Climate Change and the WTO: EU Emission Trading and the WTO Disciplines on Trade in Goods, Services and Investment Protection

This contribution examines the legal relationship between domestic trading in emission certificates and World Trade Organization (WTO) law. As domestic emission trading regimes differ – even when they are based on the international climate change regime – this article uses the EU emissions trading system as an example. In doing so, it also addresses the so-called project-based mechanisms, that is, the joint implementation and the clean development mechanisms (CDM) that are introduced under the Kyoto Protocol. This approach not only takes account of the fact that trading in emission certificates and credits resulting from these project-based mechanisms are economically and legally linked but also of the view that all three flexible instruments can be regarded as forms of emission trading, with trading under Article 17 of the Kyoto Protocol representing the ‘purest’ form of emissions trading.