An assessment of carbon taxation by input–output analysis: Upstream or downstream?

Ayu Washizu*, Satoshi Nakano

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapter


To analyze the ripple effects of CO2 emissions from the introduction of renewable energy power plants, this study developed input–output tables for analysis of next-generation energy systems (IONGES). The results revealed that the environmental benefits obtained from investing in power plants of the same capacity vary significantly depending on the type of renewable energy. Using the IONGES, under assumptions of three carbon taxation methods (upstream, midstream, and downstream), we calculated the taxable CO2 emissions induced when producing each good or service and estimated the carbon tax burden associated with the final demand. We found that, in the upstream method, the taxation effects of one unit of carbon tax is concentrated in energy goods such as coal products and petroleum basic, while the effects are relatively dispersed in the downstream taxation method. If renewable energy is added to the government target level in 2030, taxable CO2 emissions will decrease by 12–13.3%. Compared with the upstream taxation method, in the midstream and downstream methods, the CO2 emissions induced by each final demand are distributed more evenly across various goods and services. Compared to the downstream taxation method, upstream taxation leads to higher CO2 emissions from exports, but lower CO2 emissions from household consumption. This is because energy-intensive industries such as machinery have high export ratios. We analyzed which expenditure categories contribute to the carbon tax burden associated with household consumption. In the case of upstream taxation, households mainly focus on reducing electricity consumption; in the case of downstream taxation, households reduce consumption of various energy-intensive goods and services.

Original languageEnglish
Title of host publicationEconomics, Law, and Institutions in Asia Pacific
PublisherSpringer Japan
Number of pages29
Publication statusPublished - 2021

Publication series

NameEconomics, Law, and Institutions in Asia Pacific
ISSN (Print)2199-8620
ISSN (Electronic)2199-8639


  • Downstream taxation method
  • Input–output table for analysis of next generation energy system (IONGES)
  • Midstream taxation method
  • Renewable energy
  • Structural CO emissions
  • Upstream taxation method

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Law


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