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Seven emissions trading scheme (ETS) pilots have been established in China. They have introduced some unique methods to set emissions caps and allocate allowances, different from textbook models and their counterparts in the EU, California, and many other regions. This article provides a detailed introduction to the methods for cap setting and allowance allocation adopted by the pilots, and presents detailed comparisons of these methods. In terms of cap setting, the pilots adopt flexible caps that can be adjusted where necessary, which primarily depends on the outcomes of the bottom-up approach, namely aggregating the allowances allocated to participants. As for allowance allocation, the pilots not only adopt such methods as grandfathering and benchmarking, which are also widely applied in other existing schemes, but also some special methods that requireex postadjustment, such as those based on enterprises’ historical emissions intensity (including both physical quantity and added-value intensity) and current production/output. The factors influencing the design are further analysed, including the impacts of theory and experience from foreign systems, concerns about economic development, traditions regarding intensity targets and policy, constraints from data availability and preparation time, tight regulation of the electricity and heat generation sector, and concerns regarding price stability. The practice of pilots presents an improvement opportunity and a challenge for China to further balance the theoretical and practical requirements in ETS design in establishing its national system. Policy relevance China is piloting emissions trading in seven regions, as part of efforts to try to rely more on market-based instruments to achieve GHG emissions control targets. All seven pilots have been confronted with special issues in the design process when compared with existing foreign schemes. This article analyses in depth the special issues related to cap setting and allowance allocation and the approaches adopted to address these issues. Flexible cap setting through a bottom-up approach and different types of allocation methods with or withoutex postadjustment are adopted in the pilots. The flexible and innovative approaches the pilots have developed could provide useful experience for designing the nationwide ETS in China and promoting emissions trading policy in other parts of the world. [ABSTRACT FROM PUBLISHER]

In 2013, China launched its domestic pilot emissions trading scheme (ETS) as a cost-effective strategy to reduce CO2emissions. Theoretically, the ETS can interact with the feed-in tariffs (FITs) applied to renewable energies (REN). This article presents a simple method to demonstrate how FITs can be adjusted based on the evolution of ETS carbon prices in order to provide a cost-effective climate policy package in China. First, by using provincial data and wind and solar power as examples, it calculates the implicit carbon prices that FITs generate in different Chinese provinces and finds that they are much higher than current carbon prices in the pilot ETS. This shows the necessity of using both instruments to guarantee current level incentives to develop REN for climate change purposes, at least in the short and medium terms. Second, by keeping the annual total carbon price level stable (the sum of the implicit FIT carbon price and the ETS carbon price), and taking into account the cost evolution of REN development, this article demonstrates, for the 2018–2020 period, that FIT should decrease at an annual rate of 3.04–4.63% (for wind) and 7.84–8.87% (for solar) based on different growth rates for progressive national ETS carbon prices. Policy relevance There are a number of studies and debates on the interactions between climate policies in Europe in particular, ETS and subsidies for REN. The key issue is that a climate policy package should be cost-efficient and the implementation of one policy should not jeopardise the performance of another. For a country like China, a considerable scale effect on climate target achievement and total cost savings could be produced by the careful design of the climate policy package. FIT and ETS, which are cost-efficient policies if implemented separately, will very probably constitute a major climate policy package in the future in China, which is aiming to limit the use of command-and-control policies. So far, there is some debate on how to reduce FIT for wind power in China due to development cost changes. But discussions are lacking on the linkage between FIT and ETS. This paper fills this gap. [ABSTRACT FROM AUTHOR]

The few systematic international comparisons of climate policy strength made so far have serious weaknesses, particularly those that assign arbitrary weightings to different policy instrument types in order to calculate an aggregate score for policy strength. This article avoids these problems by ranking the six biggest emitters by far – China, the US, the EU, India, Russia, and Japan – on a set of six key policy instruments that are individually potent and together representative of climate policy as a whole: carbon taxes, emissions trading, feed-in tariffs, renewable energy quotas, fossil fuel power plant bans, and vehicle emissions standards. The results cast strong doubt on any idea that there is a clear hierarchy on climate policy with Europe at the top: the EU does lead on a number of policies but so does Japan. China, the US, and India each lead on one area. Russia is inactive on all fronts. At the same time climate policy everywhere remains weak compared to what it could be. Policy relevance This study enables climate policy strength, defined as the extent to which the statutory provisions of climate policies are likely to restrict GHG emissions if implemented as intended, to be assessed and compared more realistically across space and time. As such its availability for the six biggest emitters, which together account for over 70% of global CO2emissions, should facilitate international negotiations (1) by giving participants a better idea of where major emitters stand relative to each other as far as climate policy stringency is concerned, and (2) by identifying areas of weakness that need action. [ABSTRACT FROM AUTHOR]

