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Edited by Alina Averchenkova, Sam Fankhauser and Michal Nachmany

A deepening understanding of the importance of climate change has caused a recent and rapid increase in the number of climate change or climate-related laws. Trends in Climate Change Legislation offers an astute analysis of the political, institutional and economic factors that have motivated this surge, placing it into context.
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Summary of the main findings

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 7 presents a summarised version of the key findings of this book. While the EU ETS, the AUS CPM and the NZ ETS have all subsidised emissions-intensive industries, the consequences of this regulatory model have, in general, escaped the scrutiny of legal scholars. The book closes with an important message, that despite formally participating in ETSs, many heavy polluters are not yet paying their fair share of the carbon price. Keywords: Emissions Trading – EU ETS – Free Allocation – World Trade Organization –Agreement on Subsidies and Countervailing Measures

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Joana Setzer and Mook Bangalore

Chapter 9 relates climate legislation, which is passed by parliaments, to climate litigation, which is pursued through the courts. Using data from 25 countries, the chapter documents how the judiciary is playing an increasingly active role in climate policy, both complementing and in some cases substituting for national legislation. The majority of climate litigation cases fall into one of three categories. In the first category, climate change is at the periphery of the argument. A second category of cases deals with administrative matters related to specific projects. Only in the third category are climate change concerns at the core of the case, and these cases divide equally into lawsuits oriented towards climate policies and legislation, information and disclosure, and loss and damage. Looking at the outcomes of litigation cases, the chapter finds that the courts have so far tended to enhance, rather than curtail, climate change regulation, confirming the important role of courts in regulating climate change.

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Reconsidering the eligibility thresholds for the free allocation of permits

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 4 focuses on carbon leakage in practice and real life examples of the use of free allocation as an industry assistance measure. It demonstrates that jurisdictions linking independent ETSs would benefit from harmonising the free allocation methodologies in order to minimise the competitiveness concerns and to reduce the trade distortions and other impacts inherent to the free allocation system. It proposes a review of the general thresholds in order to assess the exposures to carbon leakage so as to improve the effectiveness and fairness of the ETSs. The two final key recommendations are the removal of the sole trade-exposure factor from the quantitative assessment in the EU ETS and increasing the stringency of all the thresholds to determine emissions-intensity. Keywords: carbon leakage – free allocation – emissions intensity – trade exposure – linking – competitiveness

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Real world emissions trading schemes: challenges and lessons learnt

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Chapter 3 introduces the three case studies, that is, the European Union Emissions Trading System (EU ETS), the New Zealand Emissions Trading Scheme (NZ ETS) and the Australian Carbon Pricing Mechanism (AUS CPM). The chapter provides the reader with a basic understanding of the key elements of each ETS, such as the coverages, emissions caps, governance regimes and links with other schemes. It also reflects on the main achievements and challenges particular to each scheme. For example, the significant problems with surplus emissions permits experienced by the EU ETS, the process that led to the repeal of the CPM in Australia and the distinctiveness of the NZ ETS, which has been resilient and stable, despite significant changes in the country’s approach towards international climate change negotiations. Keywords: European Union Emissions Trading System (EU ETS) – New Zealand Emissions Trading Scheme (NZ ETS) – Australian Carbon Pricing Mechanism (AUS CPM)

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Paying the Carbon Price

The Subsidisation of Heavy Polluters under Emissions Trading Schemes

Elena de Lemos Pinto Aydos

Paying the Carbon Price analyses the practice of freely allocating permits in Emissions Trading Schemes (ETSs) and demonstrates how many heavy polluters participating in ETSs are not yet paying the full price of carbon. This innovative book provides a framework to assist policymakers in the design of transitional assistance measures that are both legally robust and will support the effectiveness of the ETSs whilst limiting negative impacts on international trade.
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Fergus Green

Chapter 5 discusses the ethical, political-philosophical and international-legal foundations of climate change legislation. Both climate change impacts and the mitigation of climate change affect human well-being in diverse and significant ways. Two political-philosophical frameworks – the liberal-egalitarian-inspired ‘climate justice’ framework and the utilitarian-inspired ‘economic efficiency’ framework – have dominated philosophical theorizing about how to trade-off these diverse well-being impacts in the context of climate change. International climate law borrows from both political-philosophical frameworks but ultimately constitutes a free-standing normative foundation. The chapter provides an overview and critical analysis of these various normative foundations and discusses their (limited) impact on domestic climate change legislation. It also highlights three nascent ‘movements’ at the cutting edge of climate politics and policy – anti-fossil-fuel movements, visions of green transformation, and transitional fairness/‘just transition’ claims – and discusses the alternative normative foundations on which these movements implicitly rest.

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Abbie Clare, Sam Fankhauser and Caterina Gennaioli

Chapter 2 offers a statistical, top-down review of the key factors that explain the passage of climate change legislation. Successful climate legislation arises from the interplay of domestic and international factors. The chapter finds that a particularly important driver of climate action is the passage of framework laws, which codify the political consensus and create clarity about the future direction of climate policy. In most countries, there is broad agreement among political parties about the direction of travel. The chapter finds no significant difference in the legislative activities of left-wing and right-wing governments outside the Anglo-Saxon sphere. Climate laws are more likely to be passed by strong, unified governments, although in democracies they are unlikely to do so in an election year. Future climate policy is likely to be influenced by the pledges countries have made under the Paris Agreement, although the earlier Kyoto Protocol has had little impact on the number of climate laws passed, once other factors (such as national income) are controlled for.

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Alina Averchenkova, Sam Fankhauser and Michal Nachmany

Chapter 1 offers an overview of the book and summarizes the state and trends in climate change legislation. Making use of a unique global database, Climate Change Laws of the World, the chapter identifies over 1,200 climate change laws and policies of similar stature in the 164 countries the data covers. This stock of laws is the result of over 20 years of policy making and speaks to the growing attention that legislators are devoting to climate change. In 1997, at the time the Kyoto Protocol was signed, there were only about 60 relevant laws and policies. Countries use different routes to address climate change. In some countries the primary avenue is acts of parliament, that is, formal laws passed by the legislative branch. In others, the policy direction is defined through executive orders, decrees and strategies. Climate change laws also differ in scope and ambition. Some laws are specifically focused on climate change, advancing explicitly emissions reduction or adaptation targets. Others introduce climate concerns into sector policies, such as those on energy, or broader development plans. Understanding these different approaches becomes increasingly important as countries implement their pledges under the Paris Agreement.

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Alina Averchenkova and Michal Nachmany

Chapter 6 discusses the institutional arrangements for climate change policy. Climate action is complex and often controversial. It needs an institutional framework to legitimize, execute and scrutinize the targets and measures that have been put in place. Appropriate institutional arrangements will vary from country to country and depend on the political economy, institutional history and other local factors. Yet certain key functions are common to and important for any arrangement. The institutional framework needs to ensure policies are durable, legitimate and effective. This requires the clear delineation of responsibilities, including between national and sub-national actors, mechanisms for stakeholder engagement and an efficient state bureaucracy. It may also require the creation of new dedicated bodies, for example to set and scrutinize targets, to mobilize and channel climate finance and for monitoring, reporting, verification (MRV).