Europe already has a carbon cap-and-trade system similar to the one California will launch on Wednesday.

The northeastern United States does too, albeit in a far more limited form.

Do they work? Do they cut the greenhouse gas emissions that cause global warming and do so at a reasonable price?

Both follow the same basic principles, setting an overall limit on emissions and forcing companies to buy and sell permits to release greenhouse gases into the atmosphere. Europe's market, called the EU Emissions Trading System, opened in 2005 and now covers more than 11,000 power plants and industrial facilities in 30 countries.

Split over performance

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The northeastern U.S. system covers power plants in only nine states, from Maryland to Maine. Officially named the Regional Greenhouse Gas Initiative, the system is usually abbreviated RGGI and pronounced "Reggie."

Researchers remain divided on how well each market has performed, an assessment made much more difficult by the global economic slump. The downturn that began in 2007 cut the demand for energy, as factories scaled back production. So when Europe's greenhouse gas emissions dropped as well, from 2007 through 2009, was the decrease due to the continent's cap-and-trade system or the weak economy?

An analysis by the New Energy Finance research firm estimated that the trading system accounted for about 40 percent of the drop in Europe's greenhouse gas reductions in 2008.

"We've seen real reductions in emissions, reductions that are attributable to the ETS," said Alex Hanafi, an attorney with the Environmental Defense Fund who wrote a recent report on the European system's progress. "The environmental goals are being met."

Here in the United States, RGGI currently has far more allowances for sale than the companies participating in the market need. Again, the recession and sluggish recovery played a role.

So did the plunge in natural gas prices. Power plant operators have been relying more on gas and less on coal, and gas produces about 47 percent less greenhouse emissions when burned, according to a study by the Worldwatch Institute. That means the plant operators need to buy fewer allowances. The RGGI system's overall cap doesn't limit their emissions, because they're already well below it.

"I think RGGI so far has been a flop, but it's been a fairly cheap flop," said Myron Ebell, director of energy policy at the Competitive Enterprise Institute and a longtime critic of cap and trade. "The good news is, it isn't raising energy prices. The bad news is, it isn't doing anything to reduce emissions, if that's your goal."

Energy bills rise

So far, the RGGI trading system has raised electricity bills in member states by an average of 43 cents per month, according to the Initiative. Allowance prices last year typically ranged between $1.87 and $1.94. In contrast, allowances sold in California's system will have a minimum price of $10. Each allowance represents 1 ton of carbon dioxide.

California regulators have tried to learn from both systems.

The minimum price represents one such lesson. Early in the European system, allowance prices crashed to zero after traders realized that the market had too many allowances for sale. The reason for the oversupply? European officials had relied on estimates of greenhouse gas emissions at the continent's power plants and factories - not actual measurements. California, in contrast, has required companies to measure and report their emissions for several years.