– Emissions trading is far from straightforward

Publisert 23.05.2016
Are environmental issues a legal concern? What are the mechanisms that control environmental markets and emissions trading? These are some of the questions that 2016 Nils Klim Laureate Sanja Bogojević answers in this interview.

What does this prize mean to you and your research?

– The prize is a rather spectacular recognition of my scholarship and so it is a great honour to be a Nils Klim laureate 2016.

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

– I did not plan to become a lawyer. Rather I had an early interest in narratives - how a particular worldview, outlook or reality can be constructed through particular building blocks of words. In fact, this is what I do in my legal research: analyse laws and legal texts and trying to explain how these portray and frame reality. For instance, I used discourse analysis as a means to unpack how we discuss and understand carbon markets.

I 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 assumed private/public divide that is very much present in debates on environmental markets: namely, how individuals are or may be regulated for the sake of a common good. 

Can you elaborate on what environmental markets are?

– ‘Environmental markets’ is a very broad concept.  It encompasses carbon markets, or so-called emissions allowance trading schemes, water markets, markets in fishing quotas, and biodiversity trading – this not being an exhaustive list. These are different types of markets, each trading a different subject-matter relevant to environmental protection. In broad brushstrokes, the idea with, for instance, emissions allowance trading is that you need to obtain an emission allowance for your emissions, which, should you emit less than what is your quota, you can sell. In this way, any emitter has an economic incentive to pollute less, and in that way be able to sell his/her surplus.

Hear the entire interview by Knut Melvær here: 

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

– I started my doctoral studies in 2007, so environmental issues were definitely on the agenda. However, the scholarly debate on carbon markets was dominated by economists. What my research aimed to do was to create a legal framework for the analysis of emissions allowance trading schemes. What I discovered was that when we discuss emissions allowance trading schemes, we are in fact talking about many different regime types.

I then created what I call the three models. The models are not exhaustive 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 any bureaucratic control of so-called commons with private property rights. The third model understands emissions trading to be environmental regulation with inbuilt flexibility.

My research shows that we cannot assume that carbon markets are straightforward. Rather, they raise difficult questions such as, to what extent is state intervention permissible in carbon markets, what is the regulatory scope of carbon markets, why do we turn to carbon markets and with which legal implications? I found that my research created a legal framework for analysing carbon markets that did not exist before.

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

– Markets are not neutral; they are cultural constructs meaning that they depend on the legal context in which they exist. The way in which we discuss emissions allowance trading in the EU will be very different from the way in which we discuss similar schemes existing in the US. The second model that I use says that the trading parties can determine the terms of carbon trading amongst themselves. That model is heavily influenced by public choice theory and is the prevalent model within at least the original US legal scholarship. It, however, does not play any significant role in the EU legal scholarship.  What this shows is that the law is not neutral: it is dependent on the meaning that e.g. judges, policymakers ascribe to it, and so its meaning 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?

– I should point out that I was born in Sweden but I came back, having studied for ten years abroad, to work at Lund University in 2011. Trust in the state underlies the Swedish legal system, which is something I found both interesting and different to many other jurisdictions I have studies, the US being one such example. That may explain why private litigation here plays, for instance, less of a political role compared to many other countries.

This is actually my next project. I am working on adjudication: how judges adjudicate environmental rights. My preliminary results show that these judicial approaches vary greatly across jurisdictions, and my hope is to show, with reference to legal culture among other factors, why that is and what that in fact means for environmental rights litigations, focusing on the EU context.

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?

– Yes, I firmly believe that lawyers have the responsibility to explain and show why law matters.

As for law being a means to prevent environmental degradation, or as you put it, the world coming to an end, I think that it is important to recognise that law has a significant role to play here, but it is not a simple tool that can easily fix things.

Rather, it is a legal construct, which is often contested and difficult to agree on. For instance, even if we can find consensus on climate change being a fact, why climate change happens, and what needs to be done about it are matters that are heavily disputed. As law is dependent on legal culture for meaning, these contested matters are embedded in environmental laws. My scholarship points to some of the key contested matters in relation to carbon trading, which serves to both better understand carbon trading and be able to move the discussion forward.