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  European System For Cutting Carbon Dioxide Emissions Is Working Well
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ContributorArmyDem 
Last EditedArmyDem  Jun 13, 2008 12:58pm
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News DateThursday, June 12, 2008 06:00:00 PM UTC0:0
DescriptionScienceDaily (Jun. 12, 2008) — For the past three years, the European Union has been operating the world's largest emissions trading system and the first system to limit and to trade carbon dioxide emissions. An MIT analysis of this initial "trial" phase finds that—despite its hasty adoption and somewhat rocky beginning—the European Union cap-and-trade system has operated well and has had little or no negative impact on the overall EU economy.

The MIT results provide both encouragement and guidance to policy makers working to design a carbon dioxide (CO2)-trading scheme for the United States and for the world. "This important public policy experiment is not perfect, but it is far more than any other nation or set of nations has done to control greenhouse gas emissions—and it works surprisingly well," said A. Denny Ellerman, senior lecturer in the MIT Sloan School of Management, who performed the analysis with Paul L. Joskow, the Elizabeth and James Killian Professor in the Department of Economics.

The cap-and-trade approach to controlling emissions is hardly unprecedented. For years, the US has operated highly successful cap-and-trade systems for emissions of sulfur dioxide and nitrogen oxides. Based on a national emissions cap, facilities that emit those pollutants receive a limited number of emissions permits, or "allowances," for a given period. Facilities that emit more than their allowed limit must buy allowances from facilities that emit less. Markets for trading allowances operate smoothly, and—in response to the strong economic incentive—facilities have reduced their emissions significantly.
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