Rethinking Emissions Trading: State Rescaling and the Administrative Foundations of Tokyo’s Cap-and-Trade System

As cities assume growing responsibility for climate mitigation, an important question is whether urban carbon markets can serve as effective instruments of decarbonisation. While emissions trading research has focused primarily on emissions outcomes, less attention has been paid to the institutional mechanisms underlying policy operation. This article addresses this gap through a qualitative case study of the Tokyo Cap-and-Trade System (TCTS), launched in 2010 as the world’s first mandatory city-level emissions trading scheme. Despite its official designation, the TCTS largely follows the logic of a baseline-and-credit system rather than a conventional allowance-based cap-and-trade programme. Drawing on government data, policy documents, academic studies, and interviews, the article examines how emissions trading was adapted to the metropolitan scale through policy mobility, institutional translation, and functional state rescaling. It argues that the TCTS combines carbon trading with bureaucratic oversight, monitoring and verification, technical guidance, and energy-efficiency regulation within an administratively embedded governance framework. Although substantial emissions reductions were recorded among regulated facilities, persistent surplus credits and limited trading reveal the limits of market mechanisms alone. The study shows how globally mobile climate policies are reconfigured through local institutions and metropolitan governance capacities, suggesting that successful urban decarbonisation depends as much on administrative capacity, institutional learning, and sustained regulatory engagement as on carbon pricing.