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Carbon Emissions Trading in China: The Evolution from Pilots to a Nationwide Scheme

Author

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  • ZhongXiang Zhang

    () (School of Economics, Fudan University)

Abstract

The Chinese central government has approved the seven pilot carbon trading schemes. These seven pilot regions are deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These pilot trading schemes have features in common, but vary considerably in their approach to issues such as the coverage of sectors, allocation of allowances, price uncertainty and market stabilization, potential market power of dominated players, use of offsets, and enforcement and compliance. This article explains why China opts for emissions trading, rather than carbon or environmental taxes at least initially, discusses the key common and varying features of these carbon trading pilots and their first-year performance, draws the lessons learned, discusses the potential pathways for evolution of regional pilot carbon trading schemes into a nationwide carbon trading scheme, and raises fundamental issues that must be addressed in order to make such an emissions trading scheme to work reliably and effectively and with an increasingly expanded coverage and scope.

Suggested Citation

  • ZhongXiang Zhang, 2015. "Carbon Emissions Trading in China: The Evolution from Pilots to a Nationwide Scheme," CCEP Working Papers 1503, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:ccepwp:1503
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    File URL: https://ccep.crawford.anu.edu.au/sites/default/files/publication/ccep_crawford_anu_edu_au/2016-03/ccep1503.pdf
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    Cited by:

    1. D’Amato, Alessio & Valentini, Edilio & Zoli, Mariangela, 2017. "Tradable quota taxation and market power," Energy Economics, Elsevier, vol. 63(C), pages 248-252.
    2. Zhang, Zengkai & Zhang, Zhongxiang, 2017. "Intermediate input linkage and carbon leakage," Environment and Development Economics, Cambridge University Press, vol. 22(06), pages 725-746, December.
    3. Munnings, Clayton & Morgenstern, Richard D. & Wang, Zhongmin & Liu, Xu, 2016. "Assessing the design of three carbon trading pilot programs in China," Energy Policy, Elsevier, vol. 96(C), pages 688-699.
    4. ZhongXiang Zhang, 2016. "Are China's climate commitments in a post-Paris agreement sufficiently ambitious?," CCEP Working Papers 1607, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
    5. Chen, Guangwu & Wiedmann, Thomas & Wang, Yafei & Hadjikakou, Michalis, 2016. "Transnational city carbon footprint networks – Exploring carbon links between Australian and Chinese cities," Applied Energy, Elsevier, vol. 184(C), pages 1082-1092.
    6. repec:eee:appene:v:220:y:2018:i:c:p:657-671 is not listed on IDEAS
    7. repec:eee:eneeco:v:75:y:2018:i:c:p:357-367 is not listed on IDEAS
    8. Coraline Goron & Cyril Cassisa, 2017. "Regulatory Institutions and Market-Based Climate Policy in China," Global Environmental Politics, MIT Press, vol. 17(1), pages 99-120, February.
    9. Cong, Ren & Lo, Alex Y., 2017. "Emission trading and carbon market performance in Shenzhen, China," Applied Energy, Elsevier, vol. 193(C), pages 414-425.
    10. Guangwu Chen & Thomas Wiedmann & Michalis Hadjikakou & Hazel Rowley, 2016. "City Carbon Footprint Networks," Energies, MDPI, Open Access Journal, vol. 9(8), pages 1-16, July.
    11. repec:now:fntmic:0700000060 is not listed on IDEAS
    12. Baochen Yang & Chuanze Liu & Yunpeng Su & Xin Jing, 2017. "The Allocation of Carbon Intensity Reduction Target by 2020 among Industrial Sectors in China," Sustainability, MDPI, Open Access Journal, vol. 9(1), pages 1-19, January.
    13. Inha Oh & Yeongjun Yeo & Jeong-Dong Lee, 2015. "Efficiency versus Equality: Comparing Design Options for Indirect Emissions Accounting in the Korean Emissions Trading Scheme," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-21, November.

    More about this item

    Keywords

    Pilot carbon trading schemes; environmental taxes; compliance; carbon offsets; energy prices; China;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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