Linking emissions trading schemes

The 1997 Kyoto Protocol envisages a World with each national emissions trading scheme ("ETS") linked to achieve a global market for carbon. Under this vision a carbon price is factored into commercial decision making motivating a trend towards green energy whilst a global market ensures efficiencies - funds flowing to those jurisdictions where green energy is cheapest.\ud \ud Unfortunately this vision has been blunted by real World politics, greed and ignorance. A World populated by national ETSs has yet to materialize, nor a global market for carbon.\ud \ud However, some jurisdictions have enacted ETSs. In particular, the European Uniotn ("EU") has had an ETS for nine years, in 2010 the Tokyo Metropolitan Government ("TMG") established an ETS, New Zealand established a scheme in 2008 which it broadened significantly in 2010, California introduced a regime on 1 January 2013 and since 1 July 2012 Australia has had a comprehensive nationwide ETS.\ud \ud The emergence of these regimes raises the possibility of linking the respective carbon markets. The EU and Australia have already committed to full bilateral linkage from 1 July 2018.\ud \ud This paper explores the issues that arise with linking the Australian regime. It will be demonstrated that whilst there are some barriers to linkage, with appropriate "fixes" linkage between the Australian and other regimes might be achievable. The question is whether the political will to do so exists