Policy instruments as innovation in governance: the case of emissions trading

The development of a new policy instrument, “emissions trading”, is analysed as an innovation journey in the realm of governance. Tracking the process by which a novel pattern of social regulation emerges and travels shows how “policy technology” develops according to dynamics of its own, partly independent of policy problems and goals. Interactions across science, policy development and particular domains of governance are critical for the transition between phases: from options to first developments, to experimentation with a prototype and to further diffusion and the formation of a new policy regime. Key factors are the use of openings in existing governance regimes, establishment of linkages with contexts of implementation and the generation of momentum through the “carbon industry” as an emerging service economy.