By linking different ETS, regulators create interdependence: decisions taken in one system have effects on the linked systems. Since ETS are evolving over time, there is a need for joint governance structures, to ensure compatibility of the linked systems, to avoid unwanted inferences, and to prepare for eventual disputes. In this report for the German Emissions Trading Authority, Benjamin Görlach, Michael Mehling and Ennid Roberts have looked into possible solutions for these challenges. The report is available for download.

From an economic and climate policy perspective, linking emissions trading systems is an attractive option. For that reason, the linking of emissions trading systems has received an increasing amount of attention in the political debate as well as in the research in recent years. In that context, issues that have received less attention are the legal and institutional arrangements for linked ETS: On what legal basis can Emissions Trading Systems be linked, which potential difficulties should be covered in a linking agreement, how can decisions be agreed upon and differences be settled and how could the linking agreement be terminated?