Lessons for Theory and Practice
New Horizons in Environmental and Energy Law series
Edited by Michael Faure and Marjan Peeters
Michael Faure and Marjan Peeters 1. PROBLEM DEFINITION: REASONS FOR THIS BOOK Emissions trading can no longer be seen as just an interesting theoretical exercise: this market-based approach has developed an increasingly important role, first within the environmental law framework of the USA and later also within that of the EU. The instrument of emissions trading has been applied in order to combat significant environmental problems like acid rain, ozone-depleting substances and climate change. Regarding the two latter problems, the instrument is applied both on the international level as well as on national levels. Notably for the greenhouse gas emissions problem, emissions trading seems to be very much suited to reaching the necessary reductions in a costeffective way. In Europe there is now some experience with emissions trading as a result of the implementation of the greenhouse gas Emissions Trading Scheme (EU ETS).1 The EU ETS is the biggest regional emissions trading system established thus far. The first trading period started on 1 January 2005 and finished on 31 December 2007; the second trading period, during which this book will be published, runs till 2013 and thus comprises five years. In the meantime, only three years after the start of the first trading period, the European Commission released on 23 January 2008 a proposal for a major revision of the EU ETS, which should change the system from 2013 onwards.2 This proposal includes challenging new topics, like auctioning of allowances, an additional and gradually declining free allocation of allowances...