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«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»

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Introduction The provision of global public goods is based on a narrative of common concerns. As considerations of common concern can find individual or collective expression in a variety of different fora, meaningful political action can only be institutionalized by moving from international discourse to normative methodologies. Given the wide spectrum of common concerns, the identification of a global public good mostly entails the adoption of legal agreements that express common concern, and state the intention to move toward concerted action (Kaul et al., 2003, p.13). The challenge of enforcing international agreements concluded by sovereign entities, however, can be of a complex nature, as can the regulatory vacuum between the broad contours of stated objectives and effective political action (on the complexity of legal self-enforcement and compliance, see A. Chayes and A. H. Chayes, 1998).

The binding implementation of agreed legal instruments, which define regulatory objectives and allocate responsibilities for the public goods to be protected, is therefore of pivotal interest for fostering state-based compliance. In addition, a provisional understanding of the regulatory composition of the good itself is required.





Taking into account the global nature that characterizes climate change, the efforts made by multiple institutions in the last decades to effectively protect the climate provide an integrated example of supranational and interdependent public goods regulation. Climate change is one of the very few policy challenges that corresponds very closely to the standard definition of a global public good and the tragedy of the commons: everyone producing carbon dioxide emissions contributes to increasing the risks of adverse climatic changes, and everyone reducing greenhouse gas emissions contributes to the mitigation of these risks (Hardin, 1968; Baettig and Bernauer, 2009; Heyvaert, 2010). Global warming, in that sense, refers to a global negative externality as it involves the “global environmental commons.” (Trebilcock and Howse, 2005, p.509).

As early as 1972, years before the normative concept of global public goods had become established, the United Nations Conference on the Human Environment in Stockholm addressed the fragile state of the global environment for the first time at an international level. The conference has therefore been considered to mark a turning point in the development of international environmental politics (Baylis et al., 2010, pp.454–455). The emergence of global environmental policies has indicated the (limited) carrying-capacity of the planet – referring to both the exploitation of natural resources and the decrease of environmental quality (Stavins, 2010, p.1). In this regard, the emergence of international environmental legal obligations facilitated a common understanding of climate change as a global public good. An unprecedented level of common concern is reflected by the multitude of regulatory levels, ranging from biodiversity; to water and air quality; hazardous waste; ozone layer protection; societal adaptation; and, most importantly, the global emissions of greenhouse gases. The severe management of climate change exceeds the limited scope of sovereign states and therefore requires cooperation on global scales. Considering that the effects of climate change have spread across continents, countries and communities, state and non-state authorities have been asked to create incentives at various policy levels for the promotion of public goods protection. Within the last two decades, the evolution of global climate governance has been shaped by incentives that are based on two regulatory assumptions: the integration of market-based approaches to environmental protection * Freie Universität Berlin and Max Planck Institute for Comparative Public Law and International Law, Heidelberg.

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regimes, and the out-sourcing of responsibilities for achieving emission reductions on behalf of international organisations and nation states (Scott, 2011, pp.805–835; Winter, 2010a, pp.49–89).

The objective of this paper is therefore to examine the methodological nexus between global public goods protection and the regulation of climate change mitigation, and to connect some elements of the global regulatory puzzle on how, when, and why it can (not) work. In this regard, the paper considers different approaches to effectively averting anthropogenic climate change. I begin by examining the specific nature of climate change mitigation, for which I consider the inherent effects of regulatory multipolarity to decision-making and norm-making processes on European, international, and regional scales. The methodology itself will then be emphasized in the analytical context of three different case studies: the European Union’s emissions trading scheme (EU ETS), regional trading initiatives in North America, and the conceptualization of Border Carbon Adjustments in transnational trade.

The paper aims to deconstructing the legal code of global climate change regulation and proposes to shed some light on the effectiveness of the mentioned instruments of regulation, from the perspective of long-term protection of the global public good that is climate change. As the future of global climate policy is likely to be built out of a collection of fragmented domestic commitments, these approaches are understood as being highly important for the normative understanding of different mechanisms set up on different regional levels.

The Legal Code of Climate Change Regulation Within the international regulatory sphere, there are very few inter-generational problems subject to the same multilevel character as the regulation of climate change. The mitigation of greenhouse gases, for example, requires new regulatory methodologies of environmental protection, and the global consumption of fossil fuels affects transnational inter-linkages between energy and security. Further to this, global warming undermines the architecture of global trading patterns, as well as our notions of growth and competition, welfare and technology transfer, investment policy, and sustainable development.

Moreover, the impacts of climate change may be severe for a number of nations, threatening economic structures or food production and maybe even requiring the relocation of effected communities (Biermann, 2010, p.284). Given that millions of individual or collective entities affect the global atmosphere, the code of climate change regulation is determined by a fundamental regulatory dilemma: “All benefit from reduced greenhouse gas emissions, but the problem is they benefit whether or not they pay any of the costs. In other words, beneficiaries cannot be excluded from the benefit of cleaner air. Trying to solve the regime of providing a public good is therefore a classic collective action dilemma.” (Ostrom, 2009, p.5).

In other words, it is a major problem of freeriding. As the joint 'good' is reducing a joint 'bad,' caused by increased emissions of greenhouse gases, air pollution and deforestation, solutions to abate the collective action problem of climate change are related to a multipolarity of policy fields and involved actors. While the standard model of international environmental law has been determined by norms set by agreements among states, the global regulatory vacuum averting climate change has enhanced different processes of policy diffusion, developing a multitude of regulatory arrangements (Ostrom, 2009, pp.8, 16). From this perspective, international regulation addressing climate change mitigation has been characterized by its 'fragmentation' of legal developments, its 'regionalization' of regulatory initiatives, and its lack of enforcement of norms and principles (Barrett, 2003, p.360; van Asselt et al., 2008, pp.423–449). In particular, the inadequate implementation of environmental rules in domestic legal systems vis-à-vis private polluters and governmental administrations has weakened treaty-based intergovernmental rules on this specific collective action problem (Petersmann, 2008, p.136 ff; Kingsbury, 2007, p.72 ff).

Global Public Goods and Asymmetric Markets: Carbon Emissions Trading and Border Carbon Adjustments Therefore, in the absence of international agreements that effectively address the regulation of carbon emissions on global levels, the regulatory problem which is global in origin has become regional by regulation. The current policy regime, initiated by the inclusionary property regime of the 1992 United Nations Framework Convention on Climate Change (UNFCCC) in Rio, and further institutionalized by the (Kyoto Protocol, 1997), has allocated considerable power to the implementation of economic instruments for the protection of the global environment (Louka, 2006, p.103). Assuming that hierarchical legal mechanisms have (so far) failed to provide adequate incentives to limit greenhouse gas emissions effectively, the use of economic instruments has been based on the regulatory belief that marketization can provide adequate incentives for guiding human behaviour. According to a European Commission report from 1990, economic instruments in environmental law can affect the “costs and benefits of alternative actions open to economic agents, with the effect of influencing behaviour in a way which is favourable for the environment.” (Sands, 2003, p.159; European Commission, 1990; see also OECD, 1991).



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