ABSTRACT
This chapter examines official documents from European Union bodies and central governmental and non-governmental stakeholders, articles and books on the European Union emissions trading system (EU ETS), articles from news agencies such as ENDS Daily and Carbon Pulse, and interviews with stakeholders. In the preparatory process of the 1990s, prior to the Kyoto Protocol, the European Union was sceptical of the idea of using flexible instruments such as emissions trading in the context of climate-change policy. The EU made a policy turn-about and started to develop an emissions trading system – the EU ETS in 1998. The EU ETS provides ample evidence of the relationship between design and the actual functioning of the system, as expressed not least through the carbon price. Earmarking attempts can be understood in light of 'domestic politics': the EU's overall climate ambitions, where income from auctioning could be used to further stimulate emission reduction.
