Greenhouse Gas Emissions in Canada and Japan: Sector-Specific Estimates and Managerial and Economic Implications

Many firms generate large amounts of carbon dioxide and other greenhouse gases when they burn fossil fuels in their production processes. In addition, production of raw materials and other inputs the firms procure for their operations also generates greenhouse gases indirectly. These direct and indirect greenhouse gas emissions occur in many sectors of our economies. In this paper, we first present sector-specific estimates for such greenhouse gas emissions. We then show that estimates for such sector-specific greenhouse gas emissions are often required for various types of corporate as well as public policy analyses in both domestic and international contexts. Measuring greenhouse gas emissions resulting from firms' multi-stage production processes in a multi-sector context is relevant for policies related to the Kyoto protocol, an international agreement to limit global greenhouse gas emissions. For example, since the protocol allows firms to engage in trading and offsetting of their greenhouse gas emissions across national borders, provided that emissions are correctly measured, the firms can take advantage of such trading schemes by placing their energy-intensive production facilities globally and strategically. We present several case studies which illustrate the importance of this and other aspects of greenhouse gas emissions in firms' environmental management. We also argue that our modeling and estimation methods based on input-output analyses are suitable for the types of research goals we have in this paper. Our methods are applied to data for Canada and Japan in a variety of environmental management circumstances.