Between national interests and European coercion - An institutional analysis of the European Emission Trading Scheme

Traditionally it is argued that the member states create and determine the policy at the European level. They are the principals and the EU is the agent, which acts on behalf of the member states. This paper argues that in the case of the European Emission Trading Scheme (EU-ETS) not only the member states influenced the development of the EU-ETS. In fact, the EU-ETS will also determine massively from 2013 onwards the national climate mitigation policy. The paper first develops a neoinstitutional concept to explain this change of the institution. It evolves over time not only with regard to content but most notably in relation to the member states. This paper analyses two different sequences. The first sequence ranges from the Kyoto protocol to the enacting of the directive 2003/87/EC about the EU-ETS and the national implementation. In this period, national strategies influenced the conceptual design of the scheme in different ways. The content of the regulation was quite open so that the member states could and did interpret the requirements in their own interests. The consequence was the failure of the instrument to reduce greenhouse gases but also a very high degree of national formal arrangements. The member states used the European requirements to pursue national strategies. In the second sequence from 2005 onwards, the direction of action is different. The reversion of the directive is a turning point and connected with a break of the domestic paths. All important competences in this policy are now located at the European level. From that moment on the institution develops a life of its own. In this process, the member states lost the unlimited control over the institution.