No Emissions Trading Scheme is an Island: Building a Global Linking Agreement from the 'Bottom Up'

The global climate change regime is at a crossroads. There remains little prospect states will agree to urgently needed binding commitments through a "top down" climate agreement, but the ability of national and sub-national policies to produce sufficient emission reductions in its place faces significant challenges. This paper proposes a possible alternative model for building a centralised climate regime from the "bottom up" through linking national and sub-national emissions trading schemes in stages under a global linking agreement. This model is argued as preferable to waiting for a global carbon price to develop from decentralised linkages, or for a "top down" linking agreement to emerge. The paper then considers how the legal design of such an agreement could best facilitate linking of different schemes, concluding that parties should agree to "low end" mutual recognition of allowances under an umbrella treaty structure, with less essential elements left to non-binding arrangements.