Practices of Emission Trading in China: Exploration and Innovation

Abstract

In recent few years, market economy mechanism in China has gradually established, and market-based policy tools were attached more importance than ever before. As China’s economy has been growing fast in the past three decades with an annual increasing ratio greater than 8%, its environmental problems are mostly getting worse. In the future, more environmental restraints would be imposed on the economic development, and bigger pressures of major pollutants reduction will be ensued, so policy innovation of environmental pollution prevention and control should be expedited. Emission trading pilot projects has emerged in China since late 1980s, but advanced very slowly. However, with great efforts in environmental protection of the governments these years, environmental monitoring and supervision and management capacities have been greatly increased, in particular in some industrial sectors or regions, and with these years pilot projects exploration, lots of policy implementation experiences of emission trading also gained. Under such backgrounds, pollution emission trading programs developed rapidly especially since 2007, development trends of emission trading have become vigorous. Firstly, this paper reviewed systematically practices and progresses of international and domestic emission trading policy in China during the past two decades, and concluded that emission trading is broadly used in the air pollutants reduction in USA, and the global carbon reduction with better effects, the emission trading policy exploration in China could be roughly divided into three stages: Initial Development stage (1988–2000), Piloting exploration stage (2001–2006), Deepening Piloting stage (2007-). Secondly, nine characteristics of the current emission trading practice in China were concluded and six key issues influencing the advancement of emission trading piloting were identified and discussed. And lastly, the paper proposed the pilot roadmap for implementation of the emission trading, and pointed out that efforts in the near future should focus on the construction of “six systems”, that are key technical supporting system, fair and reasonable allocation system of the emission permit, emission trading market system, laws and regulations system, pollution source monitoring and management system, and law enforcement and supervision system.