Defining emissions entitlements in the constitution of the EU emissions trading system

Transnational Environmental Law

Volumn 1, Issue 2, 2012, Pages 303-323

  Manea, Sabina ^a  

^a LONDON SCHOOL OF ECONOMICS   (United Kingdom)

Author keywords

Emissions Allowances; Emissions Trading System; ETS; Keywords European Union; Property Rights; United States Acid Rain Program

Indexed keywords

EID: 84889840991     PISSN: 20471025     EISSN: 20471033     Source Type: Journal    
DOI: 10.1017/S2047102512000131     Document Type: Article

References (122)

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21. Clean Energy Act 2011 (Commonwealth) (Cth) s. 103.
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30. E.g., M. Wilder, 'Nature of An Allowance', in P. Watchman (ed.), Climate Change: A Guide to Carbon Law and Practice (Globe Business Publishing, 2008), pp. 93-109, at 101-2
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32. E.g., R. Hahn & R. Axtell, 'Re-evaluating the Relationship between Transferable Property Rights and Command-and-Control Regulation' (2007) 8(2) Journal of Regulatory Economics, pp. 125-48.
33. Convery, n. 8 above, at 397 and 407.
34. Recital 5, EU ETS Directive, n. 1 above.
35. European Commission, Climate Action, 'Emissions Trading System (EU ETS)', available at: http://ec.europa.eu/clima/policies/ets/index-en.htm.
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37. Tietenberg, n. 23 above, at pp. 46-7.
38. Arts. 12(1) and 19(2), EU ETS Directive, n. 1 above.
39. In microeconomic theory, exclusivity, enforceability and transferability of rights are the key prerequisites for a market to function effectively: see, e.g., B. Field & M. Field, Environmental Economics: An Introduction (McGraw-Hill Irwin, 2009), at p. 203.
40. § 403(f), 1990 Clean Air Act Amendments, 42 U.S.C. § 7651b(f).
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42. D. Cole, Pollution and Property: Comparing Ownership Institutions for Environmental Protection (Cambridge University Press, 2002), at p. 55
43. J. Dennis, 'Smoke for Sale: Paradoxes and Problems of the Emissions Trading Program of the Clean Air Act Amendments of 1990' (1993) 40 UCLA Law Review, pp. 1101-44, at 1137
44. A. Rosenberg, 'Emissions Credit Futures Contracts on the Chicago Board of Trade: Regional and Rational Challenges to the Right to Pollute' (1994) 13 Virginia Environmental Law Journal, pp. 501-36, at 508.
45. Commission Regulation (EU) No. 1193/2011 establishing a Union Registry for the Trading Period Commencing on 1 January 2013, and Subsequent Trading Periods, of the European Union Emissions Trading Scheme pursuant to Directive 2003/87/EC and Decision 280/2004/EC and Amending Commission Regulations (EC) No. 2216/2004 and (EU) No. 920/2010 [2011] OJ L315/1.
46. European Commission, Climate Action, 'General Questions and Answers on Registries', answer to question 6, available at: http://ec.europa.eu/clima/ policies/ets/registries/faq-en.htm.
47. A suggested analytical method for determining the characteristics of emissions entitlements is put forward in Part 5 below, using the UK as an example.
48. E.g., T. Webb, 'Corus Agrees to Sell Teesside Plant to SSI of Thailand', The Guardian, 27 Aug. 2010, available at: http://www.guardian.co.uk/business/ 2010/aug/27/ssi-corus-teesside-sale.
49. E.g., M. Szabo, 'Closed UK Steel Plant to Get EU Carbon Permits: Government', Reuters, 14 Dec. 2009, available at: http://uk.reuters.com/article/ 2009/12/14/btscenes-us-britain-steel-emissions-idUKTRE5-BA2JJ20091214.
50. The recent judgment of the High Court of England and Wales in Armstrong DLW GmbH v. Winnington Networks Ltd [2012] EWHC 10 suggests that in UK law an allowance is capable of forming the subject-matter of a trust: see [52]-[59].
51. Department for Business, Innovation and Skills, Government Response to the North East Regional Committee's Second Report of Session 2009-10 into Teesside Cast Products (BIS, Government Response), Cm 7868, 7 Apr. 2010, at p. 7, available at: http://www.official-documents.gov.uk/document/cm78/7868/7868. asp.
