Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-23T17:26:30.108Z Has data issue: false hasContentIssue false
  • English
  • Français

Financial innovation and climate change: the case of renewable energy certificates and the role of the GATS

Published online by Cambridge University Press:  02 July 2009

PANAGIOTIS DELIMATSIS
PANAGIOTIS DELIMATSIS*
Affiliation:
Assistant Professor of Law, Tilburg University, Netherlands and Senior Research Fellow, World Trade Institute, Switzerland
*
*Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Energy has come to the forefront of the public debate in the past decade for two main reasons: the first relates to the lack of a secure, continuous, and unconditional energy supply in the importing countries, mostly developed and transition economies, which are still dependent on non-renewable carbon-based fossil fuels. The second reason is that uncontrolled production, distribution, and use of conventional energy may lead to environmental degradation and global warming. Renewable energy certificates (RECs) are instruments that allow countries to promote energy generation from renewables and form part of domestic policies aimed at climate change mitigation and adaptation. Since RECs can be traded in secondary markets, this paper discusses issues raised by the nature of and the trade in RECs which can be of concern for the General Agreement on Trade in Services (GATS) and the multilateral regulation of trade in financial services, notably in the case where World Trade Organisation (WTO) Members undertook sweeping commitments in financial services which equally apply to trade in RECs.

Type
Research Article
Information
World Trade Review , Volume 8 , Issue 3 , July 2009 , pp. 439 - 460
Copyright
Copyright © Panagiotis Delimatsis 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Agnolucci, Paolo (2007), ‘The Effect of Financial Constraints, Technological Progress and Long-Term Contracts on Tradable Green Certificates’, Energy Policy, 35: 3347–3359.CrossRefGoogle Scholar
Allen, Helen, Hawkins, John, and Sato, Setsuya (2001), ‘Electronic Trading and Its Implications for Financial Systems’, in Bank for International Settlements (ed.), Electronic Finance: A New Perspective and Challenges, BIS Papers No. 7.Google Scholar
Bhagwati, Jagdish (1984), ‘Splintering and Disembodiment of Services and Developing Nations’, The World Economy, 7(2): 133–144.CrossRefGoogle Scholar
Capoor, Karan and Ambrosi, Philippe (2008), State and Trends of the Carbon Market 2008, World Bank.Google Scholar
Claessens, Stijn (2003), ‘Regulatory Reform and Trade Liberalization in Financial Services’, in Mattoo, A. and Sauvé, P. (eds.), Domestic Regulation and Service Trade Liberalization, Oxford University Press.Google Scholar
Cottier, Thomas, Delimatsis, Panagiotis, and Diebold, Nicolas (2008), ‘Article XIV GATS’, in Wolfrum, Rüdiger, Stoll, Peter-Tobias, and Feinäugle, Clemens (eds.), WTO – Trade in Services, Max Planck Commentaries on World Trade Law, Brill Publishers.Google Scholar
de Witt Wijnen, Rutger (2005), ‘Emissions Trading under Article 17 of the Kyoto Protocol’, in Freestone, David and Streck, Charlotte (eds.), Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work, Oxford University Press.Google Scholar
Delimatsis, Panagiotis (2007), ‘Due Process and “Good” Regulation Embedded in the GATS – Disciplining Regulatory Behaviour in Services through Article VI of the GATS’, Journal of International Economic Law, 10: 13–50.CrossRefGoogle Scholar
Delimatsis, Panagiotis (2008), ‘Determining the Necessity of Domestic Regulations in Services – The Best is Yet to Come’, European Journal of International Law, 19: 365–408.CrossRefGoogle Scholar
Delimatsis, Panagiotis and Molinuevo, Martin (2008), ‘Article XVI GATS’, in Wolfrum, Rüdiger, Stoll, Peter-Tobias, and Feinäugle, Clemens (eds.), WTO – Trade in Services, Max Planck Commentaries on World Trade Law, Brill Publishers.Google Scholar
Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market [2001], OJ L 283/33, as adapted by the Directive 2006/108/EC relating to the accession of Bulgaria and Romania.Google Scholar
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC [2003], OJ L 275/32, as amended by the Directive 2004/101/EC.Google Scholar
