Global Climate Change and European Legal Pluralism: Decoding the European Union’s Emission Trading Scheme

Considering phase I and II of the market-based Emission Trading Scheme of the European Union (EU-ETS), the analytical framework provides a contradicting picture of policy implementation: on the one hand, the EU-ETS claims to be an institutional success with regard to the functional setting of the first supranational scheme – in spite of numerous structural malfunctions. On the other hand, the regulatory impact in terms of CO2 emission reductions has only been moderately measurable within the first five operational years. Given the systemic importance of the ETS, the legal genome of the EU-ETS’ institutional micro-design itself reflects the challenge for the whole rhetorical mindset of the construction of the European legal regime: the EU’s conceptual allocation of welfare, the interplay between different national legal orders and the functionality of the internal markt in the process of an European integration 2.0. Taking into account the EU’s climate action framework, its regulatory instruments and its legislative package, the legal design of the EU-ETS questions the lack of a functional concept of legal differentiation in EU law, providing legal niches for different administrative capacities and political preferences without reducing the European legal pluralism as such. The empirical deconstruction of the EU-ETS’ implementation on European and Member States level in the first two decentralized phases I and II as well as the centralized allocation process for Phase III (2013-2020), therefore, accounts for the structural diversity of regulatory strategies converging in the European legal body and its integrated conceptualization of emission trading. Aiming for sequencing its genetic phenoytpe, the paper will embed the legal analysis of the EU-ETS in a discursive triangle of cap-and-trade regulation, European market integration and the principle of legal differentiation – contributing, herewith, to demystify a number of lessons from European integration in the supply of public goods.