ABSTRACT
The EU Emission Trading Scheme has played a catalytic role in putting climate change on the corporate agenda. It has not only demonstrated that governments could act, but that they were prepared to act and to take decisions that were not necessarily in the best short-term interests of all companies. The first point is that climate change policy is not simply about single policy instrument solutions. An effective policy response to climate change will require the deployment of a range of policy instruments, targeted at specific sectors and focusing on different corporate motivations. The second point is that the policy and market conditions faced by companies remain highly complex and uncertain. The uncertainties in climate policy include the political context within which climate policy is developed, the targets that are to be met and how these are to be allocated between companies, the policy instruments that are used, and the duration of climate change policy instruments.
