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

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Abstract

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.

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Notes

  1. According to Oran Young, a ‘functional’ linkage means that substantive problems that two or more institutions address are linked in biophysical or socioeconomic terms. A ‘political’ linkage means that actors decide to consider two or more arrangements as parts of a larger institutional complex (Young 1999, p. 50).

  2. The main point is here using this framework to interpret and analyse existing evidence, not a critical discussion of the framework.

  3. JUSCANNZ was a coalition of nations in the negotiations on the Kyoto Protocol and included Japan, USA, Canada, Australia, New Zealand, Norway and Iceland.

  4. CoP-4 in 1998 failed to further define the rules of the game for emissions trading.

  5. These states should aim for a balanced mix between lowered allocation for second phase; implementing additional measures in the non-trading sector; and ‘potentially supplemented’ by government purchase of Kyoto unit credits (European Commission 2005, p. 6).

  6. A key statement here was: where a Member-state with a remaining gap to close between its actual emissions and allowed emissions according to the Kyoto target does not substantiate or insufficiently substantiates the intended government purchase of Kyoto units this contravenes criterion 1 (setting a cap consistent with each Member-state’s Kyoto Protocol commitment), and as a consequence the intended total quantity of allowances is reduced proportionally (European Commision 2006, p. 7).

  7. UNFCCC/CDM web site, February 2008.

Abbreviations

CDM:

Clean Development Mechanism

CoP:

Conference of the Parties

ET:

Emissions trading

EU ETS:

EU emissions trading system

ICAP:

International carbon action partnership

JI:

Joint implementation

NAPs:

National allocation plans

RGGI:

Regional greenhouse gas initiative

UNFCCC:

UN framework convention on climate change

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Acknowledgments

Many thanks to Ingmar von Homeyer, Måns Nilsson, Sebastian Oberthür, Marc Pallemaerts, Olav Schram Stokke, and two anonymous reviewers for very helpful comments to earlier work on this manuscript. Thanks to Maryanne Rygg for language polishing and editorial assistance. The work on the manuscript has benefited from funding by the EPIGOV project (CIT5-CT-2005-028661 EPIGOV).

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    Jørgen Wettestad

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Wettestad, J. Interaction between EU carbon trading and the international climate regime: synergies and learning. Int Environ Agreements 9, 393–408 (2009). https://doi.org/10.1007/s10784-009-9107-9

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