Relying on a recent survey of more than 3400 participants from China, Germany, and the US, this article empirically analyses citizens' perceptions of key guiding principles for sharing mitigation costs across countries, justification of climate policy and trust in climate policy. Our findings suggest that the ranking of the main principles for burden-sharing is identical in China, Germany, and the US: accountability followed by capability, egalitarianism, and sovereignty. Thus, on a general level, citizens across these countries seem to have a common (normative) understanding of fairness. We therefore find no evidence that citizens' (stated) fairness preferences are detrimental to future burden-sharing agreements. In all three countries a majority of citizens considers international climate policy to be justified, but citizens' perceptions differ across specific items and countries. Finally, a substantial portion of citizens in all countries exhibit a lack of trust in international climate agreements. Policy relevance Disagreement over the distribution of mitigation costs across countries is blocking current negotiations about a new international climate change agreement to be adopted in 2015. At the heart of this disagreement are different perceptions of distributive justice among those involved in climate policy making. Our findings show that there is no difference in the ranking of fairness principles across citizens in China, Germany, and the US, suggesting that the common ground for crafting a future agreement is larger than expected. In particular, the accountability principle should weigh heavily when deciding on the burden-sharing. In addition, our findings suggest that in order to gain support among citizens, international climate policy may need to take measures to improve trust. [ABSTRACT FROM AUTHOR]

This article explores the incentives and challenges for Chinese business companies in participating in carbon emissions trading schemes (ETSs). Based on extensive interviews with the business managers and government officers who are currently involved in the ongoing policy experiments of pilot ETS programmes across China, the article identifies factors that either motivate or discourage companies in participating in carbon trading activities. It argues that different business groups, i.e. capped enterprises, uncapped enterprises, and carbon intermediaries, are affected by these factors to significantly different extents in terms of formulating their specific carbon strategies. It also illustrates some factors, such as a lack of stakeholder pressure and fragmented political interests, which have a distinctive Chinese character and are believed will have a fundamental impact on the quality and efficiency of Chinese ETSs in the future. Policy relevance At the outset, the successful implementation of any ETS depends critically on the active involvement of business actors across various industries. Hence, having an understanding of the business incentives and obstacles in participating in carbon trading is crucial, as these factors will ultimately determine the size and quality of the carbon market, and the total volume and integrity of the GHG emissions to be traded. This article also illustrates the common factors that affect business appetite for carbon trading throughout the world, as well as the factors that are unique to the Chinese political and economic context to constrain business in the market. Finally, a presentation of the business attitude towards the ETS experiment indicates the most worrying aspects of the policy design regarding carbon trading in China. As the construction and implementation of the ETS is a long-term undertaking, such investigation deserves attention from both policy makers and business leaders alike. [ABSTRACT FROM PUBLISHER]

