CICERO - Center for International Climate Research
Energy Food and forests Climate finance Local Solutions China The Arctic ​International Climate Policy

Designing Effective Emissions Trading: The Contribution of International Diffusion

ETS-DIFFUSION focuses on emissions trading, a key instrument for reducing greenhouse gas (GHG) emissions that has gained increasing attention and weight in recent years.

In theory, emissions trading provides cost-effective stimuli for reducing emissions by putting a price on GHG emissions. However, its effectiveness is heavily conditioned by design factors, not least the stringency of the emissions cap.

This project investigates the factors influencing the design and international diffusion of emissions trading in some major emitting jurisdictions: the EU, China, California and Australia. These systems develop at different speeds, with some frontrunners and others as recent adopters. This makes it important to clarify inter-system lessons-learning and other types of interaction. Hence, we link up to a rich debate on policy diffusion, and how design processes are adapted to the specific circumstances of countries and regions. Improved knowledge about designs and main shaping factors is also important for assessing the possibilities for greater transnational linkage of systems as a potential ‘bottom–up’ alternative global climate regulatory response.

We will improve knowledge by detailed document analysis, semi-structured interviews with central stakeholders, and by drawing upon the expertise of some of the world’s leading experts on climate politics and carbon markets. ETS-DIFFUSION has clear relevance for the negotiations under the global climate regime on ‘market and non-market mechanisms’.

Norway was among the initiators of the International Carbon Action Partnership (ICAP) and has over time emphasized the development of market mechanisms. ETS-DIFFUSION also has practical implications for Norwegian governmental and industrial actors involved in bilateral and multilateral coordination processes, particularly vis-à-vis emerging systems as in China. Furthermore, Norway is linked to the EU ETS through the European Economic Area agreement.


Jørgen Wettestad, 'Mot global karbonprising' ('Towards Global Carbon Pricing'), Klima, 30.10.2014. In Norwegian.

Arild Underdal, David G.Victor, and Jørgen Wettestad. 2015. Studying the Global Diffusion of Emissions Trading: Key Building Blocks in the ETS-DIFFUSION Project Research Design, FNI Report 2/15; The Fridtjof Nansen Institute.




Jørgen Wettestad and Lars G.Gulbrandsen. 2015. The Evolution of Emissions Trading Systems: Waves, Design and Diffusion, Paper for International Studies Association Convention, New Orleans, February 18–21, 2015