Executive Summary
Emissions trading continues to expand as a flexible policy response to climate change, and governance plays a crucial role in its success. This report focuses on the governance of emissions trading systems (ETS), examining how governance occurs through actors, tools, and processes.
Introduction
Governance in ETS refers to the mechanisms and processes that ensure the system's effectiveness, compliance, and integrity. It involves stakeholders, institutions, policies, and regulations that must be carefully designed and managed to ensure the system functions efficiently and achieves its environmental objectives.
Why Governance Matters
Effective governance ensures that ETS operate within a robust legal framework, maintain transparency, and address conflicts effectively. It also facilitates stakeholder engagement and performance reviews, leading to continuous improvement and adaptation of the system.
Overview of ETS Governance
The governance of ETS encompasses three main phases:
- Establishing the ETS: This involves political and legal processes, stakeholder engagement, adoption of a legal basis, and conducting regulatory impact assessments (RIAs).
- Operating the ETS: This focuses on routine operations, overseeing the compliance cycle, managing the market for emission units, ensuring transparency, and resolving conflicts.
- Reviewing and amending the ETS: This includes reviewing performance, managing system changes, and updating the ETS based on feedback and evolving environmental needs.
Principles of Successful ETS Governance
Successful governance is guided by principles such as clarity in roles and responsibilities, effective communication, stakeholder involvement, adaptability, and transparency.
Governing Emissions Trading Systems
The governance structure typically involves different actors, including governmental bodies, private entities, and independent advisory bodies. Key tools and processes include institutional frameworks, regulatory mechanisms, capacity building, and performance reviews.
Conclusion
Effective governance of ETS is critical for their success in reducing greenhouse gas emissions while promoting economic growth and innovation. By focusing on key phases, principles, and actors, policymakers can create more sustainable and resilient ETS systems.
