Public and Private Authority in Global Climate Governance: Who Rules the Compliance and the Voluntary Markets for Carbon Offsets?

The architecture of contemporary global climate governance is characterized by a mix of public and private authority. Several authors have highlighted carbon markets as governance arrangements that lead to a shift towards the privatization of authority. This paper aims to scrutinize the continuously evolving relationship between public and private authority in global carbon markets. Drawing on literature that distinguishes between delegated and entrepreneurial private authority, we first examine the Clean Development Mechanism (CDM) as a prominent example for the delegation of authority to private actors. Because of its hierarchical regulatory structure, we interpret the CDM as a market-based mechanism which operates in the ‘shadow of hierarchy’ with background conditions of public authority and governmental intervention. In contrast, the emerging voluntary carbon market (VCM) is often referred to as the ‘Wild West’ of carbon offset trading. The VCM with its various voluntary standards constitutes a privately regulated governance arena and can be seen as an instance of private entrepreneurial authority. Interestingly, however, the supply chains of the verified emission reductions in the VCM are very similar to those of the certified emission reductions generated under the regulatory framework of the CDM. The rules and procedures negotiated by national governments for the compliance market have been copied by private actors and extended their impact beyond their initial reach. We thus put forward the argument that national governments and hierarchical forms of steering remain central in global carbon governance.