Why Japan’s sovereign climate finance took a transition-bond form: bureaucratic mediation in an eco-developmental state

This article explains why Japan organized its Green Transformation (GX) sovereign borrowing programme around a transition-labelled use-of-proceeds instrument despite its prior green-finance infrastructure and the international prevalence of sovereign green bonds. It develops a political economy account of instrument choice within an eco-developmental state. The article introduces accommodative instrument design as a process through which bureaucratic actors translate incumbent sectors’ conditional support for decarbonization into an instrument that combines a formal climate objective with gradual adjustment. The analysis draws on documentary evidence and process tracing of policy developments from 2017 through February 2024, including 21 semi-structured interview sessions with 18 participants. It finds that an alignment between the Ministry of Economy, Trade and Industry and transition-exposed industries helped shape eligible sectors and transition pathways. Environmental actors exerted less influence in the venues where the GX programme and its eligible uses were designed. The article contributes to distributive climate politics and policy-instrument scholarship by showing how mandate-differentiated agencies convert sectoral bargains into the rules of sovereign finance.