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC [2004], OJ L 145/1.Google Scholar
Dobson, Wendy and Jacquet, Pierre (1998), Financial Services Liberalization in the WTO, Institute for International Economics Press.Google Scholar
Dornau, Robert (2005), ‘The Emissions Trading Scheme of the European Union’, in Freestone, David and Streck, Charlotte (eds.), Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work, Oxford University Press.Google Scholar
Eschenbach, Felix, Francois, Joseph, and Schuknecht, Ludger (2000), ‘Financial Sector Openness and Economic Growth’, in Claessens, Stijn and Jansen, Marion (eds.), The Internationalisation of Financial Services: Issues and Lessons for Developing Countries, Kluwer Law International.Google Scholar
European Commission (2008a), ‘Proposal for a Directive of the European Parliament and of the Council on the Promotion of the Use of Energy from Renewable Energy Sources’, COM(2008) 19 final.Google Scholar
European Commission (2008b), ‘20 20 by 2020: Europe's Climate Change Opportunity’, COM(2008) 30 final.Google Scholar
Evans, Peter (2003), ‘Strengthening WTO Member Commitments in Energy Services: Problems and Prospects’, in Mattoo, Aaditya and Sauvé, Pierre (eds.), Domestic Regulation and Service Trade Liberalization, Oxford University Press.Google Scholar
Freestone, David (2005), ‘The UN Framework Convention on Climate Change, the Kyoto Protocol, and the Kyoto Mechanisms’, in Freestone, David and Streck, Charlotte (eds.), Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work, Oxford University Press.CrossRefGoogle Scholar
GATT (1991), ‘Services Sectoral Classification List’, MTN.GNS/W/120.Google Scholar
Gillenwater, Michael (2008a), ‘Redefining RECs (Part 1): Untangling attributes and offsets’, Energy Policy, 36(6): 2109–2119.CrossRefGoogle Scholar
Gillenwater, Michael (2008b), ‘Redefining RECs (Part 2): Untangling certificates and emission rights’, Energy Policy, 36(6): 2120–2129.CrossRefGoogle Scholar
Gilligan, George (1999), Regulating the Financial Services Sector, Kluwer Law International.Google Scholar
Green, Andrew (2005), ‘Climate Change, Regulatory Policy and the WTO – How Constraining are Trade Rules?’, Journal of International Economic Law, 8(1): 143–189.CrossRefGoogle Scholar
Holt, Ed and Bird, Lori (2005), ‘Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges’, National Renewable Energy Laboratory (NREL) Technical Report.Google Scholar
Holt, Ed and Wiser, Ryan (2007), ‘The Treatment of Renewable Energy Certificates, Emissions Allowances, and Green Power Programs in State Renewables Portfolio Standards’, available at: http://eetd.lbl.gov/ea/ems/reports/62574.pdf (accessed September 2008).CrossRefGoogle Scholar
Intergovernmental Panel on Climate Change (IPCC) (2007), Climate Change 2007: Synthesis Report.CrossRefGoogle Scholar
International Energy Agency (IEA) (2007), World Energy Outlook 2007.Google Scholar
Key, Sydney (2005), ‘Financial Services’, in Macrory, Patrick F. J., Appleton, Arthur E., and Plummer, Michael J. (eds.), The World Trade Organization: Legal, Economic and Political Analysis, Volume I, Springer.Google Scholar
Leroux, Eric (2006), ‘What is a “Service Supplied in the Exercise of Governmental Authority” Under Article I:3(b) and (c) of the General Agreement on Trade in Services?’, Journal of World Trade, 40(3): 345–386.CrossRefGoogle Scholar
Mattoo, Aaditya, Randeep, Rathindran, and Subramanian, Arvind (2006), ‘Measuring Services Trade Liberalization and Its Impact on Economic Growth: An Illustration’, Journal of Economic Integration, 21(1): 64–98.CrossRefGoogle Scholar
Menanteau, Philippe, Finon, Dominique, and Lamy, Marie-Laure (2003), ‘Prices Versus Quantities: Choosing Policies for Promoting the Development of Renewable Energy’, Energy Policy, 31(8): 799–812.CrossRefGoogle Scholar
Meyer, Niels (2003), ‘European Schemes for Promoting Renewables in Liberalized Markets’, Energy Policy, 31(7): 665–676.CrossRefGoogle Scholar
Mitchell, Catherine, Bauknecht, Dierk, and Connor, Peter (2006), ‘Effectiveness through Risk Reduction: A Comparison of the Renewable Obligation in England and Wales and the Feed-In System in Germany’, Energy Policy, 34(3): 297–305.CrossRefGoogle Scholar
