Those who find the cheapest ways to cut emissions are tangibly rewarded, because they can sell any allowance they do not need to others that face higher costs. The results speak for themselves. U.S. acid rain-causing emissions are being cut ahead of schedule at 50 per cent of the expected cost, bringing cleaner air to millions of Americans. Within the European Union alone, measures to control greenhouse gases are as much as six times more expensive in some countries than in others, according to European private sector analysts. The cost differences are even greater when looking at all industrialized countries, and greater still between developed and developing countries.
Trading gets the incentives right by encouraging cuts where they can be achieved at the lowest cost.
Of course, emissions trading is not a substitute for an aggressive national commitment to controlling greenhouse gases. Rather, it is just one tool for carrying out such a commitment. The U.S. has been pursuing nearly 50 programs to reduce our emissions and improve our energy efficiency since 1993, the year after it ratified the original climate change treaty. In the recently completed budget negotiations, the president secured a 25 percent increase in climate change investments over last year's total. We recognize that many people have questions about how emissions trading can be made to work internationally.