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Sectoral crediting mechanism: How far China has to go


  • Cai, Wenjia
  • Wang, Can
  • Chen, Jining
  • Wang, Siqiang


Based on the review of the basic design of the sectoral crediting mechanism (SCM) – a promising option for developing countries’ emission reduction commitments – this paper analyzes five important practical issues for China to solve before participating in SCM, which include (1) difficulties in determining a crediting baseline (2) the unsolved over-supply problem in the carbon market (3) the very likely “carbon credits falling short of mitigation costs” problem (4) the immature market-oriented price system jeopardizing the success of motivation incentives and (5) inadequate capacity building. Corresponding suggestions or compromise solutions are given after a discussion of each issue. It is also recommended that in order to witness SCM come into being, researchers and negotiators should endeavor to solve the practical issues that SCM meets now, bearing in mind the balance of interests of both developing and developed countries. Finally we believe that SCM’s political barriers can be overcome when technical, economic institutional and capacity problems are solved.

Suggested Citation

  • Cai, Wenjia & Wang, Can & Chen, Jining & Wang, Siqiang, 2012. "Sectoral crediting mechanism: How far China has to go," Energy Policy, Elsevier, vol. 48(C), pages 770-778.
  • Handle: RePEc:eee:enepol:v:48:y:2012:i:c:p:770-778
    DOI: 10.1016/j.enpol.2012.06.012

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    References listed on IDEAS

    1. André Aasrud & Richard Baron & Barbara Buchner & Kevin McCall, 2009. "Sectoral Market Mechanisms: Issues for Negotiation and Domestic Implementation," OECD/IEA Climate Change Expert Group Papers 2009/5, OECD Publishing.
    2. Teng, Fei & Zhang, Xiliang, 2010. "Clean development mechanism practice in China: Current status and possibilities for future regime," Energy, Elsevier, vol. 35(11), pages 4328-4335.
    3. Cai, Wenjia & Wang, Can & Liu, Wenling & Mao, Ziwei & Yu, Huichao & Chen, Jining, 2009. "Sectoral analysis for international technology development and transfer: Cases of coal-fired power generation, cement and aluminium in China," Energy Policy, Elsevier, vol. 37(6), pages 2283-2291, June.
    4. Richard Baron & Barbara Buchner & Jane Ellis, 2009. "Sectoral Approaches and the Carbon Market," OECD/IEA Climate Change Expert Group Papers 2009/3, OECD Publishing.
    5. Cai, Wenjia & Wang, Can & Wang, Ke & Zhang, Ying & Chen, Jining, 2007. "Scenario analysis on CO2 emissions reduction potential in China's electricity sector," Energy Policy, Elsevier, vol. 35(12), pages 6445-6456, December.
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    Cited by:

    1. Gao, Shuai & Smits, Mattijs & Mol, Arthur P.J. & Wang, Can, 2016. "New market mechanism and its implication for carbon reduction in China," Energy Policy, Elsevier, vol. 98(C), pages 221-231.
    2. Fujii, Hidemichi & Managi, Shunsuke, 2015. "Economic development and multiple air pollutant emissions from the industrial sector," MPRA Paper 67027, University Library of Munich, Germany.


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