China has pledged to meet a series of political targets on energy and environmental performance, including a target of a 15% non-fossil fuel share in total energy use by 2020. Achieving this target requires expansion of non-fossil energy and restraining energy use, which has implications for achieving the 40–45% carbon intensity reduction target. The present study outlines quantitative formulas to measure the nexus between the dynamics of GDP, energy, and carbon intensity. Considering a ‘likely’ scenario of the non-fossil fuel expansion envisioned by the Chinese government and a GDP growth rate of 8% per annum, the key to accomplishing both targets is to restrain energy consumption to attain an energy elasticity to GDP of approximately 0.53. Both targets can be achieved simultaneously with the existing non-fossil expansion plan and are within the ‘normal’ range of GDP growth seen in China over the long term. This is, however, less than the value realized over the last 10 years. To comply with the non-fossil fuel target, the potentially slower expansion of nuclear power capacity must be compensated for by other non-fossil options. Otherwise, there must be a greater attempt to decouple energy demand and economic growth in order to realize a smaller energy elasticity to GDP. Policy relevance China has pledged to achieve a 15% non-fossil fuel share and reduce its carbon intensity by 40–45% by 2020. The key to accomplishing both targets is to restrain energy consumption and promote the development of non-fossil fuels. The achievement of these two targets by 2020 is analysed between share of non-fossil fuel, CO2intensity of energy and GDP, and energy elasticity in relation to GDP. This analysis can inform the governmental energy and climate policy on the scale and pace of non-fossil fuel development, and the prerequisite regarding the energy elasticity to GDP to achieve the targets. The impacts of slower expansion of nuclear power capacity on the target achievement and implied elasticity of energy to GDP are also provided, which is close to the policy choice and actions of government on energy saving and emissions reduction. [ABSTRACT FROM AUTHOR]

Growing international trade has been one of the most important drivers for China's recent economic growth. This growth has fed rapid increases in energy demand and carbon emissions since 2000. China is now the world's largest emitter of carbon dioxide. There is mounting pressure from some in the international community for China to take specific actions to mitigate its emissions as part of a post-2012 climate regime. However, emissions embodied in internationally traded goods have not been given enough attention in this debate. This article discusses the results of research to quantify the emissions stemming from goods that are exported from China to other countries. It finds that these emissions accounted for 23% of China's national total in 2004. The article sets out how this result has been obtained and compares it to the results of several other pieces of research to demonstrate the importance of this issue. Some pointers for international climate policy are then discussed, including the advantages and difficulties of moving to consumption-based emissions accounting, and implications for international trade rules. [ABSTRACT FROM AUTHOR]

In contrast to many discussions based on annual emissions, this article presents calculations and projections of cumulative contributions to the stock of atmospheric CO2 by the major players, China, Europe, India, Japan and the USA, for the period 1900-2080. Although relative contributions to the climate problem are changing dramatically, notably due to the rapid industrialization of China, long-term responsibilities for enhanced global warming have not been transparently quantified in the literature. The analysis shows that if current trends continue, by the middle of this century China will overtake the USA as the major cumulative contributor to atmospheric concentrations of CO2. This has enormous implications for the debate on the ethical responsibilities of the major greenhouse gas emitters. Effective climate policy will require both the recognition of shared responsibility and an unprecedented degree of cooperation. [ABSTRACT FROM AUTHOR]

The challenge of creating a global low-carbon society is examined from the perspectives of a slow-growing but highly developed economy (Canada) and a fast-growing developing economy (China). Both countries' responses are compared to a similar carbon price schedule (US$10/tCO2e in 2013 rising exponentially to $100 by 2050) using a hybrid technologically explicit and behaviourally realistic model with macroeconomic feedbacks (CIMS). Then additional measures are imposed based on the national circumstances of each country; for Canada we simulate a 50% reduction by 2050, and stabilization for China. The scale of the challenge in all cases requires that every available option be vigorously pursued, including energy efficiency, fuel switching, carbon capture and storage, and accelerated development of renewables; to compensate, there are significant co-reductions of local air pollutants such as SOx and NOx. Finally, the abatement cost schedules of China and Canada are compared, and implications considered for carbon permit flows if the cost schedule of the rest of the developed world is assumed to be similar to that of Canada. We found that the developed world and China could collectively reduce emissions by 50% in 2050 at a price of $175/ tCO2e, with permits flowing from the developed countries to China; while abatement costs are lower in China up to $75/t, at higher prices reductions are less costly in the developed world. Our results indicate that a global low-carbon society is feasible, on condition that policy makers are willing and able to impose long-term, credible policy packages with carbon pricing policy as the core element, coupled with supplementary regulations to address market failures. [ABSTRACT FROM AUTHOR]

