Michael A. Mehling

In The Oxford Handbook of International Climate Change Law, edited by Cinnamon P. Carlarne, Kevin R. Gray, and Richard Tarasofsky. 261-288. Oxford: Oxford University Press, 2016

https://doi.org/10.1093/law/9780199684601.003.0013

This chapter discusses the linking of emissions trading regimes for climate change governance. It also assesses the legal frameworks for linking as the process assumes varying degrees of formality, with implications for the legal nature and the procedural requirements of adoption. Linkage results in an enlarged market, promising greater diversity of abatement costs and thus more efficient achievement of climate change mitigation objectives. Linkage is also credited with promoting liquidity and reduced price volatility in the carbon market, helping reduce the likelihood of manipulation and abuse. These results lead to operation in a multilayered framework of established rules, principles, and procedures constituting the legal order. Carbon markets are highly regulated, and this relevance of norms also extends to a linkage between such markets. The chapter analyses past and current trading schemes as a case study, such as the European Union Emission Trading Scheme, the biggest greenhouse gas emissions trading scheme.

Keywords: Emissions Trading Systems; Linkage; Carbon Markets; Regulatory Design; International Cooperation