Implementing EU emissions trading: success or failure?

This article assesses and explains the implementation of the EU emissions trading scheme (EU ETS). It argues that implementation in terms of ambitiousness has been only moderately successful so far, but significant differences between the Member States are also observed. Similarities and differences are then explained within a multi-level governance approach emphasizing the need to search for explanations at national, EU, and global levels. The EU ETS case shows that the multi-level governance approach can be as relevant for understanding implementation as for explaining policy-making. In addition to factors located at the national level, the decentralized nature of the EU scheme itself is important for understanding how the system works in practice. At the global level, the link to the Clean Development Mechanism under the Kyoto Protocol is particularly important for determining how well the EU ETS will perform in the future.     

气候变化治理技术方案之中国路径

通过从经济与财政可能性、政治伦理可行性、技术和行政操作可行性三个方面将诸多零散的碳税和碳排放交易的利弊分析进行梳理和系统化,碳排放交易的现实可行性和优势得以显现。同时,通过对欧盟和美国碳排放市场建设历史经验的纵向分析和现状的横向比较,强制性碳排放市场的重要意义和碳排放市场建设渐进主义的优势得以体现。藉此,结合我国排污交易的历史经验与最新的政策法律导向,构建渐进主义原则下碳排放市场发展的法律主线和具体制度方案值得尝试。中国应在循序渐进地扩大碳排放交易主体和范围的基础上,通过不断修正市场激励、交易和辅助机制,逐步完善碳排放市场的内在交易机理并实现与国际气候治理机制的衔接,成为未来气候治理的领导者。     

Emissions trading for households? A behavioral law and economics perspective

This is the first research article on expanding emissions trading in the EU to households in which law and economics is explicitly and systematically combined with behavioral science. The goal of the article is neither to plead in favor nor against emissions trading for households, but rather to provide an analysis of such a scheme. To that end, the article gathers relevant theoretical insights and discusses how established empirical findings can be used to design a potentially workable scheme. The analysis not only presents an overview of possible economic and behavioral barriers, but also creates a feedback to its institutional design by presenting possible solutions to overcome them. Downstream allocation creates a more direct and visible carbon incentive, whereas administrative costs can be reduced by concentrating monitoring and enforcement upstream. Behavioral acceptance can be boosted via strategic communication, for instance by stressing that emissions trading is both effective (emissions are capped) and fair (those who emit less, pay less). Energy conservation can be stimulated by frequently sending updates to households of their carbon transactions to make the consequences of their behavior more noticeable. Whether these necessary conditions are also sufficient to ensure political acceptance remains an open question.     

Restricting the import of ‘emission credits’ in the EU: a power struggle between states and institutions

This article examines the development of a cap on the use of so-called ‘project credits’ in the EU emissions trading scheme. It investigates how the issue of such a limit was addressed in the negotiations of the Linking Directive, and how it has been dealt with in the later implementation of this directive. The article applies two explanatory approaches: one based on intergovernmentalist theory, assuming that the cap reflected the preferences of the EU Member States; and one based on the multi-level governance model, assuming that the cap expressed the preferences of EU institutions rather than Member States. What is found is a two-stage development: during the negotiations of the Linking Directive, Member States managed to secure a no-cap solution allowing extensive use of the project credits. In the later implementation phase, however, when the emissions trading scheme was up and running and a certain legitimacy for the system had been established, the Commission managed to ‘regain control’ by bringing back a cap. Thus, the project credit cap—and by that, the very nature of the EU emissions trading scheme—has been the subject of a continuing power struggle within the EU—and different theoretical perspectives explain different stages of this process.     

