaluate living standards
and the amount of domestic CO2 emissions in 2020 and
2030. The five scenarios assume the adoption of several
energy-saving and renewable technologies with either
increased or decreased use of nuclear power plants. Next
we describe on assumptions for the five scenarios of the
economic growth and distributions of power generation
in 2020 and 2030, as follows (Figure 4).
Case 4: Decreasing nuclear plants.
We assume that no further construction of nuclear
plants will occur in the future, and that all other existing
nuclear power plants will be decommissioned after 30
years of operation. Power shortages resulting from clos-
ing the nuclear p lants will be compensated for mainly by
coal, oil and natural gas power plants. Solar power gener-
ation is assumed to increase to 38 GW in 2020, and 80
GW in 2030. All other assumptions are identical to Case 2.
Case 1: The nominal case.
The nominal case does not adopt any measures to re-
duce greenhouse gas emissions. GDP is assumed to grow at
an annual rate of 1.3% from 2005 to 2020 and 0.5% from
2020 to 2030. We assume that decrease of national Case 5: Abolishing all nuclear plants.
COAL
19%
OIL
0%
NATURAL
GAS
20%
HYDRO.
13%
NUCLEAR
42%
SOLAR
POWER
1%
WIND
etc.
5%
Case 2
COAL
22%
OIL
3%
NATURAL
GAS
27%
HYDRO.
13%
NUCLEAR
29%
SOLAR
POWER
1%
WI ND e tc .
5% Case 3
Case 2 Case 3
COAL
24%
OIL
10%
NATURAL
GAS
32%
HYDRO.
13%
NUCLEAR
14%
SOLAR
POWER
2%
WIND etc.
5%
Case 4
COAL
22%
OIL
4%
NATURAL
GAS
26%
HYDRO.
14%
NUCLEAR
0%
SOLAR
POWER
29%
WIND etc.
5%
Cas e 5
Case 4 Case 5
Figure 4. Distribution of power sources for Cases 2 - 5 in 2020.

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System
196
Assumptions are the same as Case 2 except for the foll-
owing. We assume that no further construction of nuclear
plants will occur in the future, and that all other existing
nuclear power plants will be decommissioned by 2020.
Energy generated by solar power systems is assumed to inc-
rease to a level of 287 GW in 2020 and 2030, r eplacing all
of the power generated by the present nuclear power plants.
Based on the estimated lifetime of nuclear power pla-
nts, their output capacity over the next 30 years is shown
in Figure 5.
Next we show policies and measures adopted in this
analysis for energy efficiency improvement, excluding
the power generation sector, in both 2020 and 2030. We
evaluate these cases both with and without the energy-
saving measures as described in (1), (2) and (3).
1) The percentage of next-generation energy efficient
homes (1999 standard) as a stock base is assumed to be
22% in 2020 and 48% in 2030, in accordance with the
National Institute of Construction.
2) The percentage of next-generation passenger cars as
a stock base is assumed to be 40% in 2020 and 50% in
2030. Next-generation passenger cars are hybrid, plug-
inhybrid, electric, fuel cell vehicles and the like.
3) The “Top runner” system is assumed to be continued
for domestic electrical appliances and automobiles.
4) Natural gas is assumed to replace 80% (relative to
2005 levels) of petroleum products and fuel, including
heavy oil, used by all manufacturing sectors (except the
petrochemical industry).
5) Promoting modal shift: based on input-output a nal ysi s
of distribution, CO2 emissions in the transportation sector
are assumed to be cut by up to 44%.
6) Promoting energy savings in industrial sectors: in
accordance with the law promoting energy conservation,
the annual improvement of energy intensity in each in-
dustry is assumed to be 1%.
Figure 5. Power capacity of existing nucle ar power plants ov er
their estimated lifetime.s
For solar power generation systems, we assume that
their cost will decrease according to the estimate given
by Yamada et al. [3] as shown in Ta ble 1. A methodolo-
gy to evaluate the cost of future power generation sys-
tems was reported and published in a proceedings of
2011 World Engineers’ Convention.
We used the CGE model to estimate the reduction in
CO2 emissions from energy consumption in comparison
with the 1990 emissions level. Figures 6 and 7 show the
estimate results for each case in 2020 and 2030, respec-
tively.
Table 1. Estimate of future cost of solar power generation
systems [3].
(Yen/W)
2011 2015 2020 2030
Module 150 120 100 50
Balance of the system 200 150 100 70
Total system 350 270 200 120
Figure 6. Reduction of CO2 emissions in 2020 compared with
1990.
Figure 7. Reduction of CO2 emissions in 2030 compared with
1990.

