Climate Change Policy, Emissions Trading Schemes and Carbon Pricing: California and Tokyo

In this paper, we provide explicit critical comparisons of two very important and successful regional emissions trading schemes: California and Tokyo. We focus on the contrasts of the different rules and functioning of the carbon credit trading markets. We also compare the carbon leakages and the compliance of the two schemes. We highlight the “negative” carbon leakage and the voluntary compliance associated with the Tokyo- Saitama Prefecture schemes. Finally, we provide a formal model linking some “unique” Japanese labour market practices to the incentives facing the Japanese facilities.