The current state of affairs is that the Commission, following the plea from member states, has proposed the harmonization of the EU ETS. It wants to
82 Of course, one needs to review the meaning of the already adopted taxation and labeling legislation, but it seems that these measures have only a very limited meaning.
introduce auctioning, an EU-wide cap, and a further harmonization of the method of free allocation and the use of the flexible mechanisms. This would imply an important shift to decision-making on the EU level, with some far-reaching competences for the Commission, removing an important part of climate policies from the national governments. The new election of the European Parliament in spring 2009 seems to imply an incentive for a hasty process, aiming at having measures adopted before these elections, and thus probably not giving enough careful consideration in the legislative process to main questions concerning the design of the scheme. As with establishing the legal framework for emissions trading, the most important choices need to be made by the legislator. Where a critical choice needs to be made among different models, we can only hope that the legislative process will be as careful as possible, thereby not only taking into account the economic optimal solution, but also discussing different options from the perspective of legal values.
With emissions trading, we are however still in a learning phase regarding the possible design of the instrument and its related economic and other effects. Although the acid rain emissions trading system has been proven successful, this is no guarantee that other emissions trading models will be successful as well. In addition, not only instrumental effects like effectiveness and efficiency count: legal values also need to be considered when reviewing the merits and pitfalls of an instrument. We indicate the need for further assessments of the functioning of the different forms of emissions trading schemes, focusing not only on macroeconomic effects and administrative costs, but, moreover, also with regard to legal values. Not only the analysis of case law, but moreover a discussion of emissions trading against the backdrop of core legal values is needed in order to understand the system and to assess further improvements of the system.
One of such values is democratic accountability. In this article, we have elaborated on the specific view that emissions trading would allow the legislator to concentrate on the core question of environmental law. However, we have also stated that within particularly the climate change dossier, which concerns so many and such different sources, the core question 'what may be polluted during a certain period in a certain region?' is to be complemented with another one, which is 'which sector needs to reduce how much?' For comprehensive climate change policy-making, and as long as the emissions trading instrument cannot or will not cover all greenhouse gas-emitting sources, the legislator thus needs to discuss this distributional question too. For the specific legal system of the EU, with the concept of shared competences and the principle of subsidiarity, it needs furthermore to be considered on what level those questions should be answered. The initial EU ETS includes quite a clear distinction regarding both questions, and it would as such have been possible to proceed with that in the forthcoming years: on the
EU level the commitments of states contributing to the overall reduction target of for instance minus 20% or 30% in 2020 would then be discussed, while the national governments and parliaments would then decide about the distribution of the efforts between the EU ETS sector and other sectors. In this form, the democratic accountability then seems transparently arranged: the EU level will then focus on commitments among states, while the states themselves focus on commitments among sectors. The proposal of the Commission to revise the EU ETS implies however an important shift of decision-making from member states to the EU-level, which means that the distributional question can no longer be comprehensively addressed by a single legislator: both the European and the national legislators will be responsible, each for their part, for the distributional choices to be made. The push for a level playing field thus seems to win, from getting a broader experience with different national approaches for allocation issues, and, moreover, from leaving important distributional choices to national democratic processes.
In this vein, we also need to consider what the consequences of a further harmonization through the emissions trading instrument would be for public participation and, in a broader sense, the specific position of citizens. It is a pity that this aspect has yet been under-explored in the assessment of the initial emissions trading scheme. However, we still need to explore what the possible role of public participation and other forms of citizen involvement might be even within climate change policies. Thereby we need to recognize that precisely this market-based type of regulation could have as a consequence that citizens might feel even more lost, because the emissions trading instrument prevents them from getting involved in the decision-making of private companies. When the market and not the government lead decisions, there is less room for public participation compared to the traditional permit system. Therefore, the idea of a label revealing the carbon load of a product and service seems a complementary instrument to emissions trading, especially if the emissions trading instrument were to be further harmonized at the EU level. Labeling could probably make the citizen feel connected again with climate change but in an alternative and possibly even better way: the citizen can then act as a critical consumer of carbon products and services. This consumer behavior can have an influence on market decisions taken by the industries and service providers, and that influence might be even more powerful than public participation. Of course, labeling also is surrounded by challenging questions: would it be wise to think of a carbon label, or would it be better to consider an environmental label as this would prevent the tradeoffs between the carbon problem to other environmental concerns? How can it be fitted into the international trade law framework? Should a labeling system be mainly voluntary, combined with some governmental checks on the credibility of the labels, or should the labels as such be obligatory? Should a tax maybe be preferred over labeling? Is the consumer indeed a critical consumer aiming at reducing carbon emissions by buying low-carbon products? Such questions should of course be taken up when exploring the usefulness of labeling (or taxation), and this instrument is as such thus surrounded by some challenging questions. However, the market-based character of emissions trading together with the shift of decision-making from national democratic processes to decision-making on the EU level creates in fact a need to investigate which complementary instrument will facilitate citizens having an alternative say within climate change policies.
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