Emissions Trading and Polycentric Negotiation

Abstract

The Kyoto Protocol not only establishes specific deadlines and quantitative objectives for the reduction of greenhouse gases, but also provides for so called ``flexibility mechanisms". Among the different mechanisms envisaged in the Protocol, the one destined to play a central role is ``emissions trading". For national regulators, global rules provide, at the same time, limits and opportunities. The limits are established by means of binding pollution-reduction objectives; the opportunities stem from the incentives to cooperation among different actors, provided for by the new rules. As some scholars observed, ``there is a redrawing of the borders of the public sphere": public entities accomplish some tasks, but leave other activities to private entities. The pollution market plays a central role, since it gathers, in the same place, different players, who share a common goal - the achievement of agreed global environmental outcomes - that can be attained through regulation. In this context, the paper analyses three main aspects: firstly, the choice of market-based instruments, that mark the shift from ``command and control" to a new type of regulation; secondly, the roles and tasks of the different actors involved (public powers and private entities) and the relationships among them, both within national boundaries and in the new global market; thirdly, the controls and sanctions provided for in order to create an integrated system of environmental protection. The Author argues that the degree of effectiveness of the measures analysed in the paper depends upon an organized flow of information as well as on clear mechanisms of accountability, both at national and international levels.