The Environmental Law Prof pointed out several months ago that we should base regulations to limit CO2 emissions on the Montreal Protocol. She correctly called the Montreal Protocol an “effective regulatory approach” because it combines a stringent phased-in ban with trading during the phase down. She appeared to be a bit less optimistic about the Kyoto Protocol, and by implication the trading schemes associated with it.
Although there are still some skeptics, it appears that the European Union Emissions Trading System (EUETS) may also turn out to be an effective regulatory approach. Climate 411 reports that the EUETS naysayers usually focus on the short-term rise and fall of the current price of CO2, but often fail to consider that EUETS is still in the pilot phase because the Kyoto Protocol emissions reduction period does not begin until 2008. Another optimistic sign is that the carbon futures price has held relatively steady at $20-30 per ton of CO2 and is expected to be in the $30-40 range in 2008.
The cap and trade system in Europe seems to be providing some incentive for innovation, see the report 5852_harvestingthelowcarboncornucopiamarch2007.pdf. In regard to carbon capture and storage (CCS), the report states that the European Commission plans to publish a regulatory framework linking CCS to the EUETS. The methodology for allocating CO2 emissions allowances will also by revised. Existing coal-fired electricity generation plants will be allocated allowances on a CO2/kWh basis; new plants will have to be carbon neutral.
The US advocated for a cap and trade system within the Kyoto Protocol. The other parties accepted cap and trade, but the US eventually rejected the treaty. Now the EU is setting the lead in CCS. How quickly can the US catch up?
A Significant Distraction 
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