The distribution and regional determinants of nationally financed emissions-reduction projects in China

Abstract

As the Clean Development Mechanism (CDM) has experienced a decline in investments, major host countries in this mechanism have met with a surplus capacity in the production of carbon offset credits. One of these countries is China, which has turned its focus to its own emission trading institutions, such as the ‘China Certified Emission Reduction’ (CCER) scheme, a domestic carbon offsetting mechanism. In this study, we analyse this mechanism by identifying the regional determinants of the emissions-reduction projects. We examine the distribution of 2789 projects of China Certified Emission Reduction scheme and use regional economic attributes to predict the number of projects in 30 Chinese Provinces. Results from a panel data analysis indicate that these projects are more likely to be implemented in locations where per capita GDP is lower, CO2 emissions is higher, energy intensity is higher, and the amount of domestic loan is larger. This voluntary carbon market in China continues to demonstrate economic sensitivity in project implementation as it moves towards a new governing system in the post-CDM context. These findings could provide insights into the prospects for market-driven emission reduction initiatives in China and facilitate their mitigation actions.