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Lessons Learned from the EU Emissions Trading Scheme: RFF Scholars Testify before House, Senate

FOR RELEASE: March 29, 2007

WASHINGTON- RFF scholars Dallas Burtraw and Ray Kopp testified before Congressional committees this week on lessons U.S. policymakers can draw from the European Union's experience with its cap-and-trade program on carbon emissions. The hearings came as numerous climate legislation proposals circulate on the Hill. With attention on the design of potential federal climate policy, lawmakers have shown an interest in learning more about the outcome of other programs.

Kopp spoke about the EU Emissions Trading Scheme March 26 before the Senate Committee on Energy and Natural Resources, and Burtraw testified March 29 before the House Committee on Energy and Commerce's Subcommittee on Energy and Air Quality.

One lesson both urged U.S. policymakers to take away from the European Union's experience is the importance of permit allocation. "Keep the allocation rules as simple and as transparent as possible," Kopp urged in his remarks. "How permits are allocated can alter economic incentives leading to a variety of unintended consequences."

"A complex allocation system can cloak unfair and dramatic transfers of wealth," Burtraw noted in his testimony, "while a transparent allocation system will build public confidence in the institution."

 

 

Link to testimony
Written Testimony by Ray Kopp

Prepared for the United States Senate Committee on Energy and Natural Resources

Kopp also stressed that strong monitoring and accounting systems and effective banking rules are needed to control permit price volatility and asset management. Burtraw emphasized the importance of "simple and transparent design." "When we implement environmental policy efficiently," he noted, "more money is available for families and for businesses, or for even further environmental improvements."

 

Video of Ray Kopp's testimony is available on the Senate Committee website. Link to Video

Video of Dallas Burtraw's testimony is available on the House Committee website. Link to Video

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Resources for the Future, an independent and nonpartisan Washington, D.C., think-tank, seeks to improve environmental and natural resource policymaking worldwide through objective social science research of the highest caliber.

 

Link to testimony
Written Testimony by Dallas Burtraw

Prepared for the House Committee on Energy and Commerce's Subcommittee on Energy and Air Quality



 

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