Fixed-capital formation for services in Japan incurs substantial carbon-intensive material consumption

Production and services are supported by fixed-capital which require large amounts of material investments. Given that material use triggers substantial carbon emissions, management of the material use and carbon emissions via fixed-capital formation is vital for climate targets. Here, we calculate capital-embodied material footprints (MFs) and their induced carbon emissions for the 2015 Japanese economy. Our results show that the fixed-capital formation was responsible for 454 million tons MF, or one-third of the total MF regarding household consumption. The fixed-capital formation for the service sector produced an MF of 168 million tons and had a high level carbon intensity among the nine fixed-capital groups. Our findings underscore the need to break the stimulus to fixed-capital formation in the service industries to curb material use and carbon emissions. To this end, material use in companies needs to be managed up to Scope 3, with particular attention paid to Category 2 (fixed-capital).

Automated summary

The formation of fixed capital is vital for managing material use and carbon emissions, especially in the service sector. It is necessary to break the stimulus to fixed-capital formation in order to curb material use and carbon emissions.