Implementing Climate Governance: Instrument Choice and Interaction

Abstract

At all levels of regulation, the legal response to both causes and impacts of climate change has shifted away from a segmented array of isolated measures and initiatives on specific aspects of global warming, such as policies to manage energy demand or promote research on sustainable alternatives, to an increasingly sophisticated network of regulatory standards, market mechanisms, and other innovative approaches. While the first elements of a new area of law are arguably emerging in the shape of common principles and objectives for sustainable energy use, the countless rules devoted to climate change are still but loosely related and far from becoming a coherent normative framework.

Michael Mehling is President of the Ecologic Institute, Washington DC, and an Adjunct Professor at Georgetown University.

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1 Introduction

With energy production and consumption accounting for a vast majority of anthropogenic greenhouse gas emissions, climate policy invariably affects larger and also more sensitive areas of society, compelling change in nearly all domains of social behaviour and, notably, constraining economic activity at a much broader scale than any other area of environmental governance. As a result, decision makers have openly embraced alternative policy approaches based on flexible markets and price incentives, in the hope of limiting harmful effects on the economy and competitive distortions in the global marketplace. While the reasoning behind this changed orientation is understandable, the rapid growth and evolution of new mechanisms has also brought along new shortcomings, giving rise to conflicts at the level of individual rules and principles, all the way to systemic tensions within the overall configuration of the legal system. Partly, this can be ascribed to a dramatic change in the conception and focus of environmental regulation: as economic consi­derations acquire greater weight in decision making, increased preoccupation with the cost and efficiency of policies has resulted in a variety of flexible market incentives joining or supplanting more conventional performance and quality standards.¹

Such difficulties have also overshadowed the design and implementation of many domestic climate policy portfolios. Looking back on the early stages of domestic climate regulation process, one might often garner the impression of an incremental, barely coordinated strategy, resulting in a coincidental rather than intended assortment of regulatory devices, not seldom based on overly rushed legislative schedules,² substantive disagreement between rival government agencies, and the challenge of balancing international commitments with domestic legal and political realities. Faced with changing demands in a politically exposed issue area, legislators and administrators have been mandated with elaborating an operational regime for activities which, previously, had been subject to no form of regulation. Confused by the unfolding disarray and widespread misinformation, affected stakeholders have often voiced their irritation at the lack of coherence and systematisation in climate law and policy.

And yet, as this area of law matures, one can already perceive efforts to streamline the current diversity of rules through shared definitions, common objectives, and dynamic referencing between different acts of legislation. Against the backdrop of efforts in several national jurisdictions to systematise the diversity of environmental statutes, ordinances, decrees, and other relevant sources of law in a uniform code, it should hardly surprise that suggestions have also been made to harmonise climate policy under a single domestic legal act, marking a departure from piecemeal regulation to an integrated system for the management of our atmosphere. Several countries have indeed gone down that path, illustrating the growing systemic coherence of a distinct area of law.

At the international level, nations seeking to cooperate on climate change have always been forced to navigate a fine line between substance and process, general principles and specific rules, formal obligations and political commitments. Many of the core issues have been so divisive that progress has only been possible at the expense of specific and binding normative outcomes. As the negotiations on a future climate regime unfold, it is becoming increasingly evident that international cooperation itself is undergoing fundamental change.

High levels of normative and analytical uncertainty, the complex nature of interrelated issues, and substantial costs associated with any meaningful policy efforts have all strengthened the role of actors beyond the nation state, and also prompted the exploration of innovative approaches to climate governance, for instance by harnessing market instruments.³ Likewise, the traditional model of intergovernmental cooperation centred on a binding treaty is starting to give way to a more fragmented topography of regional and bilateral networks and partnerships, where informal consultations take the place of legally enshrined rights and obligations, allowing states prepared to cooperate to do so “without unduly restricting their freedom of action.”⁴