Emission Trading Restrictions with Endogenous Technological Change

In this paper we use a simple climate model for endogenous environmental technical change in order to analyse the effects on equity and efficiency of placing different degrees of restrictions on trade in the market of pollution permits. The model is obtained by incorporating in Nordhaus and Yang (1996)'s RICE model a notion of induced technical change close to the one proposed in Goulder and Mathai (2000). With the help of such a model, we assess the pros and cons of introducing ceilings on emission trading. In particular, we analyse both the cost effectiveness and the distributional effects of placing restrictions of trading emissions. The analysis takes into account the role of environmental technical change that could be enhanced by emission trade limitations. However, this effect is shown to be offset by the increased abatement cost induced by the larger than optimal adoption of domestic policy measures when ceilings are made binding. Hence, our analysis provides little support for quantitative restrictions of emission trading, even when these restrictions actually have a positive impact of technical change. Even in terms of equity, ceilings find no justification within our theoretical and modelling framework. Indeed, we find that flexibility mechanisms in the presence of endogenous technical change increase equity and that the highest equity levels are achieved without ceilings, both in the short and in the long run.     

Energy prices and emissions trading: windfall profits from grandfathering?

The greenhouse gas emissions trading scheme in the European Union primarily uses grandfathering until 2012, which means that polluters get emission rights free of charge based on their historical emissions. Energy consumers accuse energy producers of making windfall profits by incorporating the market value of those free rights into the energy prices. However, we develop a numerical example to illustrate that the reasoning of the producers is correct. We also explain why this market value is only partly passed on to consumers. We consider various measures and conclude that only auctioning the rights after 2012 nullifies the additional profits.     

Beyond Kyoto: The EU's Contribution to a More Sustainable World Economy

The EU has been leading the world fight against climate change since the late 1990s. This activism on the international scene has served as a stimulus for a common action against global warming that has, in the last 10 years, become a world referent and the central issue in the EU environmental policy. The most relevant initiative is the greenhouse gas (GHG) emissions trading scheme (ETS), adopted in fulfilment of the Kyoto Protocol. In 2008, the EU adopted a new set of measures on climate and energy for the post‐Kyoto period (2013–2020). This new legal framework, coupled with the provisions introduced by the Treaty of Lisbon and the ‘Europe 2020’ strategy, represents the EU's commitment to promote a more sustainable European and world economic model.     

环境容量的民法进程

排污权交易制度作为市场经济保护环境的手段，由于其充分发挥了市场经济的优势，能够有效地控制和减少污染物排放，受到国内外学界的关注。目前我国虽有排污权交易的实践，在排污权及排污权交易方面仍为法律的盲点，尤其对于环境容量的法律属性，未有相关法律予以确认和规定。通过对环境容量的概念、属性进行深入探讨，进而提出通过单行立法使之财产化，以解决排朽权交易中的民法障碍。     

Carbon emission right as a new property right: rescue CDM developers in China from 2012

Clean development mechanism (CDM) is encountering many uncertainties due to the coming end of the commitment period and critically suggested reformation. As the largest participant in the CDM market, China shoulders the biggest proportion of market risk. Among the studies on CDM in China, few have focused upon the legal aspect of CDM, which is crucial in defending developers’ interests. To fill this research gap in making the transition from policy to law, this paper claims that carbon emission right, which is the basis of trade, should be attributed as a property right in Property Law of People’s Republic of China. The present study will discuss the characteristics of carbon emission, definition, and legal attribution of carbon emission right. The valid object of carbon emission right in the CDM market under Property Law should be certified emissions reductions (CERs). The usufructuary right could be specifically applied in practice to the owners’ property right on CERs in China. Although experience from the CDM is not fully applicable to the development of cap and trading, the success of CDM market provides a reasonable platform to study emission right in the view of legal science. Furthermore, the proposed research acts as the pioneer study that lay the theoretical foundations in legal science on emission right trading for other potential schemes, which in turn addresses international environmental issues.     

