The above stalemate has caused individual States to resort to unilateralism, a move that in itself represents a regression from the Kyoto regime, whose main merit had been the creation of a common (although differentiated) legal framework consisting, inter alia, of a series of provisions requiring contracting parties to limit their emissions of certain greenhouse gases from a defined range of human activities over a given period of time.

The paper aims at focusing on the European way to unilateralism as represented, for example, by the so-called “effort sharing decision” of 2009 (406/2009/EC of 23 April 2009), pursuant to which, on the one hand, the emission reduction objectives imposed on EU Member States have been increased whilst, on the other hand, the scope of application of such objectives has been widened so as to include more climate-adverse substances and a greater number of economic activities, comprising for the first time a series of “small” emitters.

With an even more recent move, EU climate law appears to have taken an extraterritorial turn too. Reference has especially to be made to the “clean skies” judgment rendered by the European Court of Justice on 21 December 2011 (case C-366/10), whereby – albeit without explicitly mentioning the extraterritorial implications of its ruling – the Court has confirmed the applicability of the European emission trading scheme to the international operations of North American air carriers when they have European airports as points of arrival or departure of their flights.

The paper will conclude that, since in today’s globalized world Europe remains an important player, both politically and economically, a mixture of unilateral and extraterritorial measures, such as the ones briefly described above, may have an important role to play, not only in bringing climate change negotiations back on track, but also as a platform towards the establishment of new international standards to be agreed by Europe’s major strategic and commercial partners, in Asia as well as in North and South America.

Of course, unilateral and extraterritorial actions by themselves will never be sufficient to achieve such a goal, and a wide range of arguments (including trade-related ones) will have to be tabled and discussed to that effect. The experience shows, however, that in the past Europe has been able to promote the development of global standards in areas such as the preservation of the marine environment and the protection of the ozone layer also by providing autonomous solutions that have prompted, in turn, the adoption of appropriate international accords.

* Associate Professor of International Law, University of Genoa Faculty o Law (Italy); Dott. Ric., University of Milan; LL.M., Georgetown University Law Centre; LL.M. University of London; Member, IUCN Commission on Environmental Law

A cornerstone of the EU’s policy to combat climate change is the 2005 Emission Trading System Directive (ETS Directive). This system is an example of a market based instrument for regulating greenhouse gas emissions from so-called ETS-installations. The 1996 Integrated Pollution Prevention and Control Directive (IPPC Directive) as well as its recently adopted successor, the Industrial Emissions Directive (IE Directive) represents a command-and-control instrument by demanding emission limit values to be set in national permits for so-called IPPC-installations. In order to clarify the interaction and guarantee a smooth interplay between the two directives, Article 9(3)(iii) IPPC Directive was introduced in 2005. It provides that national permits issued under the IPPC Directive shall not contain an emission limit value (ELV) for direct emissions of greenhouse gases from ETS-installations unless necessary to ensure that no significant local pollution is caused.

The intended strict division between the two regulatory systems has been challenged from a political and a legal perspective.[1] At the European level the European Parliament – during the legislative process for the IE Directive – discussed amendments that would explicitly allow Member States to adopt more stringent protective national measures, including greenhouse gas emission requirements for installations that are covered by the ETS Directive. The amendments aimed at clarifying the consequences of Article 193 TFEU but weren’t adopted. At the national level both the UK and the Netherlands have indicated the intention to adopt national standards for CO2 emissions. They feel an increasing urgency to cut greenhouse gas emissions and therefore the need to use instruments other than the EU-ETS. This paper will focus on the legal question whether EU Member States are – in accordance with Article 193 TFEU – allowed to introduce ELV’s for CO2 (command and control) for installations covered by the ETS Directive (marked based instrument).

[1] Derrick Wyatt, & Richard Macrory, Does the EU’s Proposed Directive On Industrial Emissions (IPPC) Preclude Member States From Imposing Emission Limits for Co2 Under National Rules Other Than Those Implementing the Proposed Directive?, Legal Advice, February 2010 <http://www.ucl.ac.uk/cclp/ccsnews.php?rn=988>

The cap-and-trade system has been implemented by the European Union since 2005. The performance of EU cap-and-trade system shows many advantages. For instance, it can predict a clear environmental outcome by setting ‘cap’; it can also provide incentive for technological innovation and involve several types of stakeholders through democratic negotiation process. However, complicated design of the cap-and-trade system, the prevention of the transaction cheating and inaccurate estimation of the emissions level can cause the risks in the emissions trading market.

It might seem that ‘carbon tax’ is a simpler approach comparing to ‘cap and trade’. The implementation of carbon tax is easy. Neither the specific legislation nor transaction market is required. Nevertheless, unlike the cap-and-trade system, no concrete emissions reduction target can be defined by ‘carbon tax’. Thus proponents of the cap-and-trade system support that its performance is more effective in achieving certain GHGs emissions reduction target, which is the main aim of applying market-based approaches.

Back to Chinese context, in November 2011, central government has notified the carbon trading pilots will start in the five cities including Beijing, Tianjin, Shanghai, Chongqin shengzhen and the provinces of Hubei and Guangdong, while carbon tax still stays at the research level. By introducing Chinese tax system, the disadvantages and the risk of only applying carbon tax will be featured out. The possible conclusion is neither cap-and-trade system nor carbon tax would be the one-size-fits-all approach in China; however, it is preferable to focus on the implementation of cap-and-trade system now.

The article consists of three parts. The first part will introduce the research question, research methodology and explain ‘cap-and-trade system’ and ‘carbon tax’. In the second part, the advantages and disadvantages of the cap-and-trade system and carbon tax will be analyzed by setting a counter-argument. In the final part, whether either of the two approaches can become one-size-fits all solution will be answered.

Currently we have a high demand for greenhouse gas producing activities. In simple terms increasing the price, say, of carbon through either a tax or cap and trade scheme can decrease demand. However, lessening demand is a complex proposition, depending on the elasticity of the product, the purchasing power of the consumer and the availability of substitutes. Energy efficiency and technical innovation are two methods of reducing ghg’s. The question is how can these be most effectively achieved?

This paper will argue that there needs to be a combination of both and that a successful mitigation strategy will have to include a way of effectively encouraging the availability of substitutes, through technological innovation. This paper will examine aspects of Australia’s clean energy legislation package and its Energy Efficiency Opportunites Act to see whether it has the potential to achieve this aim.