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This chapter briefly examines, based on recent legal analysis and scholarship in the field of sustainable development, the trade and investment implications of carbon trading. First, it considers how trade regimes, investment rules, and emissions trading schemes can serve as tools for sustainable development. It then examines the trade and investment implications of new emissions trading regulations, suggesting ways to minimize overlaps with trade and investment disciplines when drafting carbon-related regulations, and addressing issues related to technology transfer. It considers how trade and investment regimes might be refined to complement and support climate-change-related measures. The chapter concludes with a call for integration and, at a minimum, coherence among trade, investment, and climate change regimes that share common sustainable development objectives.

The chapter puts carbon‐energy taxation and ETR in the context of the EU Emissions Trading Scheme (EU ETS), which has been operational since 2005. It describes the basic principles behind emissions trading and discusses the effects on competitiveness which have been estimated from the scheme, both as it is now and how it might develop to 2020. Many of the issues and effects are similar to those discussed elsewhere in the book in relation to ETR. The chapter then moves on to the interaction between taxes and trading, both in theory and as they exist in practice in the European Union. There are a number of good reasons why carbon‐energy taxation should be combined with the EU ETS, especially before the EU ETS moves to the full auctioning of quotas. However, the requirement for unanimity among EU member states on proposals for taxation at the EU level means that, notwithstanding the potential benefits, it will not be easy for new EU carbon‐energy taxes to be introduced.

The EU Emission Trading Scheme (EU ETS) is a leading example of how to strike a balance between the necessity for a sufficiently certain market design to underpin its growth and the critically important need to allow private sector mechanisms to emerge and evolve. Section 1 of this chapter considers the design elements of the EU ETS that provide market participants with the certainty necessary to underpin their participation, with a particular emphasis on the reforms to be implemented from 2013. Section 2 then considers the market mechanisms and norms that have been developed or applied to provide those participants with the confidence that key risks are addressed. Section 3 looks at some of the issues that arise in the context of the interplay between secondary markets such as the EU ETS and the primary markets where emission reduction credits under the flexible mechanisms of the Kyoto Protocol are generated. Examples of new types of transactions will be used to demonstrate the innovation that such interaction drives.

This chapter discusses the engagement of business and environmental nonstate actors in the climate regime, how their efforts have changed over time, and insights from the literature in this area. The goal is to understand how each of them influence humanity's response to climate change, through the UN process and back home in their countries of origin, and their potential to become a catalyst for more ambitious and equitable climate action. Using the dominance of fossil fuel companies as an example, the chapter shows that despite the recent diversification of business interests in the negotiations and the emergence of transnational carbon trading coalitions, fossil fuel companies still hold the most sway over states in the negotiations. It then examines the rise of carbon trading in the global market and looks at the main processes by which fossil fuel interests remain dominant.

Chapter 6 examines whether measures affecting trade in carbon units constitute measures affecting trade in financial services under the GATS Annex on Financial Services and free trade agreements covering financial services. It finds that, although carbon units are unlikely to constitute ‘negotiable instruments’, ‘transferable securities’, or ‘derivative products’, they are nonetheless likely to be covered as ‘financial assets’ or ‘any service of a financial nature’. Importantly, however, it is not the carbon units themselves that would be regulated by the GATS Annex on Financial Services, but rather the commercial activities pertaining to those units. It is conceivable that a measure could prohibit or restrict the carbon unit of a certain nationality but nonetheless leave the supply or trade of permitted carbon units by suppliers of that nationality unrestricted or unaffected.

Attention to climate now dominates much of the global discussion about conservation issues in tropical countries, particularly forests and biodiversity, as well as poverty and development concerns. One of the most prominent options is a policy for Reduced Emissions from Deforestation and Degradation (REDD+) to tackle land-use generated carbon emissions. But how different will REDD+ be from the numerous forest protection policies that have gone before? Using the case study of Vietnam, this chapter historicizes forest management and the recent development of REDD+, and finds there are major similarities between the ‘new’ climate-inspired policies and previous, usually unsuccessful, approaches. This chapter posits that a major barrier to implementation of REDD+ will be in knowledge production about forest environments and forest peoples, and in overly simplistic ‘checklist’ approaches to safeguards and participation. In these challenges, REDD+ faces many of the same problems as previous policies for tropical forest management.

