Design of a Practical Approach to Greenhouse Gas Emissions Trading Combined with Policies and Measures in the EC

Commissioned by the Center for Clean Air Policy, Washington, DC

This paper supplements the Final Report for the Study Project “Designing Options for Implementing an Emissions Trading Regime for Greenhouse Gases in the EC”. Background information on the Study is contained in the February 2000 Final Report of the Study and the July 1999 Interim Report of the Study.

The Interim Report identified a need for a more detailed analysis of how a downstream approach to emissions trading might work in the EC. The issue of how such a system would fit with existing and planned policies and measures at the national and Community level was also identified as requiring additional analytical work. This paper responds to these needs. This paper provides a "strawman" proposal, originally intended to generate dialogue with Member States present at the workshop on 8 December 1999. The proposal provides a detailed profile of how a more limited EU-wide emissions trading system covering selected industrial sectors combined with the current system of policies and measures could go into effect in advance of 2008. The “strawman” proposal presents one way in which an EC emissions trading system may be designed to balance the need to create a new system that fits well with the traditions of environmental regulation within the EC, with the need to take advantage of the new opportunities afforded by the Kyoto Protocol (KP) to pursue cost-effective greenhouse gas regulation.