Policy Experimentation and the Emergence of Domestic Voluntary Carbon Trading in China

Abstract

As China has become the largest greenhouse gas (GHG) emitter in terms of total annual emissions, to promote GHG emissions reduction in China turns out to be crucial to the success of the global efforts to address climate change. This paper explores the development of the Chinese Domestic Voluntary Carbon Market (DVCM) in order to understand how carbon trading institutions have emerged and developed in China. To do this, it traces and analyzes the roles of the Chinese government and other key actors. Through process tracing and literature review, it argues that the pre-legislation and territorially fragmented development pattern of the Chinese DVCM has resulted from the activities of Chinese local governments and non-state actors under the policy experimentation approach adopted by the Chinese central government. It concludes with brief comments on the Chinese policy experimentation approach, and suggests that some measures can be taken to promote voluntary emissions reduction and policy learning.