The ‘object’ of 1tCO2e has become central to how we imagine the problem of climate change and its possible solutions. This chapter explores the complex relationship between international law and 1tCO2e an as ‘object’. It demonstrates the way in which international law plays a fundamental and constitutive role in defining, stabilizing, and protecting the ‘object’ of 1tCO2e. It shows that there is nothing ‘natural’ or ‘inherent’ in thinking about carbon as standardized, commensurable, substitutable, and exchangeable, but rather that the imaginary of carbon as a fungible ‘object’ is a mode of legibility structured by international law. Simultaneously, this mode of legibility has been the enabling precondition for the marketized form that international climate change regulation and governance has taken. As such, this chapter analyses how the ‘object’ of 1tCO2e is thus both the effect of and the enabling condition for specific modes of international legal regulation.

Drawing from the cultural survival efforts of the Kayapó and the Paiter-Suruí, this chapter traces how indigenous rights and Western environmentalism have shaped each other. At the core of analysis is how, through the different periods of Amazonian activism, indigenous actors have been both framed by and drawn from the notion of the “Ecologically Noble Savage.” The political currency of this reoccurring trope has informed the creation of alliances between indigenous communities and Western eco-conscious actors to “save the rainforest.” While these partnerships have benefited both the “First World” and “Fourth World” actors involved, they have often been built on the false assumptions and divergent agendas. This shifting ground has produced very different environmental discourses over the last 40 years, moving the place of native Amazonians from one of confrontational eco-conscious cultural activists aligned with Green Radicalism to the shared market-based, scientifically validated indicators consistent with Ecological Modernization.

The European Union’s success in emissions trading is held up as a template for climate policymaking elsewhere. This chapter argues that this view is incorrect. The EU’s climate change policies originate not out of some altruistic willingness to accept higher taxes to save the planet; but rather out of a carefully crafted deal that seeks economic gains from investment in low-emissions infrastructure. Those gains fulfill two important functions: offsetting the costs of climate change mitigation; and building the political coalitions necessary to counter opposition from economic sectors rooted in high emissions. Moreover, the particular dimensions of the EU bargain are deeply rooted in the specific characteristics of Europe’s legacy energy systems. Hence Europe’s success with climate change mitigation suggests the need for economic gains to underpin a climate policy consensus. But EU policy is unlikely to be replicated verbatim in other national contexts with different economic and political configurations.

This chapter tackles the efforts to renew the hills and uplands to help nature's recovery. It highlights how restoring peatlands or ‘rewilding’ represents one of the greatest climate challenges in the UK, while also presenting cash-generating opportunities for those living near them. The overriding objective of returning these to a near-natural state was to lock carbon in the ground rather than letting it leach into the atmosphere. These peatlands, then, store enormous wealth: carbon, paving the way to a new economy: carbon trading, perhaps involving large companies buying credits from restored peatlands — big retailers and transport concerns, for instance. Might cash for carbon prove a potential saviour for countless upland communities in return for their labours in renewing land where sheep numbers will be drastically reduced?

In this chapter, Janette Bulkan offers a social scientific analysis of the controversies surrounding Guyana’s efforts to reduce forest carbon emissions. In 2009, the governments of Norway and Guyana signed the REDD-plus (Reducing Emissions from Deforestation and forest Degradation) agreement. On paper, REDD presented a unique opportunity for Guyana to restart stalled processes like the national development strategy and national land use planning in partnership with indigenous and other forest-dependent people and coastal constituencies. In practice, REDD procedures and projects, argues Bulkan, presented the government with funds to reward loyal subjects and buy votes at elections. The chapter goes on to consider the role of the indigenous Amerindians in the Norway-Guyana agreement at both procedural and substantive levels.