This paper examines the extent to which and how the spread and design of
carbon trading systems worldwide have been shaped by international policy
diffusion. We highlight eight central design characteristics and identify nine
cases for further scrutiny. Focusing on similarities and differences across
the cases, we find that international diffusion can explain both converging
and diverging designs. While the former observation is in line with the
traditional understanding of diffusion leading to convergence as actors adopt
a policy initiated by others, it is more striking that policy diffusion stands
forth as important for understanding design divergence. Evidence presented in
this paper demonstrates that diffusion mechanisms interact with and contribute
to the evolution in the policy as it diffuses over time. Hence, we argue that
policy convergence is not necessarily a great measure of diffusion because the
policy is not the same over time. The policy divergences, partly rooted in
different domestic conditions and political constraints, mean that no linked
global system is likely in the near future, although the spread of the policy
model can be seen as promising for a future emissions trading regime from
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