52. Art. 7, EU ETS Directive, n. 1 above.
53. Art. 1(8), Directive 2009/29/EC amending Directive 2003/87/EC so as to Improve and Extend the Greenhouse Gas Emission Allowance Trading Scheme of the Community [2009] OJ L140/63.
54. Commission Decision of 27April 2011Determining Transitional Union-Wide Rules for Harmonised Free Allocation of Emission Allowances pursuant to Article 10a of Directive 2003/87/EC [2011] OJ L130/1.
55. Recital 20, EU ETS Directive, n. 1 above.
56. Parliament Committee on Climate Change, 'Meeting Carbon Budgets: The Need for a Step Change', Oct. 2009, at p. 17, available at: http://downloads.theccc. org.uk/docs/21667%20CCC%20Report%
57. European Commission, Climate Action, 'The EU Climate and Energy Package', available at: http://ec.europa.eu/clima/policies/package/index-en.htm.
58. European Commission, 'Analysis of Options Beyond 20% GHG Emission Reductions: Member State Results', SWD(2012)5 final, at pp. 5-6, available at: http://ec.europa.eu/clima/policies/package/docs/swd-2012-5-en.pdf.
59. B. Leguet, N. Fujiwara & A. Georgiev, 'The EU Emissions Trading Scheme as a Driver for Future Carbon Markets', Centre for European Policy Studies, 2012, at pp. viii-ix and 27-8, available at: http://www.ceps.eu/book/ eu-emissions-trading-scheme-driver-future-carbon-markets.
60. Directive 2009/29/EC, n. 55 above.
61. European Commission, 'A Roadmap for Moving to a Competitive Low Carbon Economy in 2050', COM (2011)112 final, available at: http://eur-lex.europa.eu/ LexUriServ/LexUriServ.do?uri5COM:2011:0112:FIN:EN:PDF.
62. Convery, n. 8 above, at pp. 397 and 407.
63. U.S. Environmental Protection Agency, Clean Air Markets, 'SO2 Reductions and Allowance Trading under the Acid Rain Program', available at: http://www.epa.gov/airmarkets/progsregs/arp/s02.html.
64. 1990 Clean Air Act Amendments, n. 71 above, § 7651a(3).
65. E.g., L. Chestnut & D. Mills, 'A Fresh Look at the Benefits and Costs of the US Acid Rain Program' (2005) 77 Journal of Environmental Management, pp. 252-66, at 253-5
66. G. Chan, R. Stavins, R. Stowe & R. Sweeney, 'The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation', Harvard Kennedy School, RPP-2012-01, Jan. 2012, available at: http://www.hks.harvard.edu/m-rcbg/rpp/Working%20papers/RPP-2012- 01.pdf.
67. 1990 Clean Air Act Amendments, n. 71 above, § 7651b(f).
68. M. Gehring & C. Streck, 'Emissions Trading: Lessons from SOx and NOx Emissions Allowance and Credit Systems, Legal Nature, Title, Transfer, and Taxation of Emission Allowances and Credits' (2005) 35 Environmental Law Reporter, pp. 10219-35, at 10221-2.
69. US Constitution, Amendment V: Private property is not to be taken 'without just compensation'. This can include regulatory takings: Pennsylvania Coal Co. v. Mahon, 260 US 393 (1922).
70. 1990 Clean Air Act Amendments, n. 71 above, § 7651b(b).
71. 1990 Clean Air Act Amendments, n. 71 above, § 7651g(i)(1).
72. Gehring & Streck, n. 77 above, at p. 10222.
73. 194 F. Supp. 2d 147 (NDNY 2002).
74. 1990 Clean Air Act Amendments, n. 71 above, § 7651b(b).
75. Cole, n. 43 above, at pp. 113-4
76. Cole, n. 44 above, at p. 53-4.
77. Gehring & Streck, n. 77 above, at p. 10224.
78. Cole, n. 43 above, at pp. 113-4
79. Cole, n. 44 above, at p. 53-4.
80. Cole, n. 44 above, at p. 55
81. Dennis, n. 44 above, at p. 1137
82. Rosenberg, n. 44 above, at p. 508.
83. E.g., INEOS Manufacturing Scotland Ltd v. Grangemouth CHP Ltd and Another [2011] EWHC 163, which concerned a dispute based on a commercial contract for allowances.
84. BIS, Government Response, n. 53 above.
85. Art. 14(3), Grundgesetz für die Bundesrepublik Deutschland (German Federal Basic Law/Constitution)
86. U. Deutsch, 'Expropriation Without Compensation-the European Court of Human Rights Sanctions German Legislation Expropriating the Heirs of "New Farmers"' (2005) 6(10) German Law Journal, pp. 1367-80, at 1370-1.
87. German Federal Basic Law/Constitution, ibid., Art. 14(1); Deutsch, ibid.
