The Legal Perspective

From economic literature, we learn that the efficiency and the effectiveness of the regulatory approach through emissions trading are attractive factors.14 It is exactly stemming from these instrumental characteristics that emissions trading has become so popular in the field of climate change policy: it simply saves money when using this instrument. When we put the emissions trading instrument, which is in fact an economic instrument, into a legal perspective, a hurdle has to be jumped. It is quite obvious that economists are much more familiar with emissions trading than are lawyers. In general terms, lawyers seemingly feel traditionally more confident with standards and with prescribing behavior through permit conditions instead of letting the market do the work, leaving private operators quite some discretion to decide. This might explain why emissions trading has had less attention by lawyers compared to economists, and why the instrument is perhaps less favored by lawyers. There is however an important job to be done through legal analysis. The economic-oriented studies naturally under-explore core legal values like democratic

12 We refer here to assessments with respect to emissions trading schemes that already existed before the establishment of the EU ETS. 'EU ETS' is the abbreviation of the 'European Union Emissions Trading Scheme'.

13 OECD, Tradable Permits: Policy Evaluation, Design and Reform, Paris, 2004.

14 See the important work of Tietenberg (1985), and for a further overview of economic literature on his website http://www.colby.edu/personal/t7thtieten/tradable_ permits.htm. See for an overview of literature (law and economics) Michael Faure, Environmental Regulation, Encyclopedia of Law and Economics, http://users.ugent. be/~gdegeest/2300book.pdf, version 1998, update forthcoming in 2008 (website visited 8 June 2008).

accountability and the legal control of administrative decisions, transparency and public participation, the role of principles like legal certainty and equal treatment, human rights, access to courts, and legal aspects of the design of an adequate compliance and enforcement mechanism.

From a legal perspective, the analysis of the emissions trading instrument can be made on two dimensions.

First, which legal claims are made through court procedures, and how they have been solved can be analysed. The quite numerous court procedures that have occurred in the first phase of the EU ETS, both at the European courts and the national courts show that quite a few legal questions were posed, mainly by industries and member states. By analysing those cases, we develop a better understanding of the legal concerns of interested parties, and how those were addressed by courts. From such an analysis, recommendations for improving the implementation of the legislative framework, or even improvements of the legislative framework itself might be deduced.

Secondly, apart from the court procedures that show 'hard core legal problems', there are important values that can less easily, or even not at all, be tested by court procedures. This does not mean however that they should be overlooked. For instance, the democratic accountability, already mentioned, of the emissions trading instrument has up till now been under-explored in the debate about the EU ETS, and we will try to stimulate such a discussion in Section 4. Such legal analysis concentrates on the foundations that underpin the legislative framework and the legal systems in which the emissions trading system will be applied. It aims to contribute to the understanding of and to comment on the decision-making as being undertaken in practice.

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