Cap-and-trade schemes are of tremendous interest in the current trends of climate law and policy. Taking into account Phase I and Phase II, the EU ETS directive has been reformed in 2009 and will establish a totally new Phase III starting from 2013 until 2020. The new system will propose a broader material scope, new forms of allocation of allowances, due attention to benchmark free allowances and careful measures to address carbon leakage. Furthermore, the directive sets new forms of market oversight and opens up for stronger relations with other compatible systems.
On the other side of the Atlantic, the lack of a US federal cap-and-trade system has not prevented the creation of sub-national or regional cap-and-trade schemes. The Californian cap-and-trade final regulation represents the most interesting and most advanced scheme in the US. It has been eventually adopted in fall 2011 and is designed to reduce GHG emissions by 2020 through a market-based compliance system.
The two systems show improvements to earlier forms of emissions trading, but still raise questions on the actual compatibility between each other.European Energy and Environmental Law Review