As I write, final preparations are underway for the twelfth meeting of the Conference of the Parties to the Climate Change Convention (COP 12) and the second Meeting of the Parties to the Kyoto Protocol (COP/MOP 2). Once again, we hear of the so-called “Atlantic divide” between the United States and the European Union on the issue of climate change. While EU member states view climate change as one of the most significant threats facing the international community, until recently the US government questioned whether the threat actually exists. As parties to the Kyoto Protocol, EU member states have committed to reducing regional greenhouse gas (GHG) emissions eight percent below 1990 levels over the period 2008-2012, and the EU has adopted a series of regulations aimed at achieving that goal. The US, which rejected the Kyoto Protocol in 2001, has developed a climate change strategy consisting of scientific research, investment in technology, and voluntary measures to reduce the GHG intensity of the US economy. These transatlantic differences are often viewed as a significant obstacle to any meaningful progress in developing an international response to the problem of climate change.

Those who emphasize the differences between the US and the EU on this issue tend to rely on a fairly narrow understanding of global environmental governance which assumes that national governments are the central governing authority and that international treaties are the primary tool of climate governance. The notion that national governments are the principal authority in governing global issues is increasingly challenged by the politics of climate change where authority for climate governance has been reallocated upwards, downwards and outwards from national governments.¹ In Europe, the EU has taken the lead in developing climate policy for its member states, and throughout the world many sub-national governments (municipal and state/provincial) are pledging to control their GHG emissions through policies and programs aimed at the energy, planning, transport and waste management sectors. These sub-national governments increasingly interact with one another through transnational networks such as the Cities for Climate Protection program sponsored by the International Council for Local Environmental Initiatives and the New England Governors/Eastern Canadian Premiers body, often bypassing and working independent of national governments. In the private sphere, companies large and small are taking up the challenge of climate change and developing innovative strategies for controlling emissions. Their activities are facilitated by groups such as the Pew Center on Climate Change’s Business Environmental Leadership Council and the World Business Council on Sustainable Development. Religious communities have also become active on the issue. This is not to say that national governments have lost all authority for governing on the issue of climate change. Rather, it demonstrates how authority is being reconfigured in recognition that some governance activities can be performed more efficiently at other scales of social organization and outside the realm of formal government.

Alongside this reconfiguration of climate governance, we see the emergence of new tools for governance. One of the striking features of the emerging multilevel governance system on climate change is the adoption of emissions trading as a policy instrument for mitigating GHG emissions, a particularly interesting development given that emissions trading was one of the most contentious and divisive issues in the 1997 Kyoto Protocol negotiations. Today, there are more than 40 emissions trading systems in operation or under development. Allowance trading systems (also referred to as “cap-and-trade” systems) involve setting a cap for emissions levels, distributing emissions allowances among participants then letting participants trade allowances among themselves in order to meet their respective commitments. Credit (or project-based) trading systems engage in the purchase and transfer of emissions credits derived from specific projects. The carbon market is one of the world’s fastest growing markets, with trade volume increasing from 94 million tons in 2004 to 800 million tons in 2005 and more than 1,000 tons in the first three quarters of 2006.²

Interest in emissions trading follows the general pattern of multilevel governance, engaging actors operating at a variety of scales, from the local to the global, in both the public and private spheres. At the international level, the EU Emissions Trading Scheme addresses CO₂ emissions from more than 12,000 installations in the energy and industrial sectors. National governments have established domestic trading systems in the UK, Norway, Switzerland and Japan. In Australia, plans are underway to create a national trading system although the initiative has come from the sub-national state and territorial governments rather than the central government. Similarly, sub-national governments have taken a leadership role in the US, with several individual states considering trading systems (California most prominently) and a coalition of eastern states prepared to join together in the Regional Greenhouse Gas Initiative (RGGI), a common permit trading system for CO₂ emissions from power plants. RGGI also has a transnational element in that it coordinates with some of the eastern Canadian provinces. In the private sector, both BP and Royal Dutch Shell have engaged in internal emissions trading to control emissions within their own operations, and the Chicago Climate Exchange is a voluntary program whose members include companies, sub-national governments, universities and NGOs in Canada the US and Mexico.

Recognizing the multilevel governance system has implications for ongoing talks under the UNFCCC and Kyoto Protocol. First, in a system of multilevel governance, MEAs play an important role in providing a common vision under which other forms of governance might be united. One of the current challenges in the area of emissions trading is that some systems (e.g. the EU ETS) are embedded within the principles and goals of the Kyoto Protocol while others (e.g. those in the US) are not. The resulting design differences will make it difficult to link these systems in the future. Second, negotiators should seek to develop rules for the post-2012 period that build upon existing initiatives at the multiple tiers and spheres of governance. Finally, the existence of this multilevel system of climate governance suggests there are multiple venues in which to develop strategies for a global response to climate governance and that there may be more room for developing a common approach than is often acknowledged. The MEA talks are a central, but not the sole, site for facilitating such coordination.