From Top-Down to Bottom-Up Climate Policy: New Challenges in Carbon Market Design
Jonas Monast, From Top-Down to Bottom-Up Climate Policy: New Challenges in Carbon Market Design, 8 San Diego J. Climate & Energy L. 175 (2017).
50 Pages Posted: 20 Apr 2018
Date Written: January 2, 2017
The climate policy debate underwent a profound shift between 2009-2016. Prior to that point, efforts at the domestic and international levels focused on broad, top-down strategies to reduce greenhouse gas (GHG) emissions, with market-based mechanisms expected to play a key role. The simultaneous breakdown of the congressional climate policy debate and the failure of the United Nations Framework Convention on Climate Change (UNFCCC) to produce a new international agreement at the meeting in Copenhagen raised serious questions about the political viability of carbon markets, as well as the prospects for implementing meaningful near-term emission abatement strategies.
A number of bottom-up strategies have since emerged, including subnational experimentation with carbon market design, emissions trading options under the U.S. Environmental Protection Agency’s Clean Power Plan, and the UNFCCC’s focus on individual emission reduction commitments by member nations. These incremental steps represent important progress, but are incapable of stabilizing or reducing atmospheric GHG concentrations on their own. The ultimate success of the decentralized mitigation approaches currently underway, therefore, depends upon their ability to foster broader action.
This Article explores the shift from top-down to bottom-up approaches to carbon market design, focusing on three strategies that have emerged since 2009: the California Cap-and-Trade Program, the Clean Power Plan, and the UNFCCC process. The Article then examines the prospects for broad multilateral markets to emerge under a bottom-up approach and identifies three pathways to streamline market design choices: a coordinated approach; a dominant actor approach; and a common elements approach.
Keywords: climate change, carbon market, linkage, Clean Air Act
JEL Classification: K32, K20, K23
Suggested Citation: Suggested Citation