Morthorst, Poul Erik (2000), ‘The Development of a Green Certificate Market’, Energy Policy, 28(15): 1085–1094.CrossRefGoogle Scholar
Morthorst, Poul Erik (2001), ‘Interactions of a Tradable Green Certificate Market with a Tradable Permits Market’, Energy Policy, 29(5): 345–353.CrossRefGoogle Scholar
NERA Economic Consulting (2005), ‘Interactions of the EU ETS with Green and White Certificate Schemes: Summary Report for Policy Makers’, Study commissioned by the European Commission DG Environment.Google Scholar
Point Carbon (2008), ‘Carbon Market Transactions in 2020: Dominated by Financials?’, available at: www.pointcarbon.com (accessed September 2008).Google Scholar
PriceWaterhouseCoopers (1999), ‘Organisation of RE Market and Trading of Green Certificates’.Google Scholar
REN21 (2007), Renewables 2007: Global Status Report.Google Scholar
Roy, Martin, Marchetti, Juan, and Lim, Aik Hoe (2008), ‘The Race towards Preferential Trade Agreements in Services: How Much Market Access is really Achieved?’, in Panizzon, Marion, Pohl, Nicole, and Sauvé, Pierre (eds.), GATS and the Regulation of International Trade in Services – World Trade Forum, Cambridge University Press.Google Scholar
Söderholm, Patrik (2008), ‘The Political Economy of International Green Certificate Markets’, Energy Policy, 36(6): 2051–2062.CrossRefGoogle Scholar
Stern, Nicolas (2006), The Economics of Climate Change – The Stern Review, Cambridge University Press.Google Scholar
UNCTAD (2001), ‘Energy Services in International Trade: Development Implications’, TD/B/COM.1/EM.16/2.Google Scholar
United Nations Environment Programme (UNEP) Finance Initiative (2002), Climate Change and the Financial Services Industry – Threats and Opportunities.Google Scholar
United Nations Environment Programme (UNEP) Finance Initiative (2007), Declaration on Climate Change by the Financial Services Sector.Google Scholar
United Nations Environment Programme (UNEP) (2007), Global Environmental Outlook (GEO 4) – Environment for Development.Google Scholar
United Nations Environment Programme (UNEP) (2008), ‘Global Trends in Sustainable Energy Investment 2008 – Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency’.Google Scholar
UNFCCC Secretariat (2007), ‘Energy Subsidies: Their Magnitude, How they Affect Energy Investment and Greenhouse Gas Emissions, and Prospects for Reform’.Google Scholar
Verhaegen, Karolien, Meeus, Leonardo, and Belmans, Ronnie (2005), ‘Towards an International Certificate System – The Stimulating Example of Belgium’, in Deketelaere, Kurt, Milne, Janet, Kreiser, Larry, and Ashiabor, Hope (eds.), Critical Issues in Environmental Taxation: International and Comparative Perspectives, Volume IV, Oxford University Press.Google Scholar
Wemaere, Matthieu and Streck, Charlotte (2005), ‘Legal Ownership and Nature of Kyoto Units and EU Allowances’, in Freestone, David and Streck, Charlotte (eds.), Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work, Oxford University Press.Google Scholar
Wilkinson, Rorde (1995), ‘The Uruguay Round and Financial Services’, in Bourgeois, Jacques, Berrod, Frédérique, and Fournier, Gippini (eds.), The Uruguay Round Results: A European Lawyer's Perspective, European Interuniversity Press.Google Scholar
Wilder, Martijn (2005), ‘Can Companies or Entities from a Non-Party to the Kyoto Protocol Participate in the Flexible Mechanisms?’, in Freestone, David and Streck, Charlotte (eds.), Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work, Oxford University Press.Google Scholar
Woodrow, Brian (2000), ‘The 1997 World Trade Organization Accord on Financial Services: Its Impact and Implications for the World Insurance Industry’, The Geneva Papers on Risk and Insurance, 25(1).Google Scholar
WTO (1997), ‘Fifth Protocol to the General Agreement on Trade in Services’, S/L/45.Google Scholar
WTO (1998a), ‘Energy Services’, Background Note by the Secretariat, S/C/W/52.Google Scholar
WTO (1998b), ‘Financial Services’, Background Note by the Secretariat, S/C/W/72.Google Scholar
WTO (2002), ‘Additional Commitments under Article XVIII of the GATS’, S/CSC/W/34, 2002.Google Scholar
WTO (2005), ‘Liberalization of Financial Services’, Communication from Australia et al., TN/S/W/43, S/FIN/W/43.Google Scholar