Climate Policy.

Gore says, "The European Union has adopted this U.S. innovation; emissions trading, and is making it work effectively there."

Emissions trading, also called cap and trade, is a free market scheme accepted under the Kyoto protocol as a means to reduce the emissions of pollutants and CO2. The mechanism is for governments to set a cap on the amount of a given pollutant a company or industry can emit. The emitters are given credits for the amount of pollutant up to the maximum of the cap. If the company succeeds in reducing the amount emitted to less than the cap the excess credit can then be sold to another company. It is intended that over time the caps will be progressively lowered and the total number of credits in the market reduced. This is supposed to eventually drive up the price of emissions to the point where it becomes more economical to reduce emissions rather than buy credits. The effectiveness of this scheme obviously depends on setting the caps at realistic levels. Not so high that too few credits are freed up for trade and emissions are little reduced. Not so low that it becomes uneconomic for companies to stay in business.

Contrary to what Gore says these emissions trading schemes are not yet working. Since 1997, the year the Kyoto Protocol was negotiated, emissions in the E.U. countries have increased and are increasing faster than those in the U.S. The first phase of Emissions trading only came into effect in 2005 and according to The Economist magazine "For the first phase of the emissions-trading scheme, between 2005 and 2007, governments handed out more permits than were needed. When this became clear earlier this year, the price of emission permits plummeted. The surfeit of allowances also suggested that Europe was not cutting its emissions very dramatically."

See The Economist, "Europe's emissions-trading scheme - Compressed", Nov 30th 2006

Almost two months later they said "........ companies were given too many permits, and emissions have therefore not fallen."

See The Economist, "The greening of America", Jan 25th 2007

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Each year the Energy Information Agency of the U.S. Department of Energy publishes figures the amounts of CO2 emitted by each country annually.  As the above figure shows the rate of increase in European CO2 emissions is greater than that of the U.S.  So contrary to Gore's statement the E.U. is not making the process work effectively at all.

See U.S. Energy Information Agency, Department of Energy, July 2006

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In fact as as the above figure from the U.K. Institute for Public Policy Research shows E.U. emissions are rising so rapidly that most E.U. countries will not be able to meet their Kyoto targets by the deadline of 2012.

See U.K. Institute for Public Policy Research, 27 December 2005,