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

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." 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."

Written Testimony by Dallas Burtraw Prepared for the House Committee on Energy and Commerce's Subcommittee on Energy and Air Quality

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

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

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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.