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In order to implement its obligations to reduce greenhouse gas emissions, as required under the Kyoto Protocol, the European Community elaborated a directive establishing a community-wide greenhouse gas trading system. Ecologic has been commissioned by the German Federal Ministry for the Environmemnt to analyse the legal framework for implementing the directive in Germany and also to draft the implementing legislation.

The introduction of an emissions-trading system in Germany must be compatible with the framework of the already existing regulations. In addition to the pertinent aspects of German Law, an integration must also be compatible with the European and international law framework. Therefore, the project report comprises a thorough analysis of constitutional issues such as the allocation of emissions allowances. Here, different models for calculating and taking into account "early actions" are assessed from the angle of fundamental rights and EC state aid law. The study involves the discussion of fundamental issues such as how to situate emissions-trading within the already existing IPPC regime, as well as the special questions of emissions trading, e.g. the emittent's access to the courts regarding his new obligations, the protection of confidence for data collected from the operators while setting up the new instrument, the so called "pooling model", and aspects of trade law. In addition, the study deals with the question as to which form the implementation of the directive will take in Germany, i.e. if it has to be implemented by a parliamentary law or if regulation enacted by the government suffices.

As a subsequent project, Ecologic was commissioned to draft an emissions trading directive on the basis of its findings in close co-operation with the German Federal Ministry for Environment and the German Federal Environmental Agency.