In many ways, this evolution also has far reaching implications for the legal nature of climate cooperation. If current trends are any indication, the global response to climate change beyond 2012 will see a shift in emphasis from binding obligations to more loosely organised coordination and facilitation in a system based on voluntary pledges, where national policy developments displace negotiated arrangements as the new benchmark of climate efforts.⁵ As one observer has remarked about the outcome of recent negotiations, rather than adopting “a detailed, binding framework for furthering global climate cooperation”, the international community has instead embraced “a general political statement that privileges the voluntary actions of states and devalues the role of international law and global climate governance.”⁶

Should the crucial feature of enforcement also soften as it evolves towards res­ponses more ‘in harmony with the cooperative spirit’⁷ required for climate cooperation, it could raise questions about the very role and limitations of international law.⁸

After all, it would imply that climate cooperation is ultimately determined only by the interests, at any given time, of the regime participants. Whether commitments are enshrined in law would then become largely irrelevant, displacing binding norms to an anachronistic realm of burdensome procedures, an obstacle, some might even argue, in the formulation of effective cooperation strategies. In such a system, a “country that deliberately fails to abide by … legally binding commitments under the Kyoto Protocol is also likely to resist the application of punitive consequences, regardless of whether these consequences are made legally binding or not.”⁹ But that must surely beg the question: what normative force is then left to international climate law?

For international lawyers, this question will resonate with a latent anxiety about the changing role and perception of their discipline, a departure from the application of objective rules in a coherent and enforceable system of norms to the politically guided management of technical, fragmented regimes.¹⁰ Indeed, climate cooperation and its study appear particularly amenable to new vocabularies of governance, legitimacy and compliance, where preoccupation with the seemingly archaic language of formal international law and its binary focus on the observance or violation of rights and obligations may seem entirely outdated.¹¹ Aside from revising our understanding of climate cooperation, therefore, do we also need to leave behind the tools of international jurisprudence and reconceptualise the climate regime and its commitments through the lenses of more novel ways of thinking about international cooperation, such as transnational governance and global administrative law?¹²

2 Exploring the Boundaries of Domestic Climate Law

2.1 Instrument Choice at the Domestic Level

Decision makers seeking to address the causes and effects of climate change can take recourse to a portfolio of policy instruments, including pricing controls and quantity rationing,¹³ performance standards, subsidies, agreements, and informational instruments.¹⁴ In practice, these instruments are applied alone or in varying combinations to different sectors, such as electricity generation, transport, buildings, and industry.¹⁵ By diverting resources and capital away from the production of conventional goods and services, and often into costly abatement measures, these instruments can have a detrimental effect on economic growth in the short term. Over the medium and longer term, the various co-benefits of mitigation action, such as energy savings, reduced health impacts, or improved energy security, suggest that a carefully designed strategy to lower greenhouse gas emissions will generate greater benefits than costs,¹⁶ but current political and economic decision making cycles are notorious for being myopic and providing little incentive for anticipatory governance or foresight.¹⁷ Additionally, while the social cost of action is expected to be lower than the impacts of unabated climate change, it will nonetheless rise over time as readily available abatement options are exhausted and more costly solutions need to be explored.¹⁸ In the context of climate change, therefore, both the rationale of policy instruments and the manner in which they are designed have been sensitive to economic concerns from a number of important stakeholders, prompting widespread adoption of flexible or suasive incentives alongside more coercive regulatory prescriptions.¹⁹

With this broad range of available instruments comes a need for reliable criteria to guide and justify selection processes between contending approaches to climate governance. While it is widely agreed that no single model can serve as a panacea for all regulatory purposes,²⁰ a number of criteria have gradually evolved in various academic disciplines to evaluate individual instruments and their combination in a coordinated portfolio. At a sufficient level of abstraction, the following criteria are typically proposed:

• Environmental effectiveness: how well does a policy instrument meet its intended environmental objective? How certain is its level of environmental impact?

• Cost effectiveness: can the policy achieve its objectives at a lower cost than other policies? Does it create revenue streams that can be reinvested?

• Distributional considerations: how does the policy impact consumers and producers? Can it be considered fair and equitable?

