Thesis title: Multi-level governance of carbon markets: the institutional foundations of international emissions trading
In contrast to the multilateral carbon market envisaged under the Kyoto Protocol, jurisdictions around the world have developed different carbon pricing policies to suit their domestic circumstances. Linking these different systems offers an alternative, ‘bottom up’ model for global cooperation on climate change. Linkages also make mitigation efforts more cost effective and offer a range of other economic and political benefits which, in turn, enable governments to set more ambitious targets. Around 100 countries intend to use international trading to meet their 2030 emissions reduction targets, and regional carbon trading clubs are emerging around the world. However, the institutional foundations of these clubs (their formal and informal rules) differ in important ways, with implications for their efficiency, environmental effectiveness and risk of collapse.
The central research question to this dissertation is: (1) What are the institutional foundations of international carbon trading clubs and what are the implications for the trajectory of global carbon market development? Two further questions contextualise and lend gravity to this central question:
(2) What institutions enable governments to overcome the collective action problem of linking their emissions trading schemes? What lessons could be drawn for scaling up to enable more harmonisation of policy approaches and sustainable linkages?
(3) How do institutional arrangements vary across regional carbon trading clubs and what are the implications for efficiency, environmental effectiveness and risk of failure?
The intended contributions of this research are threefold. First, it brings a novel perspective to the question of why carbon pricing linkages are difficult to negotiate but occur sometimes. Second, it identifies institutions that enable carbon trading and analyses their costs and benefits. Third, it contributes to a theory-driven explanation of institutional fragmentation.