agreements negotiated between the government and industry in each entity. Moreover, intergovernmental agreements would provide not only for guidelines for domestic legislation and regulations but would also set up international mechanisms to reduce the unevenness of distributional impacts or increase access for those with less resources to implement policies and measures. This combination would make the implementation of domestic measures more enforceable.

In conclusion, the research shows that sectoral approaches could contribute to the development of a method that could optimally set a cap on GHG emissions and allocate emission allowances, especially (but not exclusively) through benchmarking. Sectoral benchmarking could be built upon improvements in boundary setting and data collection, along with best practices. Yet, views over the costs associated with and the capacities for sectoral benchmarking differ from country to country, especially between developed countries and emerging economies or developing countries that are ‘economically more advanced’.

### 1. Introduction

Sectoral approaches are regarded as having the potential to broaden the range of contributions by all parties, including emerging economies, to emission reductions in greenhouse gases (GHGs), and to help moderate competitiveness concerns in trade-exposed industries. In particular, such approaches may help to identify emissions on a sector-by-sector basis and build confidence that policies and measures can be put in place to reduce emissions. They can also help identify national or global commitments through the aggregation of sectoral data, if countries so wish.

There are different models of sectoral approaches across sectors (e.g. Bodansky, 2007). Egenhofer and Fujiwara (2008b) identified at least three main models of sectoral approaches: industry-led transnational initiatives linked to the deployment of sector-specific technologies; bottom-up developing country commitments, possibly combined with 'no-lose' targets; and a sectoral Clean Development Mechanism (CDM) or sectoral crediting with implications for carbon finance. Nevertheless, all the models attempt to combine the following three objectives:

- Induce changes to technologies through either the development of new and breakthrough technologies or the accelerated deployment of existing technologies, essentially by means of cooperation among firms.

- Reduce the unevenness of distributional impacts among firms for the same aspect, which may arise as a result of uncoordinated local, national or regional climate-change policies.

- Engage developing countries in reducing emissions and taking on emission-reduction commitments.

The preconditions to achieve these objectives are as follows:

- data collection on the present state of the sector, e.g. emissions (actual and projected), information on the applied technologies, technology benchmarks and best practices;

- the identification and spread of best practices; and

- the development and diffusion of technology.

This paper considers models of sectoral approaches (sections 2 and 3) and the policy implications of such approaches (sections 4, 5 and 6). In looking at industry-led transnational initiatives, the paper describes the progress in work on benchmarking in section 2. This model is compared with the concept of sectoral crediting in section 3. Section 4 gives an overview of UN negotiations and the sectoral dimensions of recent policy developments in the EU, examples of two emerging