• Institutional feasibility: is the policy instrument likely to be viewed as legitimate, gain political acceptance, be adopted and ultimately implemented?²¹

While these criteria are widely advocated, albeit with slight variations,²² it bears noting that processes of instrument choice are often complicated by the fact that individual criteria tend to compete with each other, rendering tradeoffs inevitable and any selection largely dependent on specific circumstances.²³ Additionally, climate governance tends to address several market failures and seek a variety of outcomes, thus necessitating the use of more than one instrument.²⁴ Yet with the simultaneous operation of various instruments comes a risk of adverse interactions or even redundancies.²⁵ Some instruments will pursue more than one objective,²⁶ and the extreme uncertainties underlying causes and impacts of climate change as well as policy outcomes further complicate the evaluation of relevant instruments.²⁷ As the next section illustrates, similar complexities are also faced when seeking to apply evaluation criteria to international regimes; many of the considerations guiding the debate on domestic instrument choice are, however, transferable to some extent.²⁸

2.2 Instrument Interactions at the Domestic Level

Growing in consecutive stages, the domestic body of rules devoted to climate policy in most jurisdictions has evolved into a comprehensive and highly diverse regu­latory strategy. But as with most entities that develop over time, it has not always grown in a systematic fashion, rather adding layer upon layer to accommodate new challenges and international commitments. In recent years, for instance, the German climate strategy has been subject to growing criticism for consisting of “several barely coordinated measures and actions” whose “interaction, mutual enhancement, and mutual cancellation” are not fully known.²⁹ Its instruments have been censored for “being introduced, modified or expanded in a random manner”, resulting in regulatory overlap and excessive government intervention, all of which, in turn, is “stifling the market.”³⁰

While such verdicts mostly originate with representatives from industry and commerce, the sectors most affected by environmental and energy policies, they are not entirely unfounded: even an Advisory Council of the German federal government observed that interactions between different policies had been “insufficiently considered”,³¹ suggesting that the German basket of instruments for greenhouse gas mitigation deserved further attention. Generally speaking, thus, such an instrument mix can be the outcome of a carefully guided process, or merely the accidental convergence of various measures adopted by decision makers in a political system to achieve a set objective.³²

Leaning more towards the latter category, it appears, global warming legislation has been adopted over time and in response to situational demands, sacrificing systemic coherence for a profusion of divergent terminologies and altogether various degrees of overlap, ambivalence and inconsistency. Important issues are frequently governed by executive ordinances and decrees rather than statutory law, constituting a violation of the constitutional doctrine of essentiality, which requires that substantial issues be governed by formal parliamentary acts.³³

With energy and environmental regulation in the Member States largely initiated by Community law, many of the foregoing shortcomings can be traced back to the supranational level, where the adoption of legislation is a process strongly guided by regulatory competition between the Member States³⁴ and often finds its basis in a precarious compromise in the Council.

Looking back in time, these challenges might also find their origin in the very history of environmental legislation, which evolved from earlier rules on trade supervision and traditionally relied on a rigid system of administrative permits and control.³⁵ Its ambit was commonly limited to the regulation of impending threats to public safety, such as acute pollution and other perilous activities, rather than distant, elusive environmental risks.³⁶ Given their innate affinity to pollution prevention and control, however, measures taken to mitigate global warming were initially often assigned to the same area of law governing noise and air pollution. In Germany, for instance, a central act of legislation in this field, the Federal Ambient Pollution Control Act, mentions protection of the atmosphere amid its objectives, which is commonly understood to include the global climate.³⁷

And yet, the very notion of climatic change has, by definition, originated from a precautionary outlook, seeing how it involves diffuse, cumulative manifestations of risk rather than localised and immediate danger. Unlike conventional pollutants, therefore, greenhouse gases were generally not subject to any form of management in the past, with the ability to emit greenhouse gases limited by the capacity of an installation only. Elaborating climate policies within the regulatory ambit of pollution control is, however, proving less and less viable, as legislators are compelled by economic constraints and supranational commitments to engage in a paradigmatic shift of regulatory traditions and vest flexible mechanisms and market incentives in the guise of formal law.