国际碳排放权交易及其对我国的启示

全球气候变化对各国产生了一系列的影响,碳排放权已成为新兴的交易客体,国际碳排放权的产生与发展,既为我国带来机遇,也使我国面临挑战。我国碳排放权交易市场尚处于起步阶段,建立与完善我国碳排放市场机制显得尤为重要与迫切。因此,我们应当借鉴国际碳排放权交易的经验,从法律、政策、信息透明度、政府职能等方面进行改进。     

Interaction between EU carbon trading and the international climate regime: synergies and learning

This article discusses the developing interaction and cross-scale effects between the company-focused EU emissions trading (ETS) and the country-focused international climate regime, in particular the Kyoto Protocol. Key questions discussed are first, what has been the character of selected interactions so far—synergistic or disruptive? Second, what kinds of interaction mechanisms have been driving the interactions; normative, cognitive, or utilitarian? Third, with regard to cross-scale effects, has significant learning taken place between institutions at different levels? Four sub-cases of interaction are analysed: first, the interaction between the Kyoto Protocol as source and the ETS as target which started after the adoption of the Protocol in late 1997. Second, a next phase of interaction started in 2004 when the EU states started to develop national allocation plans (NAPs) where bringing in credits/allowances developed under the Clean Development Mechanism (CDM) became one compliance strategy. Third, the opposite relationship is examined, i.e., with the ETS as the source and the Kyoto Protocol institutions as targets. The first phase started after the adoption of the 2003 ET Directive and with the developing ETS possibly leading to a more rapid and extensive CDM development than would otherwise have been the case. Fourth and finally, a separate case of interaction deals with the possible role the ETS plays and could play for an emerging global carbon market. Key findings are that these cases are mainly of a synergistic nature. Furthermore, in order to understand the driving forces, it is necessary to draw upon several interaction mechanisms, particularly cognitive and utilitarian ones. Finally, as to cross-scale learning, the post-2012 global regime may avoid pitfalls related to the allocation process experienced by the ETS. But the learning and diffusion potential should not be exaggerated.     

Emitting Uncertainty: How Brexit Might Affect Emissions Trading Worldwide

After the UK referendum that voted to leave the EU in 2016, much question has surrounded what implications this decision might have. This article will discuss the referendum's environmental effects, mainly in the area of global emission reduction strategies. Part I describes the European Union and the emissions trading system that has developed within it. Part II considers what effect Brexit might have on the current emissions trading regime and emissions trading globally. Part III discusses the Paris Agreement and what impact the referendum might have on these obligations. Part IV contemplates the current market conditions regarding the purchase of solar PV from China, and what influence the UK's renegotiation of its trade deals might have on the renewable energy industry.     

追溯与寻明:国际法视角下的碳排放权单位研究

自以《京都议定书》为基础的市场化机制建立以来,经过近20年的发展,全球碳金融市场呈现蓬勃发展的态势,交易量大幅提升,成交金额不断攀升,市场化机制在夯实中不断完善和发展。同时,争端与纠纷日益增加,国际多边环境公约调整下的碳排放权机制部分地在WTO体制下进行规制,成为众多学者的憧憬。碳排放权单位体现的既不是GATT框架下的"产品",也不是GATS框架下的"服务",而是在经济上反映出特殊的金融衍生产品的属性。然而,碳排放权单位交易商提供服务的行为契合GATS金融服务要求,因此交易商可依据GATS享受跨国服务领域中的最惠国待遇,并可将与WTO规则相关的争端诉诸WTO争端解决机制,实现环境争端解决的规范化、法制化。     

Market Darwinism vs. Market Creationism: Adaptability and Fairness in the Design of Greenhouse Gas Trading Mechanisms

International rule-making and compliance routines with respect to the Kyoto Protocol are evolving rapidly. This paper examines potential designs of emissions-trading programs by comparing the emissions credit trading (ECT) and cap-and-trade models for achieving cost-effective reductions in atmospheric greenhouse-gas (GHG) loading in terms of their adaptability and fairness. Adaptability is a valuable attribute when markets and their governing institutions are evolving rapidly or when regulated entities do not yet have well-established and predictable compliance routines. Fairness in both procedures and outcomes is central to efforts to establish and maintain institutions of international governance. The key difference concerns the awarding of tradable emission rights, which occurs at the launch of a cap-and-trade program but following when firms reduce emissions below baselines in an ECT scheme. Implications of this difference are explored in terms of institutional adaptability and fairness during program-design stages. By not locking in emission rights at the outset, and by being amenable to incremental roll-out, ECT appears to have superior adaptive and fairness qualities during periods of rapid institutional evolution.     