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System 197
The results indicate that decreasing the use of nuclear
energy has a large impact on CO2 emissions. Namely, the
difference in the CO2 reduction, between the case of in-
creasing nuclear energy and the case of decreasing nu-
clear energy, is approximately 12% in 2020 and 22% in
2030.
The results indicate that decreasing the use of nuclear
energy has a large impact on CO2 emissions. Namely, the
difference in the CO2 reduction, between the case of in-
creasing nuclear energy and the case of decreasing nu-
clear energy, is approximately 12% in 2020 and 22% in
2030.
Next, we show the increases and decreases in house-
hold welfare values. Figures 8 and 9 show the estimated
differences in welfare values per household for each case
compared with Case 1 for 2020 and 2030, respectively.
Figure 8. Changes in household welfare values in 2020.
Figure 9. Changes in h ousehold welfa r e va lues in 20 30 . Figures
8 and 9 express the differences from Case 1, the no reduc-
tion case.
Changes in welfare are translated from changes in utility
by using the concept of equivalent variation. Specifically,
the welfare changes show changes in utility, based on the
concept of equivalent variation, in which the utility
changes are expressed in terms of the price of goods and
services before the change. We cannot express changes
in household welfare in terms of only disposable income,
since the prices of goods and services are different depend-
ing on each case. Hence, we use househo ld we lf ar e v al ue s
with equivalent variation.
Values of household welfare in Case 2 are higher than
those in Case 5 in 2020. However, household welfare
values for Case 5, in which all nuclear power plants are
decommissioned and replaced with solar power genera-
tion systems, are even higher than those for Case 1, in
which no measures are taken to reduce CO2 emissions.
Although values of household welfare for Case 2 are
also higher than those for Case 5 in 2030, the difference
is much smaller than in 2020. This smaller difference in
household welfare is because the costs of solar power
generation systems and batteries are lowered (see Table 1)
through research and development of these technologies.
To confirm this point, in Figures 10 and 11 we show
percentage changes in the prices of consumption goods
for househo lds in 2020 and 20 30, respectively.
Unless we are unable to deploy the energy-saving
technologies listed in (1), (2) and (3) in Chapter 3, the
prices of all consumer goods centered on electricity es-
calate in 2020. This escalation is a consequence of de-
ploying enough solar power generation systems to pro-
duce nearly 300 GW of electricity by means of a feed-in-
tariff. In contrast, the increase in the price of electricity
and other goods becomes smaller in 2030, even though
these solar power generation systems produce nearly 300
GW of power. This trend is mainly due to the effect of
reducing the cost of solar power generation systems, as
shown in Table 1.
Figure 10．Changes in prices of consumption goods of house-
holds in 2020.

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System
198
Figure 11．Changes in prices of consumption goods of house-
holds in 2030. Figures 10 and 11 depict changes in pri ce s fr o m
Case 1.
Finally, we compare household welfare values in 2030
for all income brackets under Case 2 and Case 5 (Figures
12 and 13). These figures show that household welfare
values will increase regardless of the ex istence of nuclear
power plants, as long as the energy efficiency of final
consumption is improved using the measures (1), (2) and
(3) in Chapter 3. Therefore, promotion of energy conser-
vation is the most significant factor in establishing a low
carbon society.
The following implications are deduced from the above
analyses:
 Cases 2 and 3, in which we increase or maintain the
number of nuclear power plants, are superior in im-
proving household welfare and decreasing CO2 emis-
sions. However, these cases are questionable from the
perspectives of environmental safety and security.
Especially, now that public acceptance has been low-
ered by the accident at the Fukushima Daiichi Nu-
clear Power Plant.
 Although Case 4, in which we decrease nuclear power
plants, is inferior to Cases 2 and 3 in terms of house-
hold welfare values, the difference is small. CO2 emis-
sions are, however, drastically increased in Case 4,
which is contradictory to the goal of establishing a
low carbon society in Japan.
 CO2 emissions are reduced to some extent in Case 5,
in which we decommission all nuclear power plants
within five years. Case 5 is also not problematic from
the perspectives of env ironmental safety and security.
However, introduction of a large number of solar
power generation systems suppresses household wel-
fare due to the rapid escalation of electricity prices. If
the cost of solar power generation systems can be de-
creased as shown in Table 1, there will be almost no
adverse effect on households.
Figure 12. Changes of household welfare values in individ-
ual income brackets for Case 2.
Figure 13. Changes of household welfare values in individ-
ual income brackets for Case 5. Figures 12 and 13 depict
the change in household welfare values relative to Case 1,
and we assume promotion of en ergy-saving measures (1), (2)
and (3) in Chapter 3.
4. Conclusions
This article aimed at investigating energy policies and
measures to establish a low carbon society. For this pur-
pose, we used the computable general equilibrium (CGE)
model for Japan, so as to conduct a comparative analysis
of the effects of increasing and decreasing the number of
nuclear power plants on the national economy and CO2
emissions. We also used the model to evaluate the effects
of deploying renewable energy and energy- saving tech-
nologies. As a result, we found that a decrease or aboli-
shment of nuclear power plants has a serious negative
impact on CO2 emissions.
Next we evaluated the impact of energy policies on
households’ utility. The computed results imply that the
utilities of households could be considerably improved
by the spread of energy-saving products, such as high-
efficiency electrical appliances and automobiles. Thus,

Prospective on Policies and Measures for Realizing a Secure, Economical and Low - C a r b o n Energy System
199
measures to promote the spread of these products are
crucial, regardless of the increase or decrease of nuclear
power plants.
Now that trust in nuclear energy has been severely
damaged as a result of the accident at the Fukushima
Daiichi Nuclear Power Plant, it is inevitable that energy
policies must be revised. With present technologies and
institutions-regardless of whether nuclear power plants
are increased, maintained, decreased or decommissi-
oned—no ideal so lution exis ts tha t offers env ironmen tal
safety and security, benefits to the economy and low
carbon emissions. Thus, we need technological and insti-
tutional innovations in order to realize a sustainable
energy system in the long term. These innovations
include reducing the cost of solar power generation tech-
nologies, improving energy efficiency, integrating infor-
mation technology with the energy system to create a smart
grid, and introducing renewable energy technologies.
REFERENCES
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Medium Term Target of Reducing Greenhouse Gases,”
Forum on Public Policy: A Journal of Oxford Round Ta-
ble, Vol. 2010, No. 3, 2010, pp. 1-11.
[3] K. Yamada, T. Inoue and K. Waki, “Future Prospects of
Photo-Voltaic Systems for Mitigating Global Warming,”
Proceedings of 2011 World Engineers’ Convention, Ge-
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