comprising the consumption of crude oil, gas, coal, and petroleum products. The
representative household maximizes its utility subject to time and budget constraints,
given the prices of goods and services, wage rates, the rental prices of capital stock,
and the unit prices of leisure time available to household members, the opportunity
cost of which is wage rates.
10.3.3.4 Feed-in Tariff
The economic and environmental impacts of eliminating nuclear power may depend
heavily on the potential of Japan’s renewable energy supply and the capacity of the
fossil fuel electricity supply. The Japanese government promotes renewable energy
through a solar photovoltaic (PV) feed-in tariff (FIT) to address climate and energy
issues. Under the FIT system, introduced in November 2009, an electric power
company must purchase electricity generated from solar PV at a fixed price and pass
on the cost to their customers. The FIT system was applied only to surplus electricity; electricity generated by solar PV must be consumed on-site first. Purchase rates
at this time were 48 JPY/kWh for residential use and 24 JPY/kWh for nonresidential
use. The purchase duration was 10 years. Following the Fukushima Daiichi nuclear
accident, the Japanese government decided to include wind, geothermal, biomass,
and micro hydro resources in the FIT targets.
Here, the FIT is modeled as a subsidy paid for electricity generation through the
use of renewables and as a tax on electricity sales. The budget for renewable energy
subsidies is financed by taxes on electricity sales. The tax rate of electricity sales is
determined endogenously in order to balance the subsidy budget and tax revenue.
10.3.3.5 Simulation Scenarios
The benchmark year of the GTAP-Power database is 2011. In the database, nuclear
power generation accounts for 7.9% of total electricity generation in Japan. Before
the accident, for example, in 2010, this figure was 32%. In CGE simulation, the
economic agents are assumed to adapt rationally to the economic situation described
in the GTAP-Power database. The assumption of rational adaptation of economic
agents is useful for calibrating the parameters of CES functions. However, this
assumption could underestimate the importance of nuclear power in 2011, thus the
benchmark year affects the results of the simulation.
Two scenarios are assessed. By adjusting the amount of specific capital of the
nuclear power source, the power generation level can be controlled. The first
scenario is one in which nuclear power generation increases to account for 20% of
total power generation in Japan. This scenario is called the 20% nuclear power
scenario. The Japanese government proposed a 20% nuclear power share in the
Basic Energy Plan released after the Fukushima nuclear accident. The second
scenario reproduces actual nuclear power use in Japan after the accident. In the
second scenario, nuclear power accounts for almost zero percent of total power
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M. Yamazaki and W. Zhou
representative household maximizes its utility subject to time and budget constraints,
given the prices of goods and services, wage rates, the rental prices of capital stock,
and the unit prices of leisure time available to household members, the opportunity
cost of which is wage rates.
10.3.3.4 Feed-in Tariff
The economic and environmental impacts of eliminating nuclear power may depend
heavily on the potential of Japan’s renewable energy supply and the capacity of the
fossil fuel electricity supply. The Japanese government promotes renewable energy
through a solar photovoltaic (PV) feed-in tariff (FIT) to address climate and energy
issues. Under the FIT system, introduced in November 2009, an electric power
company must purchase electricity generated from solar PV at a fixed price and pass
on the cost to their customers. The FIT system was applied only to surplus electricity; electricity generated by solar PV must be consumed on-site first. Purchase rates
at this time were 48 JPY/kWh for residential use and 24 JPY/kWh for nonresidential
use. The purchase duration was 10 years. Following the Fukushima Daiichi nuclear
accident, the Japanese government decided to include wind, geothermal, biomass,
and micro hydro resources in the FIT targets.
Here, the FIT is modeled as a subsidy paid for electricity generation through the
use of renewables and as a tax on electricity sales. The budget for renewable energy
subsidies is financed by taxes on electricity sales. The tax rate of electricity sales is
determined endogenously in order to balance the subsidy budget and tax revenue.
10.3.3.5 Simulation Scenarios
The benchmark year of the GTAP-Power database is 2011. In the database, nuclear
power generation accounts for 7.9% of total electricity generation in Japan. Before
the accident, for example, in 2010, this figure was 32%. In CGE simulation, the
economic agents are assumed to adapt rationally to the economic situation described
in the GTAP-Power database. The assumption of rational adaptation of economic
agents is useful for calibrating the parameters of CES functions. However, this
assumption could underestimate the importance of nuclear power in 2011, thus the
benchmark year affects the results of the simulation.
Two scenarios are assessed. By adjusting the amount of specific capital of the
nuclear power source, the power generation level can be controlled. The first
scenario is one in which nuclear power generation increases to account for 20% of
total power generation in Japan. This scenario is called the 20% nuclear power
scenario. The Japanese government proposed a 20% nuclear power share in the
Basic Energy Plan released after the Fukushima nuclear accident. The second
scenario reproduces actual nuclear power use in Japan after the accident. In the
second scenario, nuclear power accounts for almost zero percent of total power
192
M. Yamazaki and W. Zhou