The U.S. Congress is in the midst of a debate on regulating greenhouse gas emissions. The Waxman-Markey bill was passed by the House of Representatives on June 26, 2009, and the Senate is likely to probe even more extensively the appropriate design and implications of a system to regulate emissions. Europe has accumulated a rich experience with designing and implementing a cap- and-trade program, and U.S. policymakers have an opportunity to look at this experience on key issues that continue to challenge consensus. Foremost amongst these are issues surrounding allocation of emissions permits, costs, and competitiveness. This report examines the experience of the European Union’s Emission Trading System (EU ETS) and suggests key lessons relevant to current U.S. debates, with associated recommendations.