Unsurprisingly, significant challenges have followed from this transition for administrators and the legislature, and the latter has only succeeded in embracing a more general, preventive stance to environmental protection within the past decade. Attempts to speed up the pace of reform, for instance by supplanting traditional regulation with flexible market instruments, have often been guided by purely theoretical assumptions on the merits of a particular approach, resulting in an overly narrow focus on select mechanisms at the expense of the remaining elements in the policy architecture and the operation of the policy as a whole.³⁸ As with any process requiring swift adaptation to rapidly changing circumstances, the result has ultimately been characterised by no small amount of tension and outright conflicts.

2.2.1 Internal and External Conflicts – An Analytical Framework

Generally speaking, one can discern four categories of conflicts arising from the introduction of modern climate policies into the existing legal and constitutional order. First, there are conflicts of objectives, notably between environmental protection and energy market regulation. By way of illustration, the access to electricity grids and minimum feed-in rates guaranteed in many countries through rules on the promotion of renewable energy are conditional on utilisation of specified technologies, with the scope of legislation limited to generation methods defined in the law itself.

On a theoretical level, this contradicts the general commitment to free competition set out in energy market legislation, for instance European Community liberalisation rules. Likewise, the polluter pays principle adopted as a central tenet of environmental policy is inherently at odds with the requirement in many emissions trading systems to allocate a significant majority of emission allowances for free to operators under emissions trading rules.³⁹ Accordingly, the divergent objectives of climate policies and legislation in other issue areas are not always easy to reconcile.

Conflicts can also follow from divergent regulatory approaches, notably when conventional rules based on state intervention and “command and control” meet flexible policies based on the price signals of functioning markets and other financial incentives. An example for such colliding traditions can be seen in the relationship of emissions trading and many conventional ambient pollution control regimes, as the former relies on market forces to guide the standard of technology in participating installations, while the latter, in turn, tend to force rigid performance standards and emission ceilings on each individual operator. By requiring all installations – regardless of cost – to ensure a certain standard of technology, conventional regulation goes against the central premise of emissions trading, given that installations are no longer free to decide whether to acquire further allowances or invest in more efficient facilities.⁴⁰ In order to resolve this conflict, implementation of emissions trading in the European Community necessitated a legislative amendment of pollution control legislation to exempt market participants from the general performance standard.⁴¹

But similar tensions can also occur between two mechanisms based on the same regulatory premise, exemplified by the way emissions trading interferes with the environmental performance of certain types of renewable energy promotion. At worst, the two incentives virtually cancel each other out as a means of reducing greenhouse gas emissions, given that the generation of electricity with renewable energy sources automatically increases the supply of unused allowances in the trading market and thereby disrupts the price signal required to influence corporate decisions. Moreover, the reductions achieved through renewable energy promotion could be achieved at lower cost if they were left entirely to operators participating in the market rather than a rigid promotion scheme. When this occurs, the renewable energy promotion rules ultimately subsidise CO₂ emissions originating outside of the power generation sector, rendering them an environmentally useless, but economically costly instrument.

A further illustration of conflict between two flexible instruments can be discerned in the overlap of emissions trading and voluntary declarations on climate protection by private enterprise. Under a voluntary declaration adopted by major sectors of German industry in 2000, these had pledged emissions reductions in exchange for a suspension of further regulatory measures; with the introduction of emissions trading throughout Europe, however, the federal government was bound to impose an aggregate limit on emissions for most parties to the agreement. Evidently, this did not conform with the reasoning of the earlier arrangement, although the government had no choice in the face of binding supranational commitments.

A third category of frictions can arise when implementing climate legislation in the context of constitutional doctrines and fundamental rights. On the broader level of constitutional law, the federal organisation of legislative and executive powers in many countries may impede effective elaboration and enforcement of climate policies, where a number of relevant issue fall within the purview of the federal legislator, but enforcement and administrative operationalisation, in parti­cular, have traditionally been the prerogative of the federate provinces or states. Also, responding dynamically to changing environmental circumstances may often necessitate the delegation of legislative powers to executive bodies, whereas many national constitutions require that important issues attain the democratic legitimacy of statutory law.

