The Underestimated Possibility of Ex Post Adjustments: Some Lessons from the Initial Greenhouse Gas Emissions Trading Scheme

Abstract

This chapter, from a monograph on climate change and European emissions trading, considers some lessons from the initial greenhouse gas emissions trading scheme (ETS), focusing on preliminary experiences with ex post adjustments of allocated rights within the initial framework of the European Union (EU) ETS. The authors hope to provide a starting point for a systematic analysis of possible ex post interventions within ETSs. Topics include the current legislative framework of the EU Greenhouse Gas Emissions Trading Scheme; examples derived from the implementing legislation in The Netherlands, Germany, and Belgium; and an analysis of relevant case law from both the national courts and the Court of First Instance. The authors conclude that one lesson sows that the legislative framework for dealing with adjustments has a highly technical-administrative character and is not well suited to cases occurring in practice. A second lesson reminds policy makers not to overlook the possibility of ex post adjustments being used to correct any perverse consequences of allocation within a cap-and-trade scheme. A final note considers a general lesson in theory: there is no systematic analysis of different forms of governmental intervention within the available models of the emissions trading instrument.