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China has made remarkable progress adapting emissions trading to the Chinese context. The proposed system represents the world’s largest carbon market after the EU, being a real step forward in the global effort to cut greenhouse-gas emissions, establishing a more ambitious climate policy and a stricter cap on the Chinese fast growing emissions.

With this project, the Chinese government has stressed its commitment to undertake stronger measures to safeguard the environment.

China is the world’s largest emitter: the government is gradually taking on the responsibility that comes with its growing role of a major world power.

Moreover, China is one of the world’s largest energy user: the government increasingly faces concerns of energy security, efficiency and competitiveness. In addition to that, the high levels of air pollution alarmingly show that the country is approaching its environmental limits, stressing the urgency to overcome environment related issues.

In this context, policymakers have decided to move towards an alternative market approach in order to control greenhouse-gas emissions. The project involves some regions, selected to serve as emissions-trading pilots. This program means that central government provides only a few general design guidelines, leaving the pilots with a high degree of flexibility to come up with a system that best suits their contexts.

Although the plan represents a significant breakthrough, the system requires stricter instruments to overcome the main challenges. The lack of reliable emissions data, the inadequate capacity to integrate carbon trading into business models, and the restrictions with regard to the development of derivatives and futures markets are just some of the main problems that affect the system.

In relation to that, the completion of the first compliance cycle in the coming months will give policymakers, companies and observers the opportunity to take stock of this first exercise with emissions trading in China. In this way, the government will be able to undertake the adequate measures to improve the market designs.

In this framework, laying the legal foundation and creating the administrative capacity for a national system are important further aims to reach.


The gLAWcal Team


the team of the University Institute of European Studies (IUSE), Turin, POREEN project


Tuesday, 1 July 2014

(Source: ChinaDialogue)