Also, carbon import taxes.
To not only make production unprofitable, but also prevent people from buying anything? (OK, OK, that was quite a hyperbole.)
The problem is, it doesn't make sense in the form it is today. 40% of EU emissions is less than China's rise in the single year probably. The Kioto protocol wasn't signed by many major polluters. And single-sided emission reduction is negligible in grand scheme of things, but destroys the EU industry. And God, we need it here now. Tax based emission reduction systems (emission rights trading is one of those) would need to be global to work efficiently. On the local scale, promoting innovation would lead to much better results. Specifically, going to solar power (only really feasible of the 'renewable sources' in the major scale) would be so much better idea if we actually had efficient solar cells. EU spends a lot of money on inefficient ones, because that's all we have now, instead of spending that money on creating better ones, that would fare well on the free market. It just doesn't make sense.
Ninja'd, so I will just say this:
For every factory that's driven out of Europe by said regulations, another's going to open in China or elsewhere and produce ten times the CO2 it could have back in Europe because it's simply cheaper that way.
Makes quite a bit of sense. I'm reminded of the few stories: flying low-emission hybrid Toyota from Japan to USA by jet-plane (it was for some celebrity who wanted to look eco-friendly), thus making more CO2 on the plane trip than said Toyota would save over 50 years of driving it; also, American program of paying people to dump their old, high-emission cars and buy now, low-emission ones, which had a net effect of increasing CO2 production, as the production of new cars made more CO2 than destruction of the old ones saved.