That Tricky Business of National Sovereignty

In a very important decision with broad implications for cap-and-trade programs, an EU Court has found that the EU cannot impose emissions quotas on EU member states, calling into question the ability of the unified EU ETS to function. From Deutsche Welle:

In 2006, Poland and Estonia submitted their emissions plans for the years 2008 to 2012 to the commission. Poland gave itself an overall target of 285 million tons of carbon dioxide per year, while Estonia set itself a target of 24 million tons. Arguing that it needed to account for future economic growth, Poland's self-imposed target was more than 40 million tons higher than its total industrial emissions in 2006. Estonia's target was almost double its 2006 emissions.

In 2007, the commission ruled that the plans did not fulfil the potential for emissions cuts, and ordered Poland to curb its emissions by more than a quarter, and Estonia by nearly half. That decision has now been overturned by the EU court. . .

The EU court must also decide on similar cases involving Bulgaria, Romania, Latvia, Lithuania, and the Czech Republic, effectively calling into question the way the entire system is run and potentially undermining the price of emissions permits across Europe.

Absent a world government, the ruling should make clear that which should already be obvious -- there is no global set of institutions capable of overseeing any sort of interlocking, multi-national cap-and-trade programs. If it can't work in the EU it certainly won't work in the UN.

So long as emissions are tightly coupled to GDP, then no country is going to cede authority over its economy to any other country by giving them any say over their emissions. If and when the link of GDP and emissions is broken, then such international coordination might be possible (as has been the case in say transboundary air pollution or ozone depleting chemicals, neither of which is at all coupled to national GDPs). But note the direction of causality -- technological innovation happens first, coordinated global governance second. Climate policies should thus be focused on breaking the link between GDP and emissions, which means a coordinated, international approach to technological innovation (i.e., specifically improving efficiency and reducing carbon intensity of energy supply).