ADBI Working Paper Series TECHNOLOGY FORESIGHT FOR HYDROGEN SOCIETY TRANSITION IN JAPAN: APPROACH OF GTAP-E-POWER MODEL Michael C. Huang, Yoko Iwaki, and Ming-Huan Liou No. 1403 July 2023 Asian Development Bank Institute Michael C. Huang is a Senior Research Fellow at the Ocean Policy Research Institute, the Sasakawa Peace Foundation and a Visiting Researcher at SciREX Center, National Graduate Institute for Policy Studies (GRIPS). Yoko Iwaki is a Research Fellow at GRIPS Alliance. Ming-Huan Liou is Director of the Emerging Market Study Center, TIER. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms. Discussion papers are subject to formal revision and correction before they are finalized and considered published. The Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI’s working papers reflect initial ideas on a topic and are posted online for discussion. Some working papers may develop into other forms of publication. Suggested citation: Huang, M. C., Y. Iwaki, and M.-H. Liou. 2023. Technology Foresight for Hydrogen Society Transition in Japan: Approach of GTAP-E-Power Model. ADBI Working Paper 1403. Tokyo: Asian Development Bank Institute. Available: https://doi.org/10.56506/BYKL5188 Please contact the authors for information about this paper. Email: michael-huang@spf.or.jp Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan Tel: Fax: URL: E-mail: +81-3-3593-5500 +81-3-3593-5571 www.adbi.org info@adbi.org © 2023 Asian Development Bank Institute ADBI Working Paper 1403 M. C. Huang et al. Abstract With its portable, storable, and zero-emission features, hydrogen energy is regarded as one of the most promising alternative energies for the next generation. Along with developing hydrogen technology applications, Japan’s pilot experiments have demonstrated the feasibility of a hydrogen society. However, empirical studies are still scarce and limited to energy efficiency analysis or cost-benefit analysis, and lack inclusive discussion contributing to the evidence-based approach targeting policy implementation of the hydrogen roadmap. The research aims to provide a quantitative impact assessment of Japan’s hydrogen society by applying the GTAP-E-Power model with the technology foresight parameters of 2025–2035 sourced from the SciREX Policy Intelligence Assistance System – Economic Simulator (SPIAS-e) to investigate the change in output, price, and defragmentation of supply chains of energy sectors, as well as the emission of carbon dioxide from domestic and foreign firms. In the scenario of transitioning the existing fossil power of coal, natural gas, crude oil, and other renewable energies including solar and wind power, the simulation results demonstrated that the CO2 emission by domestic firms in the transportation and service sectors could be reduced by 3.3% and 2.3%, respectively, for power generation sectors, a total equivalent to 26.6 million tons thanks to the improvement in energy efficiency. In comparison, the export of transport equipment and energy-intensive sectors increased by 6.5% and 5.6%, respectively. Moreover, the welfare analysis of equivalent variations of Japan’s hydrogen society showed an increase of $75,696 million and a 1.3% growth in GDP. Keywords: hydrogen society, CO2 emission, SPIAS-e, net-zero society, GTAP-E-Power JEL Classification: C68, R11, O13, O14, Q47 ADBI Working Paper 1403 M. C. Huang et al. Contents 1. INTRODUCTION ....................................................................................................... 1 1.1 1.2 1.3 1.4 2. LITERATURE REVIEW ............................................................................................. 4 2.1 2.2 2.3 2.4 3. Technological Improvement ........................................................................... 9 Hydrogen Society Policy Shock ................................................................... 10 SIMULATION RESULTS .........................................................