Given the universal nature of global warming and the ample scope of mitigating policies, moreover, subjects may be affected in their individual rights and freedoms in manifold ways. For instance, emissions trading has been seen to be discriminatory towards sectors covered by the trading scheme, as opposed to other sectors which faced no aggregate emission limits. And altogether, with greenhouse gases traditionally subject to no form of management, the new trading system has been held to violate the established balance between individual rights and public concerns, a balance which had found its reflection in the general freedom to engage in pollutant operations subject only to a bound decision of preventive control. Emissions trading, so the argument of critics, would curtail the legal position of operators and render their ability to exercise fundamental rights dependent on a discretionary permit.⁴²

And finally, tensions may arise between different regulatory planes, that is, divergent climate policies in domestic, supranational, and international law. What is legal on the domestic plane, for instance, may conflict with precepts of supra – or international law. A salient illustration are all forms of incentives for the promotion of renewable energy sources and energy efficiency measures, as well as the free allocation of allowances to participants in the emissions trading scheme. Depending on the circumstances in casu, such benefits may be classified as state aid under the competition rules of the European Community⁴³ or as a subsidy under the Agreement on Subsidies and Countervailing Measures (SCM) administered by the World Trade Organisation.⁴⁴

While there have been numerous efforts to reconcile separate normative environments by way of conflict or exception clauses, the tedious example of environmentally motivated trade restrictions has shown that institutions tend to prioritise their own agenda at the expense of any competing rules and objectives.⁴⁵ A second example is the admissibility of taxes or other charges on bunker fuels for aviation, which – although permissible under domestic law⁴⁶ – are precluded by anachronistic exemptions under the Chicago Convention on International Civil Aviation⁴⁷ as well as a number of bilateral agreements, formally known as “Bilateral Air Service Agreements” (BASAs).⁴⁸

At the European level, moreover, Directive 2003/96/EC calls on Member States to “exempt … from taxation under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse … energy products supplied for use as fuel for the purpose of air navigation.”⁴⁹ All this has prevented legislators in several jurisdictions from implementing effective measures to contain emissions from the most rapidly growing source of greenhouse gases,⁵⁰ delaying any progress and forcing decision makers to resort to emissions trading as the only permissible measure.⁵¹

2.3 Coherence by Design: Envisioning a Domestic Climate Management Regime

Legislation implementing domestic climate policy is frequently encumbered by a number of tensions and outright conflicts. Increased harmonisation and simplification within an integrated policy framework also suggest themselves as a possible channel of improved energy and climate regulation, including better delivery of central objectives and principles to often wary addressees. Of course, a solution at the international or regional level would be preferable for various reasons, notably to lessen the concern about impacts on competitiveness and environmental efficacy. On the international plane, however, the consensus required for a sufficiently ambitious climate regime is currently absent, with the international community already facing challenges in the adoption of fairly moderate targets. At the regional level, in turn, legislative bodies tend to lack the necessary powers for comprehensive regulation of greenhouse gases, as is illustrated by the European Union, where political opinion might be more favourable than in an international setting, but the establishing treaty confers no comprehensive power to legislate climate and energy policy. With that in mind, the following sections will outline some considerations relating to the establishment of a domestic scheme to manage greenhouse gas emissions, starting with the possible sources of a legal mandate, the most important objectives, and tentative design elements.

2.3.1 The Legal Context – Identifying a Mandate

Before addressing the material objectives and design options of a comprehensive management regime for greenhouse gases, the current legal framework should first be assessed with a view to potential bases for such sweeping reform. In an area as sensitive as energy and climate change, after all, far-reaching policies are likely to find many linkages with fundamental tenets of constitutional law and economic regulation, all of which could impede the adoption of a uniform regime. At the same time, however, the legal order has gradually evolved to accommodate new and increasingly urgent environmental concerns, providing various gateways for a genuine mandate to support the adoption of a stringent climate policy architecture.

