Xinhua reports today that the Chinese government has banned Chinese airlines from participating in the EU carbon markets, which is required by European law. It sets the stage for a showdown over climate rules increasingly interpreted in terms of international trade.

Some critics of carbon markets have expressed a certain degree of satisfaction in seeing the EU’s market agenda thwarted. It is true the market approach is increasingly unconvincing.

But it strikes me that the obvious point to make here is not the critique of market mechanisms. Rather, will global climate policy will be held hostage to trade in the spirit of the WTO’s Doha round – which is to say, in the spirit of failure? There are of course lots of reasons why major industrial polluters would like to forestall something serious as long as possible. This is evidence of some of the worst tendencies concerning climate policy fragmentation. The worst possible outcome for global climate policy is that it be managed in the way international trade negotiations have been managed. Climate justice activists should rather be increasingly forceful in arguing for a novel political ontology of the atmosphere.

The EU’s purpose in establishing this rule seems to be to maintain some leverage in international climate negotiations, since it has already given away everything and the spoils go to those who hold out.

As far as carbon markets go, I see two things happening. Within the EU ETS, the airline rule is being used to set up EU-wide registries (currently these are managed by individual member sates), so one could argue the rule is helping consolidate carbon markets against individual member states’ sometimes recalcitrance to toe the EU agenda. But I think globally we will see Pacific Rim carbon markets set up as ‘equivalent measures’ that will allow, say, Chinese airlines to opt out of EU rules because they buy offsets on the Shanghai exchange. China is pursuing a more serious domestic carbon market agenda, and other countries are definitely keeping that option open / developing ‘voluntary’ systems. Another possibility would be an industry-specific (instead of geography-specific) sectoral approach that airlines could opt into to comply with EU law. I think the EU would see their approach as a success (if only a partial one) if it encouraged other countries to set up regulatory mechanisms, however weak in practice, and it would be willing to accept something far shoddier than the ETS as ‘equivalent.’ But that’s just my sense.

Again, I feel that the issues surrounding carbon markets here are a sideshow to a far more serious issue that CJ folks should be hammering home in increasingly sophisticated ways – I mean the overarching illegitimacy of the current negotiations.
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