Commodity or propriety? Unauthorised transfer of intangible entitlements in the EU emissions trading system

This article argues that the law governing transfer of allowances within the EU Emissions Trading System (EU ETS) should place greater weight upon transactional (and environmental) integrity, even over market liquidity. More broadly, it reflects on the role played by registries in sharing or concealing information about the material world. Although property rules enable market activity through the creation of an abstract carbon commodity, they must also link past to future entitlements in a just way. In emissions trading markets, justice in private transactions is intimately connected to public questions of environmental justice. The relevant EU Regulation prioritises facility of transfer over protection of existing holders, insulating registered entitlements from prior proprietary claims. This approach ignores the important connections between history, integrity and responsibility in both public and private spheres. A preferable response would be to distinguish between transactional and register error, protecting against register mistakes, but not transactional defects.