Several recent crises have pushed climate change out of the political spotlight. However, it is still an issue that is attracting significant legislative activity and will continue to do so because of the increasingly apparent catastrophic consequences of climate change.

We usually recommend laws that are relatively complete in terms of what we call “regulatory techniques”, the more technical elements that make laws more effective in achieving their policy objectives. In the case of climate change legislation, we had to change our focus. Many of the laws we found integrate full measures and even policies, making regulatory techniques too granular a parameter to adequately compare laws under the ‘completeness’ criterion. Accordingly, in this article, we compare climate change laws primarily in terms of the completeness of policy elements, in order to provide the best possible guidance to legislators. We assume that none of the selected laws is complete in terms of regulatory techniques. Therefore, we recommend that any new draft climate change law be checked for regulatory completeness, e.g. using our Handbook and its checklists at the end and our model laws.

In this article, we first provide an overview of pure carbon or emissions trading schemes (A.), followed by a presentation of a second, more innovative policy and regulatory approach, the assessment of the environmental, and in particular greenhouse gas (GHG), footprint of products as the basis for a wide range of policy measures, from bans to taxation (B.). We then present other laws that reduce or mitigate climate change as such (C.), followed by laws that contain both reduction/mitigation and adaptation elements (D.). Finally, we present a few adaptation-only laws (E.).

A. Carbon or Emissions Trading Schemes

Emissions trading schemes (ETSs) use market mechanisms to optimise the pursuit of a particular emissions reduction target. Industries are not required to take specific actions to reduce greenhouse gases (GHGs), but can choose to do so or simply pay for emission allowances. As a result, ETSs are considered efficient and relatively business-friendly. They are often combined with an overall cap on emissions.

ETSs are usually implemented in a top-down fashion, from the largest CO2/GHG emitting industries, e.g. cement, coal and steel, downwards to less problematic industries. As efficient as they are, they create a double problem of (un)fair competition:

ETS-covered materials compete with non-covered materials; and

Domestic industry production covered by the ETS competes with foreign industry production not covered by a (similarly expensive) ETS.

Countries can try to compensate for unfair competition through domestic levies, but domestic levies cannot compensate in export markets. Subsidies are needed to compensate for disadvantages in export markets.

When choosing a reference law for an ETS, it is of paramount importance to first determine which ETS features are politically desired. No good reference can be chosen without making these policy choices. We therefore recommend that readers first look at some comparative documents, such as this paper by the International Carbon Action Partnership, this article, the World Bank’s comparative dashboard and Wikipedia’s general page on emissions trading schemes.

The second step is to choose the most appropriate reference law. If you have not found your favourite in the previous phase, we recommend that you look at the mother of all ETSs, the European Union ETS, with its frequent updates, including the innovative features introduced in 2023. We also recommend studying the almost as old New Zealand ETS, the South Korean ETS, the Chinese carbon trading scheme and the United Kingdom ETS (full legal text here) which is nicely compared to the EU ETS in this short article.

However, new regulatory approaches are being invented all the time, see for example here. The state of the art in ETS design is therefore evolving rapidly.

Once the reference ETS has been selected, the International Carbon Action Partnership’s tools and its further guidance should be used to fine-tune the chosen ETS.

Finally, we recommend that any new draft ETS legislation be checked for completeness in terms of regulatory techniques, e.g. using our Handbook, in particular the checklists at the end, and the generic (implementation) chapters of our model laws. For the EU ETS alone, various multi-billion euro fraud schemes have been uncovered. Proper compliance and other implementation mechanisms are therefore of paramount importance. Drafters of ETS legislation are not necessarily familiar with the regulatory techniques involved.

B. Environmental / GHG Footprint Assessment Schemes

In addition to the ETS, a second comprehensive policy approach is now emerging that can be used to reduce greenhouse gas (GHG) emissions in a cross-cutting and non-prescriptive manner: GHG footprint assessment schemes.

