Europe’s Disastrous Climate Policy – a Lesson for Congress

Washington, D.C.,
October 29, 2009—The Competitive Enterprise Institute today cheered the
publication of a new report that could help save the United States from an expensive,
damaging new system of global warming regulation. The report, published by the
British think tank TaxPayers’ Alliance, details
the failure of Europe’s “Emissions Trading
Scheme,” which was meant to reduce greenhouse gas emissions across the
continent. Congress is now considering its own version of the EU’s scheme, known
as a cap and trade system of emission control.

“This report couldn’t have come at a more important time,”
said Director of Projects and Analysis Iain Murray. “The leadership in
both houses of Congress are poised to ram through cap and trade restrictions
which would slow the economy, stifle innovation and  create an enormous burden on American
families. Hopefully exposing the costly and wasteful consequences of such
policies in Europe will drive home the threat they pose here in the U.S.”

The study, The Expensive Failure of the
European Union Emissions Trading Scheme, documents the massive costs
imposed by the scheme and the highly volatile nature of the trading mechanism
which was supposed to regulate allocation of emissions permits across the
continent. The report further details how policymakers in the UK have not
only ignored the scheme’s substantial flaws, but have at times adopted policies
that have actually increased the burden born by British consumers and
taxpayers.

“The European Union Emissions Trading Scheme has
cost families across Europe tens of billions
of dollars but it has been a goldmine for energy companies, which have made
huge windfall profits,” said TaxPayers’ Alliance Research Director and study
author Matthew
Sinclair. “Despite that, it has failed to produce a stable carbon
price, leaving consumers with an unpredictable addition to their bills. 

“Manufacturers already struggling to compete with
emerging economies like India
and China
cannot cope with such a substantial addition to their costs, and driving them
abroad won’t help cut emissions – but will mean lost jobs,” Sinclair pointed
out. “Americans shouldn’t make the same mistake and risk their prosperity
following the same flawed strategy that Europeans are paying such a steep price
for.”

CEI is a non-profit, non-partisan
public interest group that studies the intersection of regulation, risk, and
markets.