Transnational aspects of a linked carbon market
As greenhouse gas emissions trading systems emerge worldwide, the prospect of linking these systems has increasing economic appeal. However, there are a number of, practical and political considerations to take into account which may in many cases outweigh this theoretical attractiveness. There are also several legal instruments and approaches that can be used to link schemes ranging, from the very formal and multinational, to the informal and bilateral. Some aspects of system design may differ and still permit linking – but some, like price caps and acceptance of offset crediting, reguire a degree of harmonisation either for practical or political reasons. The European Union, having taken the lead in trading, has influence on the development of other systems, but will still be confronted with hard choices about what elements it may be to accept in a linked system.