Background

The pricing of carbon internationally, especially by emissions trading schemes (ETS), has become significantly more widespread. Previously concentrated in the EU, the number of carbon pricing instruments has increased globally.

Experiments with emissions trading started in the US in the 1970s and 1980s in the context of action against ‘acid rain’ and sulphur dioxide (SOx) rather than Climate Change. The resultant Clean Air Act Amendments of 1990 (104 Stat. 2468, P.L. 101-549) (the Act) created the Acid Rain Program under Title IV of the Act, authorising emissions trading. The perceived success of SOx trading moved emissions trading into the political mainstream in the US. This in turn gave the Clinton Administration experience and detailed economic modelling which it used at the Kyoto Conference of the Parties (COP) in 1997 to persuade other parties that emissions trading at the international level could significantly reduce the Costs of emissions reduction. International emissions trading in the form of Joint Implementation, Clean Development Mechanism, and International Emissions Trading was the outcome pursuant