A prominent issue in the U.S. debate on climate policy is the potential impact that a cap-and-trade system might have on the economic competitiveness of energy-intensive and trade-exposed industries. U.S. policymakers and stakeholders can look to Europe to gauge these potential impacts. The EU Emissions Trading System (EU ETS) has cut emissions by around 2.5-5 percent since its launch in 2005. It covers emissions from power generation and heavy industry in all 27 EU member states. U.S. companies with operations in Europe are also covered.

This paper offers a snapshot of how several of these companies have fared under the EU ETS. Based on a survey of a cross-section of leading, trade-exposed companies with significant emissions in Europe and other economic analysis, it concludes that the potential competitiveness impacts of emission caps are likely to be relatively small in the short term. The paper is written by Mark Kenber, Oliver Haugen and Madeleine Cobb of The Climate Group, an international not-for-profit organization that works closely with government and business leaders.