ABSTRACT
This chapter examines the main legal and economic aspects of the European Union Emissions Trading System (EU ETS), with particular emphasis on its features with respect to previous cap-and-trade regimes, its environmental and technological effectiveness and its potential role as a prototype for a global emission trading system. It reviews the origin of the EU ETS, starting from the early experiences in the United States (US) and focusing on developments within the EU from a historical perspective. The chapter focuses on the prospects for a global network of emission trading systems, discussing alternative options to enlarging the scope of the existing ETS domestic/regional regimes, ranging from multilateralism to bilateralism. Multilateralism seems to have lost momentum, and this has obvious implications concerning the feasibility of the different options for connecting ETS schemes via a global agreement and/or a series of bilateral agreements. One of the most important and controversial aspects of ETS regimes concerns their environmental effectiveness.