88. US Constitution, Amendment V, n. 79 above
89. Pennsylvania Coal Co., n. 79 above.
90. Regulation (EC) No. 1234/2007 establishing a Common Organisation of Agricultural Markets and on Specific Provisions for Certain Agricultural Products [2007] OJ L299/1 (Single CMO Regulation).
91. Copyright, Designs and Patents Act 1988 (CDPA), s. 1(1)
92. Patents Act 1977, s. 30(1)
93. Trade Mark Act 1994, ss. 2(1), 22 and 27.
94. M. Cardwell, 'Milk and Livestock Quotas as Property' (2000) 4(2) Edinburgh Law Review, pp. 168-90, in particular at 189-90.
95. Data Broadcasting International Ltd and Simpleactive Ltd v. Office of Communications (OFCOM) [2010] EWHC 1243, in particular at [68], [88] and [91]-[94].
96. Walter v. Lane [1900] AC 539, at 545
97. Designers Guild v. Williams [2001] Fleet Street Reports (FSR) 11, at para. 2.
98. Arsenal [2003] European Trade Marks Reports (ETMR) 19, at paras. 46-7
99. L'Oreal v. Bellure [2007] ETMR 1, at para. 99.
100. Asahi Kasei Kogyo [1991] Reports of Patent, Design and Trade Mark Cases (RPC) 485, at 523.
101. Patents Act 1977, ss. 60(5) and 64(1).
102. Art. 1, EU ETS Directive, n. 1 above.
103. In 2010 the value of the market in EU ETS allowances was $119.8 bn: see, e.g., World Bank, State and Trends of the Carbon Market 2011 (World Bank, 2011), at p. 9.
104. M. Cardwell, Milk Quotas: European Community and United Kingdom Law (Clarendon Press, 1996), at pp. 92-3.
105. Decision 243/2012/EU establishing a Multiannual Radio Spectrum Policy Programme [2012] OJ L81/7, Recital 14; Arts. 3(f) and 4(2): Member States must work to allow spectrum trading in their respective jurisdictions. Spectrum management falls within the responsibility of Member States, and must be carried out in line with EU legislation; European Commission, Information Society, 'Managing and Monitoring the Radio Spectrum in the EU', available at: http://ec.europa.eu/information-society/policy/ecomm/radio-spectrum/eu-policy/ manage/index-en.htm.
106. In the UK, e.g., spectrum licences are tradable if so designated by the Office of Communications (OFCOM): Wireless Telegraphy Act 2006, s. 30.
107. Irish Supreme Court, Maher v. Minister for Agriculture, Food and Rural Development [2001] IESC 32, at paras. 237 and 239.
108. The UK spectrum rights regime is set out principally in the Wireless Telegraphy Act 2006, s. 125(1) and Sch. 9.
109. E.g., European Commission, 'The EU Single Market', available at: http://ec.europa.eu/internal-market/index-en.htm.
110. Arts. 12(1) and 19(2), EU ETS Directive, n. 1 above.
111. Information regarding licence details is set out in the Wireless Telegraphy Act Register: Wireless Telegraphy Act 2006, s. 31.
112. E.g. Member States may retain part of a quota which has been transferred and add it to their national quota reserve: Regulation (EC) No. 1234/2007, n. 100 above, Art. 76.
113. Data Broadcasting, n. 103 above.
114. A. Bell & G. Parchomovsky, 'A Theory of Property' (2005) 90 Cornell Law Review, pp. 531-615, at 581-2.
115. Art. 16, EU ETS Directive, n. 1 above.
116. M. Mace, 'The Legal Nature of Emission Reductions and EU Allowances: Issues Addressed in an International Workshop' (2005) 2(2) Journal for European Environmental and Planning Law, pp. 123-34, at 129-34
117. A. Cook, 'Accounting for Emissions: From Costless Activity to Market Operations', in Freestone & Streck, n. 9 above, pp. 59-76.
118. FMLC, n. 26 above, pp. 5 and 8.
119. S. Drummond, 'Trading Instruments and Risk Management', in C. de Jong & K. Walet (eds.), A Guide to Emissions Trading: Risk Management and Business Implications (Risk Books, 2004), pp. 157-77
120. Mace, n. 125 above, at pp. 124-5.
121. C. Voigt, 'WTO Law and International Emissions Trading: Is There Potential for Conflict?' (2008) 2(1) Carbon and Climate Law Review, pp. 54-66.
122. Cf. L. Rubini and I. Jegou, 'Who'll Stop the Rain? Allocating Emissions Allowances for Free: Environmental Policy, Economics, and WTO Subsidy Law' (2012) 1(2) Transnational Environmental Law, pp. 325-54.