Sustainable energy policy choice: An economic assessment of Japanese renewable energy public support programs

Given the associated environmental and economic benefits, electricity from renewable energy sources (RES-Es) is expected to play a significant role in shaping the human energy future. For the development of RES-E, the Japanese government introduced a national public support system based on a renewable portfolio standard (RPS) scheme. There is, however, a gap in the international and domestic literature about the Japanese renewable deployment policy. As a result, lessons to be learned from the Japanese experience have not been shared by the academic community. This paper fills this gap by paying a focused attention on the Japanese renewable portfolio standard (J-RPS) scheme, with an assessment on whether the scheme is promoting effective and efficient RES-E development. It reveals how certain types of RES-Es are marginalized from the market under the RPS equimarginality rule. Clear policy recommendations are made for a better design of the J-RPS, based on the exclusive empirical analysis.