Agree now – pay later: escaping the joint decision trap in the evolution of the EU emission trading system

Abstract

This article seeks to refine the joint decision trap model by introducing additional time-based exit mechanisms. The procrastination of decisions, temporary derogation, and transitory compensation enable European Union (EU) member states to escape gridlock by distributing the costs and benefits of a decision over the time axis. In addition, time-based mechanisms not only help to overcome stalemate in policy-making, they also lock member states into a policy regime that may gradually be strengthened once delayed measures take effect. We demonstrate the workings of time-based strategies for the case of the EU's Emission Trading System (EU ETS). Given the diversity of EU member states' interests, the evolution of a mandatory and increasingly ambitious EU ETS presents a puzzle for EU scholars. While established exit mechanisms do not provide conclusive explanations for the case of the EU ETS, we argue that time-based strategies were key to move the EU's policy on emission trading forward.

Keywords:

• Climate policy
• emission trading system
• joint decision trap
• policy horizon
• political time

ACKNOWLEDGMENTS

We are very grateful to our colleagues Zdenek Kudrna, Guido Schwellnus and Florian Trauner, as well as to three anonymous reviewers for valuable comments and suggestions. As always, any and all remaining errors are our own.

Notes

See http://ec.europa.eu/clima/news/articles/news_2011102701_en.htm

Following Mintrom (1997: 741), we define policy innovation simply as a policy that is new to EU member states adopting it.

For a discussion of additional temporal dimensions, see, for example, Goetz (2009) and Grzymala-Busse (2011).

For example, it has been estimated that the two big German energy companies, RWE and E.ON, earned around five billion euros windfall profits from CO₂ certificates in 2007 alone (Pahle 2010: 3436).

Post-legislative guidance through non-binding legal texts is a popular strategy of the Commission to make important policy choices disguised as ‘interpretative’ or ‘methodological’ choices, thereby imposing new obligations on the member states (Hey 2008: 10).

Apart from its attempts at a unilateral re-interpretation of the EU ETS, the Commission also made efforts to move towards more ambitious EU climate policy objectives. Following the failure to agree on a 30 per cent emission reduction target at the 2009 Copenhagen United Nations Climate Change Conference, the Commission worked towards a unilateral European commitment that thus far lacked support within the EU. For unilateral exit strategies from the JDT available to the European Commission, see Falkner (2011: 245–7).

It is important to note that the EU ETS is just one element of the EU's broader efforts to fight climate change. Other elements include regulatory frameworks for carbon capture and storage, vehicle efficiency standards, fuel quality standards and ozone depleting substances. Thus far, the EU ETS has made only a moderate contribution to reduce EU emissions, with ‘older’ hierarchical instruments playing a greater role (Jordan and Adelle 2012; Jordan et al. 2012).

See Patashnik (2003) for a similar discussion on how compensation schemes may threaten the credibility of general interest reforms.

Additional information

Biographical notes:

Patrick Müller is Assistant Professor at the Institute for European Integration Research at the University of Vienna, Austria.

Peter Slominski is Assistant Professor at the Institute for European Integration Research at the University of Vienna, Austria.