Abstract
In this paper, we assess the existing seven local pilot carbon emission trading schemes in China and analyse the factors determining whether China’s carbon market is successful in terms of handling substantial amounts of CO2 emissions rights, regulating the market and trading them at a reasonable price. The emission trading system is developing slowly in most of the participating provinces and cities. Prices tend to decline, while volumes trading slowly increase. The volatility is partially the result of regulation (the rights need to be renewed before a certain date) and partially due to government interventions in the market. Based on the assessment, recommendations are provided for China implementing a national carbon market, based on the experiences and lessons learnt from the seven local carbon emission trading schemes. Conditions for China to roll out the system and later improve the national emission trading scheme to replace the existing local emission trading schemes are formulated.
Highlights
IntroductionAt the United Nations (UN) conference in Paris at the end of 2015, all countries of the world promised they will try to reduce their CO2 emissions
CO2 emissions are a hot topic, given their contribution to climate change
Recommendations are provided for China implementing a national carbon market, based on the experiences and lessons learnt from the seven local carbon emission trading schemes
Summary
At the United Nations (UN) conference in Paris at the end of 2015, all countries of the world promised they will try to reduce their CO2 emissions. The system originated with the Kyoto protocol of the United Nations, which was accepted in December 1997 and officially finished in 2012.1 The same protocol is at the basis of the clean development mechanism (CDM), which concerns the trading of CO2 emission rights between countries. The Clean Development Mechanism is one of the Flexible Mechanisms defined in the Kyoto Protocol that provides for emissions reduction projects in other countries. It generates Certified Emission Reduction (CER) units which may be traded in emissions trading schemes and help industries in developed countries.. Based on data for China’s seven pilot ETS, this paper addresses the following issues: 1) To what extent are the existing seven local pilot ETS an effective and efficient market for CO2 emission rights? 2) Which recommendations can be formulated for China, based on the experiences with other ETS so far, for improving the national ETS, which was
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