First and foremost, mitigation objectives entered by the government provide a strong foundation for comprehensive measures to meet these binding commitments, something a harmonised and consistent strategy is likely to facilitate. At the level of legal doctrine, one can point to the state objectives of environmental protection and intergenerational sustainability enshrined in constitutional documents such as the German Basic Law,⁵² as well as the principle of coherence affirmed by many constitutional courts, effectively ruling out legislation that stipulates irreconcilable obligations for one and the same addressee.⁵³ Further support for a harmonised and consistent management scheme may be derived from the principle of integration, which has been vested in the status of positive law by the Member States of the European Community,⁵⁴ and the principle of proportionality, which could potentially impose a limit on cumulative burdens flowing from the overlap of different measures and policies.⁵⁵

In many jurisdictions, energy and climate legislation has, to date, been based on the existing power to regulate economic activity as well as, more specifically, ambient air pollution.⁵⁶ Accordingly, there has been ample discussion whether the comprehensive management of greenhouse gases automatically incurs a violation of the fundamental right to engage in economic activity, manifested in an alleged right to use air as a resource and a medium for the absorption of emitted greenhouse gases. Indeed, in a decision on the responsibility of the state to compensate damage arising from air pollution, the German Federal Constitutional Court observed in a that “as a medium, ‘air’ is not subject to a management system under public law pursuant to which the holders of basic rights would generally be barred from access, and according to which use would depend on allocation by state bodies subject to their discretion.”⁵⁷

Applied to the context of climate change, such an understanding would preclude the comprehensive management of greenhouse gas emissions within an overarching framework, and would, instead, favour legislation in response to situational threats and narrowly defined issue areas. Unsurprisingly, that very approach has also been responsible for the current policy architecture, where individual policies and measures have accumulated without overall coordination, resulting in the conflicts identified in the preceding section.

Called upon to decide a challenge against the emissions trading legislation in Germany, for instance, the Federal Administrative Court has clarified that “air” could never fall within the ambit of private property, and that, instead, the rules on emissions trading merely regulate the use of property “insofar as is necessary for the general interest.” In other words, the Court concluded that the emissions trading scheme was an appropriate, necessary and proportional means of protecting the global climate, and that it had merely led to the partial reorganisation of that specific area of law without infringing on the vested rights, both nationally and under Community law, of market participants.⁵⁸ Given the growing currency and media attention afforded to climate change in recent months, this perception is likely to have become more popular, providing the dogmatic basis for stringent and comprehensive management of greenhouse gas emissions in Germany.

2.3.2 Integrated Greenhouse Gas Management – Clinching the Objective

Any attempt to create an overarching framework for the management of greenhouse gas emissions will subsequently require the definition of uniform policy objectives. Not only is specification of a common purpose a prerequisite for the determination of substantive principles and regulatory instruments, but its very existence may also have a unifying effect on the subsequent implementation process. Clear objectives have therefore proven essential for effective governance of environmental challenges in the past.⁵⁹ Materially, however, these objectives will vary with the substantive scope afforded to the management scheme.

When deciding on the scale of the policy architecture, legislators will be called upon to make a strategic decision on its perimeters. Generally speaking, they can choose to either focus on greenhouse gas emissions and their limitation, or also include broader aspects of energy market regulation and its concurrent aims of energy security and an affordable, competitive energy supply. Although inherently different from mitigation policies, in turn, measures to adapt to global warming could also be included within the ambit of a management regime.

In all cases, however, substantive guidance will follow from any quantitative reduction commitments entered under international or supranational law, helping define the level of ambition that needs to be pursued with the overall management scheme. By necessity, moreover, a management scheme will have to address central aspects of the energy sector, given that achievement of the foregoing reduction targets will be conditional on a gradual transition to sustainability through improved efficiency in the exploitation of energy resources as well as in the generation, conversion, distribution, and end use of energy, but also a shift in the structure of energy sources towards increased use of renewable energy.⁶⁰

Still, if the elaboration of a comprehensive management scheme is also meant to reduce tensions and conflicts between this scheme and other policies as well as within the scheme itself, it should aspire towards some general objectives of a systemic nature. Altogether, the management scheme should strive for the largest possible degree of consolidation and integration, ensuring the compatibility, consistency and complementarity of its various constituent policies and measures. With normative unity a central condition for the success of greenhouse gas mitigation, individual elements of this strategy must be deployed in conformity with the existing regulatory framework.⁶¹