The EU’s Ecodesign for Sustainable Products Regulation¹ sets out an innovative framework for the comprehensive assessment of the environmental impact (the so-called “footprint”) of products over their entire life cycle, to be rolled out over the coming decades. The assessment covers 16 parameters, one of which is the greenhouse gas (GHG) footprint. Once the GHG footprint has been assessed for a given product category, many different policies can be built on this assessment – again our Handbook for the full range of incentives and obligations that can be created. Simple labelling requirements can steer customers away from high footprint products. Fiscal and other incentives or disincentives can be created to reduce the footprint of products produced or to be produced. Particularly harmful products can even be phased out, while the “particularly harmful” criterion can become more stringent in absolute terms over time. Therefore, to the extent that product categories have been assessed under the EU Ecodesign for Sustainable Products Regulation, countries within or outside the European Union can base their policies on the assessment of (GHG) footprints. Thus, a single assessment can be the key to many different climate change policies in many different jurisdictions.

Of course, not all product categories can be assessed for their environmental footprint in one go. The EU programme will take decades to complete. Legislators in other jurisdictions may therefore wish to follow the development of the EU regulatory programme over the coming years and decades, and build on the footprint assessments as they become available.

Another regulatory strategy is to build directly on international standards that define a methodology for assessing the GHG footprint. It is possible to create incentives for high performing products based on the latest version of ISO 14067 on the carbon footprint of products, while keeping the assessment voluntary. It is also possible to make the assessment and labelling of products mandatory, thereby creating an incentive to reduce the carbon footprint, or to create tax incentives. Once mandatory, it is even possible to ban poor performing products.

However, there are important disadvantages to both piggy-backing on the EU’s footprint assessment scheme and developing a domestic scheme. The administrative burden for companies and administrations alike is quite high, as the Footprint assessment is complex and therefore costly, which may drive up prices. Many different verifiers need to be involved. This implies the need to supervise, coordinate and align their practices. The assessment of multi-component products is particularly difficult: how do you assess all the components of a car? If default values are used to reduce the administrative burden, which is inevitable at some point, the result will be distorted. Finally, Footprint assessment schemes impoverish foreign or distant economic actors who have little or no access to an assessment of their products. These actors will often simply drop out. This reduces competition and may lead to a further increase in the price of products. On the other hand, some countries may actually appreciate the protectionist effect of Footprint assessment schemes, which counterbalance and even somehow compensate for the disadvantage of domestic industry unfortunately associated with emissions trading schemes.

Due to the disadvantages, we see only a potential for very large jurisdictions to introduce independent new Footprint assessment schemes at a relatively low cost. Other jurisdictions, especially if they are economically closely linked to a large jurisdiction, may piggyback early or later, but probably should not try to be at the forefront. We therefore need to look at other, more targeted approaches to mitigation legislation. We do so in the following two sections.

C. Other Mitigation Laws (partly also covering ETS)

Chile’s Climate Change Framework Law 2022 establishes a complex carbon reduction planning mechanism at the national, subnational and local levels, a carbon tax, ministerial authority to establish standard GHG emissions and emission limits for each type of GHG-emitting facility or product, mechanisms to create, sell and use certificates to demonstrate GHG reductions or sequestration, and comprehensive public information systems.

Japan’s Global Warming Countermeasures Act 1998 requires emissions reporting, including for private companies; reduction plans for various industrial and commercial sectors, as well as housing and transportation; creates energy efficiency standards; establishes an ETS; and promotes renewable energy, including through the development and use of new technologies. The law establishes a National Green Investment Corporation (JICN) to assist economic actors in the green transition through support, partnerships, investments and other financial instruments (look for “JICN” in the text).

