US says EU emissions trading scheme is "a valuable prototype"

15 May 2008


As the USA moves closer to development of a national climate change policy, a new report is offering insights into Europe’s Emissions Trading Scheme (ETS), the first of its kind in the world.

The report, released by the USA-based Pew Center on Global Climate Change, highlights the need for accurate data in an effective trading system and states that the EU’s ETS provides a valuable prototype for a globally linked carbon market. It is designed to help address key concerns about cap-and-trade systems raised in the USA, which is likely to establish some form of carbon trading system in the next few years.

“The EU’s experience with emissions trading offers valuable lessons for Congress as they work to craft a sensible cap-and-trade programme for the US,” said Pew Center President Eileen Claussen. “The EU has done more than any other nation or set of nations in limiting GHG emissions – and the implementation of their cap-and-trade system has been a key part of their efforts.”

The report, authored by the Massachusetts Institute of Technology, says that initial concerns with the EU ETS are being addressed and the programme’s trial period has provided important lessons about the creation of new emissions trading schemes. It also says that suppliers quickly factor the price of emissions allowances into their business decisions and that price volatility can be reduced by including banking and limited borrowing of emissions allowances.

The report finds the EU ETS a good role model partly because the system has worked much as planned by establishing a Europe-wide carbon price and helping to reduce carbon emissions from certain sectors.

US lawmakers are currently preparing to debate a number of climate change policy proposals, most of which involve some sort of cap-and-trade system for reducing greenhouse gas emissions. Recent research by New Carbon Finance found that a carbon trading system in the USA could be worth more than $1 trillion and twice the size of the EU ETS.




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