排污权交易的公示制度研究——兼谈物权公示制度

排污权交易制度的实质是具有排放资格的单位之间就排放容量进行自由交易的制度。基于排污权交易的特殊性。则需借鉴物权理论的公示制度,构建由“公法主导”转向“公私监管”的公示制度。物权的公信力来源于公示方式的科学性和合理性。现今因为环境污染的日益严重性。排污权交易制度也需被赋予公信力。物权变动的公示和公信力涉及物权的多样性和交易的安全性。即使排污权交易不存在上述问题,但就其交易对象的数量限定性和第三人的环境利益相关性．引入物权公示制度的同时也需要增强公信力。因此本文认为,应将政府采取的“批准”方式与公示生效主义相结合来构建新型的排污权交易公示制度。这一制度的建立,既能增加交易的自由度,也能增加这一方式的公信力．     

Norway and Emissions Trading: From Global Front-Runner to EU Follower

A striking convergence has taken place in the design of the Norwegian and EU greenhouse gas emissions trading systems from 1998 to 2004. This article argues that the Norwegian adaptation to the EU did not take place as a consequence of perceived legal obligations under the European Economic Area agreement. Nor did it take place due to Norwegian actors being persuaded about the merits of the EU design. The main explanation has to do with interests. The EU market and politics are of course generally very important for Norway. However, before the US pulled out of the Kyoto Protocol in 2001, the Norwegian outlook in climate politics was global. The US pull-out accelerated the development and hence the attractiveness of the EU trading system and resulted in EU emissions trading as the most probable and possibly only international market for Norway to link up to. Hence, this analysis provides further support to the importance of being sensitive to the global context and institutional interaction when analyzing the relationship between the EU and its neighboring countries.     

碳贸易机制与WTO规则的议题交叉与体系协调

京都碳贸易机制的发展越发显现出与世贸组织涵盖协定的议题交叉。界定碳信用单位的交易属于"货物"抑或"服务"贸易,可以明确其不属于GATT管辖的产品范畴。作为服务贸易的碳贸易机制与GATS的原则规则存在着广泛的议题交叉,需要择机将碳贸易机制纳入世贸组织贸易与环境议程,促使气候与贸易的国际法规则的体系协调。     

Introducing Value Chain Stewardship (VCS)

After a decade of international negotiations to limit greenhouse gas (GHG) emissions, a sufficient number of countries have ratified the Kyoto agreement. However, even with this positive development there is a formidable challenge since, according to the World Resource Institute (WRI 2004), For the most part, developed nations have failed to attain the non-binding emission reductions they committed to in the original climate treaty in 1992. Ensuring adherence to the reductions stated in the treaty by these nations may become an immense managerial task, not to mention the enforcement of sanctions. Instead of national emission targets the approach of this paper is to focus on trade within selected industry sectors – i.e. housing and transport – responsible for most of the world’s GHG emissions. This paper shows that vehicle manufacturers – the design owners – may use their information advantages to influence customers to focus on other aspects of the vehicle than costs during use. Expanding the environmental responsibility of the design owners to coincide with the area of environmental impacts will convert emissions cost into a production cost. It is indicated in this paper that when applying the estimated costs for GHG emissions to the vehicle user, strong enough incentives are not given to drive technological change, but if the responsibility is allocated to the design owner the very same additional costs will be an incentive for the designer to use its information advantage to innovate away from those emissions-rendering technologies. A value chain stewardship (VCS) is, thus, established.