Climate politics in the multi-level governance system. Emissions trading and institutional changes in environmental policy-making

Emissions trading has forged ahead as a climate policy instrument at several policy levels. The aim of the paper is to critically examine whether the rise in emissions trading policy instrument may be described as a ‘success story’ with the help of a number of theoretical hypotheses from the field of multi-level governance research.

The authors analyse the complexity of emissions trading, bringing out the most important players, conflicts and milestones in the process. This paper demonstrates the interactions between adoption of a policy instrument on climate change and sovereignty of European national states. It also discusses the extent to which a concept of emissions trading entails a shift of powers to higher political levels and the effect on the interdependence of players at different political levels.

Main conclusion points include:

• in the case of emissions trading, governance is diffused at several territorial levels, so it is possible to speak of a shift towards multi-level governance; however, it is clear that this shift goes together with a qualitative change in the forms of governance
  
• multi-level interdependence confirms the loss of control-based on ‘nation-state coercion’, and demonstrates that political decision-making processes must increasingly rest upon the principle of majority agreement among the key players and interest groups
  
• major policy influence of the Commission in negotiations on the EU emissions trading directive are more indicative of a supranational ‘top-down’ processes. In light of the narrow influence on non-state players at international and EU levels, it is not really possible to speak of participatory negotiating solutions
  
• as far as social power is concerned (in the case between business and politics), there is considerably increased room for maneuver of many powerless interests against a few powerful (industrial) interests.