Search

The allowance mechanism is one of the core and sensitive aspects in the design of a carbon emissions trading scheme and affects the compliance cost for each entity covered under the scheme. By examining China’s allowance mechanism from two aspects-allowance allocation and allowance distribution, this paper compares China’s carbon trading pilots with the EU Emissions Trading Scheme and California Cap-and-Trade Program. The comparison identifies the unique features in allowance mechanism and particular issues that affect the efficiency of the pilots. The paper also recommends courses of action to strengthen China’s existing pilots and to build valuable experiences for the establishment of the national cap-and-trade system in China. [ABSTRACT FROM AUTHOR]

To cope with global warming, China has promulgated Enhanced actions on climate change : China ’ s intended nationally determined contributions and will start the national carbon emissions trading market in 2017. Carbon emissions are distributed by the form of free quota and paid quota. However, few literatures have focused on how the economy and the environment would be changed by the change of free quota ratio. This paper establishes the 10 scenarios of different free quota ratio of carbon emissions rights and uses a dynamic, recursive computable general equilibrium (CGE) model to simulate the carbon emissions trading market, to explore the relationship between free quota ratio and carbon trading price, and the impact of carbon trading scheme (ETS) on China’s economy and environment. The results show that free quota ratio will not have a direct impact on gross domestic product (GDP) and other economic and environment indicators but carbon trading prices. The prices and the rate of free payment in the current pilot cities in China are still relatively conservative. It is possible to reach emission peak, 8.21 billion ton, in 2025 and accumulative CO 2 reduction from 2017 to 2030 is 20.02 billion tons, or 59.60% of 2010 world’s total CO 2 emission. Cement, minerals, electricity and nonferrous metals under ETS will suffer great losses, so subsidy should be considered. Finally, we suggested that China should reduce the total carbon rights to increase the carbon price in 2017, and gradually reducing the proportion of free quota, from 90% in 2017 to 50% or less in 2030, by which the peak year of CO 2 emission can meet in 2025. We also suggest that ETS is an effective strategy for CO 2 reduction and the ratio should be gradually reduced in ETS to prevent violent fluctuation of carbon price in China. [ABSTRACT FROM AUTHOR]