The decision on the EU directive for emissions trading in June 2003 makes Europe a pioneer in the large-scale application of market instruments to climate policy. This development would have been unthinkable fi ve years ago. The negotiations provide a textbook example of public choice theory in practice. We describe the crucial points of the recent and upcoming legislation process at the levels of the EU and the Member States, the latter with a focus on Germany. The timetable for the enforcement of the emissions trading directive at the national level seems very tight – especially when considering the likely manoeuvres by several stakeholder groups.
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