France’s Energy Transition for Green Growth Act (2015) targets several sectors, including energy production, consumption and efficiency, to ensure a holistic approach to emissions reductions. It includes measures to reduce final energy consumption by 50% by 2050 and fossil fuel consumption by 30% by 2030. It mandates energy efficiency improvements in buildings, requiring all new buildings to be low energy by 2020. It discourages the waste or premature obsolescence of products and paves the way for a circular product economy. In this sense, it is an international leader. Unfortunately, it is not easy to read, as most of the provisions contain amendments to other laws that need to be read together. We therefore recommend this law as a source of inspiration for features that could be included in a draft climate change law. A more detailed description in English is available here, but it does not refer to the latest version.

Germany’s Climate Action Law (Klimaschutzgesetz, 2019) was remarkable in its original version in that it contained precise binding reduction targets by sector, which were set out in the law itself, see at the end. However, this remarkable feature has been watered down by a 2024 revision that allows for “more flexibility”. A reduction in one sector can now compensate for a lack of reduction in another.

D. Laws covering both Mitigation and Adaptation

New Zealand’s Climate Change Response Act 2002, with its integrated Amendment Act 2019, was mentioned in the first section. In addition to its ETS, it establishes emissions reporting requirements, mandates removal activities, sets sector-specific targets such as specific methane reduction targets for biological emissions from agriculture, mandates periodic risk assessments and periodically updated national adaptation plans. Like many other laws, it establishes an independent body to advise the government and monitor progress. But it also contains a wealth of powers, review mechanisms, incentives, liability mechanisms and other regulatory techniques, making it by far the best choice for starting a comprehensive climate change law.

Spain’s Climate Change and Energy Transition Law 2021 promotes the production and use of renewable energy, particularly in public transport. It reduces the carbon footprint of buildings, both for their materials and their ongoing maintenance; bans new permits for uranium, coal, oil and gas exploration; phases out fossil fuel subsidies and exploitation; requires sustainable mobility plans and low emission zones for cities with more than 50,000 inhabitants; establishes an electric vehicle charging infrastructure, including mandatory charging points at fossil fuel stations; uses public procurement policies to reduce carbon footprints; and promotes renewable energy in various other ways. Detailed provisions on the consideration of climate change and its risks in the financial sector will have an impact on both mitigation and adaptation. In terms of adaptation, the law requires climate change to be integrated virtually into all areas of public planning and policy-making, based on a thorough risk assessment.

South Korea’s Low Carbon, Green Growth Framework Act (2010) is also quite comprehensive. It mandates regular risk assessment, national and local adaptation plans, provides funding for research and implementation of adaptation strategies, and encourages collaboration between government, business and civil society in adaptation efforts. While we are generally sceptical of “programme laws”, i.e. laws that mainly contain a political programme of action, we recognise that the South Korean framework law starts with high-level programming, but also establishes concrete, difficult-to-circumvent mandatory mechanisms to make the programming more and more concrete, down to the level of obligations for private actors. It addresses carbon sinks, technology promotion, financing and international cooperation.

E. Pure Adaptation Laws

Relatively few pure adaptation laws have come to our attention, and even fewer are worth mentioning. One exception is Germany’s Federal Climate Change Adaptation Act, which was passed at the end of 2023. It lists all the possible parameters. In addition to the usual monitoring and risk analysis obligations, it also imposes an obligation on all public bodies to consider aspects of adaptation to climate change, which can be enforced by administrative courts.

The United Kingdom’s Flood and Water Management Act (2010) is, as its title suggests, a sector-specific piece of legislation. However, it contains many mechanisms that could be applied to other sectors. It is therefore worth studying. It places duties on local authorities to develop and implement flood risk management strategies. It promotes sustainable drainage systems and provides the necessary emergency powers and coordination mechanisms. It therefore falls within the area of emergency management, for which the Regulatory Institute has developed its own modular, adaptable and non-prescriptive model legislation.

Further reference legislation complementing Sections A. to E. can be found at the following link: https://climate-laws.org/

 

1. The document is also available in other languages here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32024R1781&qid=1719580391746