Revised Legitimacy of Carbon Pricing: the Differentiated Diffusion of Emission Trading System (ETS) in EU and China

Since EU claims its flagship in designing climate policies like carbon pricing, almost 46 countries have adopted this market-driven policy, thus enabling similar practices that can be seen as variants from the EU polices diffused globally. Both the similarity and variances are admitted in the diffusion process, but what generate such a coexistence is still under clarified. Regarding to the circulation of carbon pricing policy, most literatures on policy diffusion offered reasonable explanations on how “best practices” of carbon pricing diffuse across various jurisdictions from a sender-initiated perspective. However, though the modifiability of policies has been taken into account, a recipient-initiated view, which emphasize on how domestic politics facilitates the diffusion process is rarely discussed. To respond this problem, we propose to introduce the concept of legitimacy in political science and global governance into the debate on policy diffusion, so as to observe how a policy of carbon pricing from abroad is legitimized in the political institutional context of a recipient throughout the diffusion process. Therefore, four processes of how a policy garnering legitimacy from a recipient view will be developed as analytical framework, namely debates identification, demands alignment, contexts conversion and institutional emulation. And we will select three countries as comparative cases, namely UK and Germany in Europe that shares neo-liberal governance style, and China with strongly regulatory governance style. Then several key features of ETS design like Cap and allowance, Allocation and offsetting mechanism, etc., will be identified based on the differentiated contexts of UK, Germany and China to examine the applicability of the framework above. The data will come from the official reports, documents and databases of EU commissions and its affiliated organs, environment ministries/departments of UK and Germany, and China’s National Development and Reform Commission (NDRC), China’s Ministry of Ecology and Environment (MEE), etc. We find that all of three countries, taking ETS as an example, have experienced internally prudent policy debates on if and how to adopt the ETS. However, due to their institutional differences and governance styles, the legitimacy of ETS policy was individually revised to facilitate the diffusion. This means that domestic politics plays a significant role in the international diffusion of ETS. Overall, this paper provides insights to learn the role of domestic politics in policy diffusion, and also lessons for reviewing the implementation of carbon pricing policies like ETS on the national level.