Global vs. low carbon economy: The case of the revised EU emissions trading scheme

Abstract

Europe is tightening its climate change policy and with that its pollution control legislation, supposedly to lead the way towards a low carbon economy. As the rest of the world is lagging behind in greenhouse gas emission reduction efforts, this causes increasing concern for the European carbon‐intensive industry. In order to address concerns of economic competitiveness and emission leakage, the EU is considering the extension of its recently revised EU Emission Trading Scheme on carbon‐intensive goods imported from countries not taking comparable action to reduce their emissions. This article examines the permissibility of such an extension under the law of the World Trade Organization, namely the General Agreement of Tariffs and Trade (1994).