Emission trading and environmental markets: Interview with Sanja Bogojević

22.04.2016

Nils Klim laureate Sanja Bogojević's research clearly demonstrates that climate change and environmental issues are not only a concern for researchers within economics and natural sciences, but also for scholars of law.

What does this prize mean to you and your research?

The prize is pretty spectacular. It is a great recognition and it draws attention to my research, so it is a great honour.

Can you tell us how you found your way into law and environmental law?

I did not plan to become a lawyer. Rather I wanted to learn how to make arguments -- how to create a world with words and use them to illustrate reality. This is what I still do in my research: analyse how we construct reality, by creating laws. For instance, I used discourse analysis as a means to unpack how we discuss carbon markets.

I actually wrote my undergrad thesis on environmental markets. Already then, environmental law captured my attention, and I applied to do my Ph.D. on the same topic. I´m still fascinated by the fact that we create a marked, different from a regular market place, where you seek to regulate a common good.

Can you elaborate on what environmental markets are?

‘Environmental markets’ is a very broad concept.  You can have carbon markets, emission trading schemes, water markets, fishing quotas, etc., and also biodiversity trading. Let’s say you have a land site that is protected, and you want to construct something on that site that will cause environmental harm. You can then pay to offset biodiversity loss. I.e.: You can still cause harm to the environment, but you will pay compensation. There are different markets but my research has focused mainly on emissions trading.

When you began your studies, was climate change and environmental issues as much on the agenda as today?

When I began, the literature that existed on emissions trading was largely of an economic nature.

It was economists that had described ideas about externalities, that lawyers used and incorporated. My research was about creating a framework for legal analysis. We have emissions trading, but what does that in fact mean? What I discovered was that when we talk about emissions trading and environmental markets, we are in fact talking about many different regime types.

I then created what I call the three models. The models are not exclusive, but I use them to illustrate the diversity of our understanding of carbon markets. In one model, emissions trading is about cost efficiency. In the second, it is about replacing state regulation with private property rights, to be able to regulate that group of actors without interference from state regulators. The third model for understanding the emissions trading is based on a more traditional type of regulation.

My research shows that we cannot assume that the carbon markets work in a uniform way. The key questions are: What is the role of the regulator, whom are we regulating, why are we regulating and with which consequences? I found that my research created a legal framework for analysis that did not exist before for carbon trading.

In your research you talk about cultural specificities in environmental law, can you elaborate?

Markets are not neutral; they are culturally impacted and depend on the legal context in which they exist. The way we discuss carbon trading in the EU will be very different from the way we discuss carbon trading in the US. The second model that I use says that the trading parties can determine the terms amongst themselves. That model is heavily influenced by public choice theory and is the prevalent model within US legal scholarship. It does not exist in the EU legal scholarship.  

So, the law is not neutral: It depends on the meaning that we ascribe to it, and it takes inspiration from the context in which it is applied.

You have a PhD from the University of Oxford. When you came back to Sweden, with an outsider perspective, was there something that surprised you about Swedish law?

Yes, definitely. I am of Serbian origin, but I grew up in Sweden. I left when I was 19 and then I came back 10 years later, to work at the university. I assumed that returning to Sweden would not give me a cultural shock, but it did.

One of the things that are different in Sweden, is the extreme trust in the state. You can see that in the legal system, in the sense the role of litigation there is different from how it is in England. The judges do not really act in the same way in Sweden.

This is actually my next project. I am working on adjudication: how judges adjudicate environmental rights. In England, I think there is a broader acceptance of judges interpreting and expanding the existing law.

In Sweden we have environmental courts. I asked a judge how he views environmental rights and about his role as a judge: to what extent he can engage in interpretation and in pushing the law forward. He answered: “We just allow or disallow permits.”  I thought it was interesting to see how Swedish judges understand their role in interpreting and applying the law. They view their role as very much restricted to one specific task.

In your experience, what are some major differences between the Swedish and the American judicial system?                                                                                        

US Supreme Court Justice Scalia, who died recently, held the view that the Constitution is dead and that as a judge, you should not interpret the law according to today’s standards. Rather, you should interpret it according the way the law was written at the time. That view is not shared by many other justices at the Supreme Court, and scholars are divided on the issue. In US there is an understanding that as a judge, you can push the law forward, but the exact role of the judge is also heavily debated.  

In Sweden, the dominant view is that the court does not need assume such a role, because the state will do what is right anyway. In the US, I think the understanding of the regulator is the opposite of what we have in Sweden. It is the failure of the regulator which is seen as the bigger issue in the US: both the failure to regulate and the fact that the regulating that takes place is ineffective.

It seems that there is a lot at stake in environmental law. In a way, the law is a means to prevent the world from coming to an end. Do lawyers and legal scholars have a responsibility to explain the significance of environmental law?

I think that we as lawyers should be better at explaining why law matters.

As for the world coming to an end: In Europe we are not so used to climate scepticism. Outside the EU, you encounter that scepticism much more frequently.  I think we have a responsibility to show and explain why law matters in that context – that climate change is not only a problem for the natural sciences, but also for law.

I have already mentioned Justice Scalia. He underscored that climate change is not a legal problem or a legal issue. I think lawyers need to show that we do need to respond to climate change with laws and regulations. But with any legal response, we need to think about what the implications are for society.