As I write this, I’m sitting in a conference hall on the outskirts of Barcelona. The AWG-LCA plenary meeting is being wrapped up on the other side of a particleboard divider 35 feet away. The halls are filled with NGO observers and diplomats. And after five long and somewhat confounding days, all I can tell you is that there seems to remain considerable distance to a legally binding international climate accord.

I joined Ken Markowitz this week in Barcelona, at the final major climate conference before the Copenhagen meeting this December—the meeting at which the international community is supposed to replace the Kyoto Protocol. We came here, along with one of our partners, the International Network of Environmental Compliance and Enforcement, to promote compliance and enforcement efforts in support of the carbon market, an effort which included a—if I may say so—lively side event this morning over the role of compliance, and the potential for fraud, in the international carbon markets.

The major story coming out of Barcelona will be the likely failure of the world to meet the Copenhagen deadline. While some might dispute it, the general consensus in the halls of the Barcelona Fira Grand Via has been that no legally binding treaty will be developed in December. The best we can hope for, many people indicated, seems to be a political agreement, with a legally binding treaty being hashed out in 2010.

It has been simultaneously an inspiring and depressing week.

In a ruling sure to have wide-ranging effects on how the EU Emissions Trading Scheme (EU-ETS) will be governed, the European Court of First Instance ruled that the European Commission (EC), had overstepped its boundaries in rejecting national allocation plans for two countries: Poland and Estonia.

The countries had originally appealed decisions made in 2003 for the 2nd phase of the EU-ETS, which runs from 2008-2012; those decisions had been made by the EC and had set each country's allocation of carbon credits lower than they had originally proposed. The Court ruled that the EC could not:

• Reject a country's credit allocation plans on any other ground besides incompatibility with the Directive creating the EU-ETS; (In this case the EC had rejected Poland and Estonia's plans based on what it deemed to be faulty data.)

• Ignore the data submitted by a country and replace it with its own data obtained through its own methods; and

• Impose a single way of assessing credit allocations on all members of the EU-ETS.

European carbon market participants expressed concerns over the ruling:

“It means two things — possibly more allowances in the market and more uncertainty,” Emmanuel Fages, a carbon analyst with Société Générale, the investment bank, said. “It’s another blow because people will say the market doesn’t work.”

In a ruling yesterday, a panel of the 2^nd Circuit Court of Appeals handed down a unanimous victory for the plaintiffs in Connectituct v. American Electric Power, a case brought by a coalition of states and local governments against a number of large power plants. The case, originally argued in 2006, had been dismissed by the lower court on the grounds that it represented a "non-justiciable political question." Yesterday's ruling, decided by two judges (the original third Judge on the panel, Sonia Sotomayor, left the 2^nd Circuit for the Supreme Court) overturned that decision, stating that:

“Nowhere in their complaints do plaintiffs ask the court to fashion a comprehensive and far-reaching solution to global climate change, a task that arguably falls within the purview of the political branches. Instead, they seek to limit emissions from six domestic coal-fired electricity plants on the ground that such emissions constitute a public nuisance that they allege has caused, is causing and will continue to cause them injury.”

After adressing the question of the lower court's holding, the panel ruled that the suit could continue, finding that a common-law claim of "public nuisance" regarding greenhouse gasses was not preempted by federal law and articulating a role for federal courts in the current climate battle.

“It may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance. But until that comes to pass, federal courts will be empowered to appraise the equities of the suits alleging creation of a public nuisance” by greenhouse gases.

This ruling means that courts could end up having a significant role in determining how greenhouse gasses are emitted and controlled—at least in the event that Congress fails to act on its own emissions control program.

State of Connecticut v. American Electric Power Co. (PDF) [2^nd Circuit Court of Appeals]