The rise of carbon emissions trading in China: a panacea for climate change?

Abstract

The carbon emissions trading scheme (ETS) has become one of the most important and universal measures adopted to mitigate climate change. As the largest emitter and a major developing country, China is also preparing for the introduction of a mandatory cap-and-trade pilot scheme. This article takes a close look at the ETS for China from a legal perspective. If China is to have a new carbon market, that market will undoubtedly need to have a legal basis. The following three central pillars of the legal basis for a cap-and-trade programme are analysed under China's legislative framework: first, the government should have power to set limits on the total amount of certain greenhouse gas (GHG); second, the regulated entities must be under obligation to reduce emissions; and third, the participating entities should have legitimate interests of legal right to emit certain amounts of GHG. It can be found that policy and principle of carbon trading in China are clear and definite, but the legal basis and legal support for operating the carbon market are quite obscure. Without explicit legal provisions and prudent regulatory authority, it is doubtful that emissions trading can be successfully applied to address climate change.