A Comparison of Carbon Emission Trading Systems in New Zealand and Canada : Diversity is Not a Virtue in Carbon Law and Policy

Carbon emissions trading has become firmly entrenched as the favoured policy tool to address the problem of excessive global carbon emissions, and it seems increasingly likely that the post-Kyoto carbon policy will include the formation of a global carbon market realized from a collection of regional, national, and subnational schemes.The design of a carbon emissions trading system is influenced significantly by a wide range of interests. The environmental lobby calls for a stringent cap on emissions. Economic actors lobby for exemptions from compliance obligations. State officials seek ways to minimize administrative costs. Thus we should expect that regional, national or subnational carbon emissions trading systems will vary in design and operation across the globe.This paper examines the carbon emissions trading systems in New Zealand, Alberta, and Québec in relation to four design features: (1) the emissions cap; (2) the scope of coverage in regulated emitters; (3) the allocation of entitlements to emit carbon; and (4) measures used to control compliance costs. While the general legal structure governing carbon emission trading in each jurisdiction is essentially similar, the substantive design features are very distinct. The paper illustrates how these differences implicate the effectiveness of each system on reducing carbon emissions and establishing price discovery on the entitlement to emit carbon.The results of this study give strong support to the development of guidance at the international level for the design features of regional, national or subnational carbon emissions trading systems and their governing regulatory framework, so as to ensure these systems are consistent or harmonized to the greatest extent possible. Diversity is not a virtue in global carbon policy