Market-based mechanisms and climate change: EU and US approaches

Mariotti, Caterina (2015) Market-based mechanisms and climate change: EU and US approaches. [Working Paper]. LUISS Academy, Roma. p. 28. Working paper (1/2015). ISBN 9788868560294.

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A new international climate agreement for the post 2020 period is scheduled to be adopted at the 2015 Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). The most likely outcome is a hybrid system combining “bottom-up” and “top-down” aspects. The future climate regime is taking shape as a patchwork of different policies, including market-based mechanisms (such as emissions trading, carbon taxes, credit systems) as well as traditional command-and-control instruments. In this fragmented scenario, carbon markets are sprouting. As the establishment of an international carbon market appears implausible, linkage between carbon pricing systems has come to the fore as a key tool for ensuring a cost-effective and environmentally meaningful strategy. Market-based mechanisms were experimented for the first time in the US, became a fundamental component of the international climate regime through the Kyoto Protocol flexibility mechanisms, are a cornerstone of EU climate policies and are at the core of many sub-federal initiatives in the US. A transnational linkage between the EU and US carbon markets could act as a catalyst for the development of a robust interlinked international system. Existing legal literature on emissions trading tends to overlook the legal issues that arise from the complex regulatory structures that create carbon markets. The methodology employed in the present paper is based on the idea that emissions trading schemes can only be understood against the background of the legal context in which they operate. In light of this, this work analyses and compares the regulatory structures of EU and US emissions trading schemes in light of the respective legal orders, considers interactions between these systems and international law and suggests avenues for further research. Section 1 sets the stage for this analysis, discussing the theoretical foundations and the first applications of market-based environmental regulation, as well as the Kyoto Protocol flexible mechanisms. Section 2 focuses on the EU ETS, devoting attention in particular to the evolution of the system and to the question of competence allocation. Section 3 gives an overview of the current emissions trading systems in the US and highlights some legal issues, with a particular focus on the constitutionality of linkages between sub-federal entities and foreign systems. Section 4 compares EU and US approaches to climate change strategies, with a reflection on their roles in the global scenario.

Item Type: Report / Paper (Working Paper)
Research documents and activity classification: Working Papers > Refereed Working Papers / of international relevance
Divisions: Department of Law
MIUR Scientific Area: Area 12 - Law > IUS/13 International Law
Deposited by: Barbara Scipioni
Date Deposited: 04 Feb 2015 08:41
Last Modified: 21 Apr 2015 23:17


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