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The Top Runner Program, a new approach to enhancing the energy efficiency of appliances and vehicles, has been introduced in Japan. In this paper an empirical analysis of the impact of the program and the labeling systems on firms' R&D efforts is carried out. The results show that the Top Runner Program and the labeling system for appliances led to increases in R&D expenditures by appliance producers. The program combined with the labeling system caused a 9.5% increase in appliance producers' R&D expenditures. However, the Top Runner Program and the labeling system for motor vehicles had little or even a negative effect on the innovative activity of motor vehicle manufacturers. R&D expenditures by motor vehicle producers may have increased in response to the exhaust gas regulation for diesel-powered vehicles rather than the energy efficiency regulation.

This chapter investigates whether the Target-Setting Emissions Trading (TSET) Program launched in 2011 by Saitama Prefecture in Japan had an impact on CO2 emissions during the first compliance period. Facility-level data are used to estimate the causal relationship between implementation of the program and changes in CO2 emissions. The results indicate that the TSET Program spurred emission reduction efforts. In addition, this chapter shows that the TSET Program also functioned as an incentive for facilities that are not covered by the program to lower their energy consumption. These findings indicate that the TSET Program succeeded in encouraging emission reduction efforts by the facilities, even though the program includes no penalty for facilities that do not meet emission goals.