(CARBON) MARKETS ARE WHAT STATES AND PUBLIC REGULATORS MAKE OF IT!

Defenders as well as critics underestimate the institutional and political underpinnings of evolving carbon markets. Based on institutionalist approaches, the paper argues that the strong embeddedness of carbon markets explains why certain characteristics (positive and negative) materialize. Focusing on the actors who initiate carbon markets, the article, furthermore, shows that currently only states and intergovernmental agreements can provide the necessary underpinnings for carbon markets to work. Today neither market actors nor NGOs nor public private partnerships have the political power to set-up, regulate or capture the evolving market structures. Thus, whether market-based instruments bring about the results hoped for depends entirely on public regulation very often represented by the state. Four instances of the commodification of carbon serve as illustrations: The European Union Emission Trading System (EU ETS), the Clean Development Mechanism (CDM), the voluntary market, Reducing Emissions from Deforestation and Degradation (REDD+). [ABSTRACT FROM AUTHOR]