As the U.S. Congress moves closer to developing a national climate change policy, the European Union´s Emissions Trading Scheme offers some valuable lessons, according to the Pew Center on Global Climate Change
The Center released a report examining the three-year trial phase of the European cap-and-trade program. Main findings of the report include:
- Accurate data on baseline emissions is critical
- Suppliers quickly factor the price of emissions allowances into their business decisions
- Price volatility can be reduced by including banking and limited borrowing of emissions allowances
The report also states the relationship between allowance allocation, allowance markets and the unsettled state of electricity regulation must be understood and addressed to avoid unintended consequences.
"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," Pew Center President Eileen Claussen said.
The report finds that the system has worked much as it was envisioned–it established a European-wide carbon price; caused businesses to incorporate the price into their decision-making; and created the infrastructure for a multi-national trading program.
Loading...