By way of illustration, emissions reduction policies should be aligned with energy market rule to avoid tensions between the pursuit of a more sustainable energy supply and further market liberalisation. Ultimately, a comprehensive management scheme should avoid sending the contradictory signals relayed by current policies in place, and instead foster a high degree of harmony in its terminology, substantive goals and principles, and regulatory instruments. Another priority should be placed on curbing the excess regulation of earlier decades, reducing normative complexity and redundant bureaucratic obligations.⁶²

Clear, simple and transparent norms may help reduce administrative costs and also promote identification by their addressees, thereby improving the prospects for adequate implementation. Accordingly, a comprehensive management scheme could seek to streamline mandatory procedures and consolidate permitting requirements. Given the dynamic nature of climate change and evolving responses at the regional and international plane, finally, the management scheme should be sufficiently flexible to accommodate external change. In order to safeguard the coherence of the overall scheme, however, future amendments should be subjected to an appropriate assessment procedure designed to identify potential impacts, as should any legislation adopted by administrative entities based on powers conferred to them.⁶³

Such a Greenhouse Gas Management Act would ideally consist of a general part outlining the shared objectives, definitions, and principles, and a specific part focusing on individual sectors or issue areas, and the measures adopted within its ambit. In the general part, accordingly, the legislator could draw attention to mitigation commitments entered under international law and specify a global greenhouse gas reduction target, breaking this aggregate objective down to different sectors and activities. General principles could include a duty to take protective and preventive action against climate change, or the duty to use energy efficiently.

As for the selection of suitable instruments, the overall aim should be to arrive at a combination of different instruments capable of influencing individual and collective allocation decisions in line with the objectives defined earlier, and addressing all sources of greenhouse gas emission within the substantive and geographic scope of the Greenhouse Gas Management Act. All instruments currently in use or otherwise discussed for global warming mitigation are theoretically available, including:

• regulations and standards specifying mandatory abatement technologies or minimum requirements for pollution output;

• taxes and charges imposed on undesirable activity by a source;

• tradable permit schemes establishing a limit on aggregate emissions by specified sources and allowing trade among them;

• voluntary agreements between a government authority and one or more private parties with the aim of achieving emissions reductions beyond compliance with regulated obligations;

• subsidies and incentives awarded to an entity for performing a specified action;

• information instruments requiring public disclosure of environmentally related information, including labelling programmes and rating and certification systems; as well as

• research and development measures involving direct government funding and investment for innovative approaches to mitigation or the infrastructure of emissions reductions.⁶⁴

Further instruments might include planning and impact assessment procedures as well as liability rules and criminal sanctions, to name but a few. In order to achieve the strategic objectives of greater consolidation and integration, however, it is imperative that these instruments be carefully screened on the basis of appropriate criteria prior to their inclusion in a Greenhouse Gas Management Act, in order to avoid inconsistencies, conflicts and regulatory overlap.⁶⁵ And this is the most challenging stage in the elaboration of a suitable instrument mix. Commonly cited criteria of policy choice, such as those outlined by the Intergovernmental Panel on Climate Change in consecutive Assessment Reports, are generally too formulaic and abstract to allow for the contextuality of selection processes and the manner in which policy instruments are both formulated and implemented within a sophisticated matrix of interests, procedures and institutional mandates as well as material legal constraints.

Accordingly, criteria such as environmental effectiveness, cost effectiveness, distributional considerations and institutional feasibility may provide initial guidance, but are unable to determine the outcome of any given selection process.⁶⁶ Additional criteria, such as market conformity, administrative and transaction costs, political acceptance and legitimacy, openness to innovation, and the degree of flexibility and reflexiveness, may also prove helpful, but are equally unable to place the choice of instruments on a purely rational, objective and universally acceptable basis. In that sense, scholars and decision makers will arguably face their most important task when it comes to identifying suitable selection criteria based on the actual necessities at hand, engaging in an interdisciplinary and practically relevant discourse.⁶⁷

