Cooperation beyond the state: Constraints on linking regional emissions trading systems

Abstract

Recently many regions worldwide have implemented emissions trading systems (ETSs) to cap greenhouse gas emissions. These initiatives may hold the potential of providing a new bottom-up architecture for international climate policy. Cooperation or ‘linkage’ between regional emissions trading systems would improve their efficiency. Yet, linking has been realized only on very few occasions.This article deals with the question why linking of ETSs, especially between the EU and California, is still lagging behind. It seeks to go beyond common approaches and focuses on political difficulties that arise for regions that do not have the status and the mandate of a nation state.

Linking the EU ETS with California’s Cap-and-Trade Program

“…Zetterberg (2012) examined this prospect in light of the design differences between the two programs, but in the meantime both have undergone significant reforms. An even earlier paper by Mehling (2007) studied the procedural aspects of linking the EU ETS with regional ETSs in the US, while Santikarn (2014) and Unger (2016) focused on the governance and policy aspects of an EU-California linkage. Our paper contributes to the literature (a) by examining the options and barriers to linking the EU ETS with California's Cap-and-Trade Program from a law and economics perspective, (b) by exploring possible legal solutions to the identified impediments, (c) by incorporating both programs' main design features for the coming 2021-2030 period and (d) by including the latest developments, such as the EU-Switzerland linkage and the recent litigation against California's linkage with Québec by the US government.…”