The Contours of “Cap and Trade”: The Evolution of Emissions Trading Systems for Greenhouse Gases

Aim: This paper aims to evaluate the legal barriers and policy obstacles to linking the European Union Emissions Trading System (EU ETS) with California’s Cap-and-Trade Program in the United States, and to identify potential legal solutions to overcome them, by taking a law and economics perspective. Design / research methods: A qualitative law and economics analysis is performed by combining the legal-dogmatic method with insights from economic theory. Primary sources are the respective legal frameworks, ETS regulations, past linking agreements and relevant case law. Secondary sources include the relevant legal and economic literature, as well as policy documents, reports and press releases. Conclusions / findings: An EU-California linkage of emissions trading systems (ETSs) is legally feasible on the basis of an informal agreement, through reciprocal amendments to the respective ETS-regulations. Potential barriers could emerge, in particular from misaligned provisions regarding price containment measures and offsets. A gradual implementation of certain mutually beneficial ETS reforms, possibly in conjunction with initially restricted linkage, can provide momentum for transcending these barriers. Originality / value of the article: To date, no linking has taken place between emissions trading systems from different continents. This paper contributes to the legal-economic literature on linking the EU ETS with California’s Cap-and-Trade Program by performing an up-to-date analysis of its associated barriers and by providing concrete legal suggestions to possibly overcome them. Such a transatlantic linkage could enhance the cost-effectiveness of climate policy and contribute to the bottom-up expansion of carbon markets worldwide.

Download Full-text

To Trade or Not To Trade? Criteria for Applying Cap and Trade

The Scientific World JOURNAL ◽

10.1100/tsw.2001.376 ◽

2001 ◽

Vol 1 ◽

pp. 953-957 ◽

Cited By ~ 7

Author(s):

Stephanie Benkovic ◽

Joseph Kruger

Keyword(s):

Emissions Trading ◽

Environmental Problem ◽

Cost Effective ◽

Cap And Trade ◽

Policy Tool ◽

Effective Manner ◽

Effective Policy ◽

Foreign Governments ◽

Trading Program ◽

The U.S

The use of emissions trading (cap and trade) is gaining worldwide recognition as an extremely effective policy tool. The U.S. Sulfur Dioxide (SO2) Emissions Trading Program has achieved an unprecedented level of environmental protection in a cost-effective manner. The successful results of the program have led domestic and foreign governments to consider the application of cap and trade to address other air quality issues. Certain analyses are particularly important in determining whether or not cap and trade is an appropriate policy tool. This paper offers a set of questions that can be used as criteria for determining whether or not cap and trade is the preferred policy approach to an environmental problem.

Download Full-text

U.S. Emissions Trading and what it can teach us for a Post-Kyoto World

10.5771/9783748927808 ◽

2021 ◽

Author(s):

Fabian Krause

Keyword(s):

International Law ◽

Emissions Trading ◽

Basic Research ◽

Point Of View ◽

The European Union ◽

Trade Data ◽

Trading Systems ◽

Republic Of China ◽

Economic Fundamentals ◽

The Usa

Major CO2 emitters such as individual states of the USA, the People's Republic of China and the European Union continue to rely on emissions trading systems to reduce CO2 emissions. Against this background, this thesis examines four emissions trading systems in the USA. For this purpose, the legal and economic fundamentals of emissions trading are presented in detail. Subsequently, emissions trading systems are analyzed from an economic as well as a legal point of view based on criteria defined for this purpose and the results are embedded in the context of national and international law. For this purpose, the author conducts extensive basic research by processing the available emissions and trade data.

Download Full-text

Canadian Challenges in Implementing the Kyoto Protocol: A Cause for Harmonization

Alberta Law Review ◽

10.29173/alr489 ◽

2020 ◽

Author(s):

Elisabeth DeMarco ◽

Robert Routliffe ◽

Heather Landymore

Keyword(s):

Kyoto Protocol ◽

Emissions Trading ◽

Legal Issues ◽

Current Status ◽

Trading System ◽

Trading Systems ◽

Legal Context ◽

Ghg Reduction ◽

The Impact ◽

Emissions Trading System

On 17 December 2002, Canada ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol), taking on binding targets to reduce Canadian emissions of greenhouse gases (GHGs). Canada's ratification decision and the proposed domestic emissions trading system forming part of Canada's Kyoto implementation plan continue to be the source of considerable disagreement and conflict between the provinces and thefederal government regarding: the practical challenges associated with multiple Canadian jurisdictions implementing emissions trading systems: the current status and legal issues associated with covenants between industry and government(s) to enforce GHG reduction targets; the legal jurisdiction over domestic emissions trading system(s); and the impact on interprovincial and international trade. Each ofthese issues is examined in the unique Canadian legal context. The authors conclude that many ofthe most significant challenges may be mitigated through harmonization and coordination byfederal and provincial governments in a manner that allows for local concerns to be addressed without fragmenting the Canadian emissions markets.

Download Full-text

Principles of Kyoto and Emissions Trading Systems: A Primer for Energy Lawyers

Alberta Law Review ◽

10.29173/alr488 ◽

2020 ◽

Author(s):

Brian Evans

Keyword(s):

Climate Change ◽

Kyoto Protocol ◽

Emissions Trading ◽

Policy Instruments ◽

Trading Systems ◽

Policy Responses ◽

Legislative Authority ◽

Depth Analysis ◽

Potential Impact

The Kyoto Protocol defines new emissions standards to be met by the international community in respect of greenhouse gases, the aim of which is to curb the present trend of adverse climate change. The specific responses of ratifying governments to bring about the desired changes will significantly impact citizenry and industry alike. This article addresses the issues surrounding emissions trading systems as market-based policy instruments that may ultimately contribute to Canada s legislative response to the Kyoto standards. Central to this question is the need to familiarize legal practitioners with the implications of climate change and the range of policy responses available to government in the context of emissions trading systems. The author examines responses open to the governments of Canada and Alberta through a review of the international reaction to climate change, the role of emissions trading in environmental regulation generally and the anticipated use of emissions trading to comply with the Kyoto Protocol in the future. The author presents an in-depth analysis of the principles underlying the design of domestic emissions trading systems, of the legislative authority surrounding their implementation and of the need for affected businesses to strategically plan for ensuing changes. The author concludes that while Canada has not yet adopted a policy on domestic emissions trading systems in respect of the Kyoto Protocol, the potential impact of emission standards on domestic sources is pronounced, meriting an inspection of the design features that may form a pan of such trading schemes.

Download Full-text