3 Instrument Choice at the International Level

Past decades have seen an astounding proliferation of international arrangements in the area of the environment. A widespread perception that these have proven only marginally successful sparked growing interest, both institutional and academic, in the conditions and requirements of improved environmental governance. Over time, this shift in attention from the design of new international environmental arrangements to their evaluation and improvement has elicited a number of individual and collaborative research efforts across academic disciplines, producing a wealth of output and generating intense debate. In effect, research on the role and consequences of environmental regimes, treaties, and institutions became such a dominant part of the study of international relations at one point that it compelled a scholar to speak of a “veritable growth industry” and a “driving force” in his field.⁶⁸ Much of the resulting literature has focused on specific dimensions of regime performance, with the greatest weight being afforded to questions of effectiveness, followed by research on economic impacts, fairness, and equity.⁶⁹

But even within these narrow categories, terms and definitions have varied greatly due to “elusive” concepts involving “daunting evaluative and analytical problems” that have given rise to much “disagreement, both in method and approach and in substantive views”. Significant variations in the focus of relevant studies, as well as the distinct intellectual backgrounds and orientation of their authors, have resulted in very different approaches to the measurement of performance in terms of outputs, outcomes, and impacts. Research on the effectiveness of international environmental governance, for instance, was initially prompted by a shared concern about the ability of cooperative arrangements to influence state behavior, and hence focused on issues of regime design and improved compliance management. But definitions of what exactly constitutes “effective” governance differed widely in earlier research, with some authors merely seeking behavioral change or observable political effects, while others set the threshold higher by looking for an improvement in – or even resolution of – the situation that necessitated cooperation in the first place. Although later research has become more critical in terms of applied methods and concepts, even a recent shift to more empirical and quantitative approaches has failed to altogether eliminate some of the more persistent epistemic challenges in the study of regime effectiveness, including identification of the purpose of cooperation and of causal connections between governance systems and subsequent behavioral or physical change.

While the conceptual limitations of this line of research are thus readily apparent, the work to date reflects a sophisticated intellectual effort to determine whether international environmental cooperation plays a role in shaping collective action and social practices. Progress has been made, in particular, when it comes to distinguishing normative and utilitarian motives for state behavior and extending the perception of environmental compliance beyond binary treaty observance to a more managerial process focused on clarity, capacity, and priority, in which soft incentives and facilitation play as much a role as traditional legal coercion. More recently, scholars have responded to the rapid growth in environmental regimes by focusing on regime fragmentation and overlap, discussing options to manage conflicts and leverage synergies between multiple levels of governance and concurrent governance systems.

Overall, there can be little doubt that our comprehension of international environmental cooperation has been greatly advanced, from the earliest stages of diplomatic negotiations to the final application and enforcement of individual arrangements. Nonetheless, studies of regime performance have so far failed to yield a set of clear and robust generalizations about the conditions for successful environmental governance. In particular, aspects other than compliance and effectiveness, such as economic impacts, fairness, and legitimacy, have received less systematic consideration in the absence of large, integrated research networks. Future work is likely to address such remaining gaps while further improving the clarity and transparency of analysis. Standardized definitions of key concepts, more rigorous comparison of findings across projects and disciplines, and use of advanced methods such as statistical analysis, simulations, and integrated case studies will help aggregate cumulative knowledge about the dynamics that affect regime formation and implementation. In the meantime, however, the research agenda remains heterogeneous, underscoring the earlier assertion that no single approach can capture the diverse ways of looking at international environmental cooperation, calling instead for a case by case determination of suitable evaluation criteria.

Existing surveys of alternative approaches to international climate governance have already devoted significant intellectual effort to defining generally applicable criteria for the evaluation of cooperative frameworks. What is more, they have been, to a greater or lesser extent, able to build on the cumulative insights offered by previous research on the assessment of domestic environmental policy and international environmental governance. Still, the criteria proposed in relevant literature to date are fairly heterogeneous. Only one criterion – environmental effectiveness – is common to all proposals, and even that is characterized by variations in the conceptual definition and scope. Other criteria, such as economic implications and considerations of equity, feature in a majority of studies, but again, their material content varies substantially. Comparisons across surveys become virtually impossible.