Abstract This paper employs a new class of computable general–equilibrium (CGE) models, developed in the context of energy-economy-environmental models to simulate the impacts of the EU economy of internal and multilateral instruments for regulation of greenhouse gases (GHGs) emissions. Climate change due to emissions gases of greenhouse gases is a long-term global environmental problem. While specific impacts on different regions as well as their timing are yet uncertain, it is reasonable to suppose that unilateral voluntary action by individual countries to reduce their net emissions of GHGs is unlikely. This is because significant reduction of net GHGs emissions by a single major net emitter, say, for example the EU, is unlikely to substantially slow down the rate of increase in concentration in the atmosphere because the emissions of GHGs worldwide is increasing rapidly with spreading industrialization. On the other hand, unilateral changes in energy use patterns are widely perceived to have adverse effects on a country’s economic growth, consumer welfare and trade competitiveness. This perception is shared by both developing (DCs) and industrialized countries (INCs). Some major policy instruments have been assessed on the basis of experiments with the CGE model. The use of each of the policy instrument for direct GHGs regulation is promising. The results of the above experiments seem to show, that first, emission standards accomplish significant decreases in net GHGs emissions with negligible relative GDP and Welfare index changes and without major distributional impacts in the sense of relative changes in factor rewards. They seem to work through major reduction in coal and natural gas use and slight overall reduction in the use of petroleum. Second, auctioned tradeable permits also accomplish large decreases in net GHGs emissions, with, however a perceptible increase in the Welfare Index and significant distributional impacts in higher rewards to land owners and labor relative to capital owners. They appear to work primarily by expansion to the forest sector and associated increases offsets generation. Third, the use of a GHGs tax on positive net emissions of GHGs by industries accomplishes large reductions in net GHGs emissions with significant increase in GDP and the Welfare Index. The relative changes in factor rewards are also important and favor land owners over labor and capital owners. This instrument too appears to work primarily through considerable expansion of the forest sector and consequent increases offsets generation. Each of these instruments show sufficient promise as effective policy tools for GHGs reduction, that it would be advisable to conduct further research in each case. The choice between standards on the one hand, and market-based domestic regulatory instruments on the other, is not straightforward. These results need verification through further analysis.