We present a dynamic input-output model, which determines the optimal level of economic activities and their optimal emission of air pollutants so as to maximize the welfare function being subject to the emission standards of the air pollutants with respect to the emission taxes. By making the emission standards strict step by step, we analyze the feasibility and implementability of the reduction scenario in the Kyoto Protocol by the numerical simulations. In this paper, it is argued that the cost of reduction in the emission of air pollutants in terms of GNP is large and the welfare rapidly decreases less than generally tolerable level as the reduction rate increases. We formulate a model of the total environmental economic system, which controls the air pollutants emitted by not only industries but also households. The fundamental of the model is the non-linear dual system of the input-output analysis. The taxes are levied on the emission of air pollutants by both production and consumption activities based on the producers pay principle. The prices change so as to reflect social costs of the air pollutants through the optimal emission taxes. For a while, we consider that these optimized emission taxes are collected by the government, and subsidized back for activities which abate air pollutants in the model. The model is applied to the Japanese economy in 1994-2002. Thirty-two industries are distinguished, and three types of pollutants, CO₂, SO_x and NO_x are analyzed. We had obtained that to achieve a vast reduction in the emission such as made in the Kyoto Protocol, the technological progress in the abatement industries should be an important key factor. A fairly large amount of R & D investment into the abatement technology and related sciences will more pay than ever thought generally. And, it could be considered that even the reduction rate of 15% less than Basic Case (estimation case without any environmental policy) would be too large to be accepted generally and maximum tolerable reduction level could be 10% or so as for estimated Japanese economy of third period (1999-2002).