Although many economic studies suggest that China would reap significant benefits from participating in a global cap-and-trade regime, China has consistently refused to participate in international negotiations on this issue. Understanding China's underlying concerns is a key to explaining why China has not embraced an international greenhouse gas emissions trading scheme. This is explored as a potential basis for including China in future negotiations and schemes. This issue is considered from the following perspectives that impact upon China: (a) fairness: how do developing countries perceive emissions caps? (b) why have China and India been sceptical about international emissions trading? (c) what would China's political perceptions be of an inflow of CDM investment in comparison with the exports of emissions permits to the USA? (d) what are the implications of 'lock in' to an emissions cap, particularly when no rules and principles exist for setting emissions targets for post-2012? (e) the complex question of establishing future emissions caps for developing countries. [ABSTRACT FROM AUTHOR]

The Chinese central government has approved seven pilot carbon trading schemes. These pilot regions have been deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These 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 stabilisation, potential market power of dominated players, use of offsets, and enforcement and compliance. Our study finds that educating the covered entities, strictly enforcing compliance rules, ascribing allowances as financial assets and defining their valid duration, and including non-compliance in the credit record of non-complying entities are crucial to enabling active participation in carbon emissions trading. Moreover, the retrospective examination of the carbon trading pilots suggests that a national emissions trading scheme (ETS) should at least be based on uniform standards for measuring, reporting, and verification, the allocation of allowances, and the rules of compliance. Until a nationwide carbon market becomes fully functional after 2019, regional ETSs continue to function in parallel but those entities covered in the existing regional ETSs will be unconditionally integrated into a nationwide ETS if they meet the latter's threshold. Policy relevance The purpose of launching the seven carbon trading schemes and the reason why these seven pilot regions are given considerable leeway to design their own schemes are to enable China to develop a nationwide ETS with expanding geographical coverage and sectoral scope to complement the administrative means on which China, to date, has predominantly relied to achieve its increasingly stringent energy-saving and carbon intensity goals. This article discusses the lessons that carbon trading pilots have learned either from their own practice or other pilots in the first compliance year, as well as the good practice that the to-be-established national scheme could follow, and discusses the potential pathways for the evolution of regional pilot carbon trading schemes into a nationwide carbon trading scheme. Insights into the design, implementation, and compliance of China's carbon trading pilots and potential pathways help make these pilots work reliably and effectively and will smooth the transition from the pilots to a national ETS. [ABSTRACT FROM AUTHOR]

This synthesis article reviews China's efforts and effects concerning low-carbon green growth (LCGG) and explores the policy implications of reformulating the country's LCGG strategy. The article first reviews China's efforts in four major areas – carbon mitigation, market construction, fostering green industries, and managing the negative effects of LCGG – and then reviews China's LCGG effects with respect to the growth effect and the low-carbon effect. The results show that the increasingly stringent low-carbon policy has not diminished the country's economic growth as some had expected. Rather, the policy has fostered green industries and brought impressive quality improvements, including structural change and increased employment. Although the efforts and effects in China are impressive, the global emissions reduction is far from sufficient to achieve the global climate change target. To solve the problem of global climate change and seize the opportunity of green growth, China must reformulate its LCGG strategy, not just enhancing its existing LCGG efforts, but more importantly, rethinking the purpose of development and shifting its development paradigm from one that is highly gross domestic product (GDP)-oriented to one that is well-being-oriented. Policy relevance China must reformulate its LCGG strategy on two levels. First, China must enhance its existing efforts. Second, China should learn lessons from the industrial countries and reformulate its development model to one that is well-being-oriented to establish a more forward-looking green growth model in the new context of the Internet era. The time is now ripe for China to make a strategic transition. The 13th Five-Year Plan (FYP, 2016 to 2020) provides an opportunity for a more fundamental change in LCGG strategy. If China could succeed in exploring LCGG, it would make a significant contribution to the whole world. [ABSTRACT FROM AUTHOR]

The projections of 89 scenarios from 12 different models for the CO2emissions of China to 2030 are reviewed, along with wider examinations of lessons from the history of energy forecasting in OECD countries, and of the Chinese macroeconomic situation. Even by 2030, emissions in the scenarios span a factor of almost 2.5, indicating significant range and uncertainty. Statistical analysis of Kaya components suggests the carbon intensity of energy supply to be the strongest determining factor. However, most scenarios assume that industry1continues to account for more than 50% of total final energy demand. This is in contrast both to historical examples, which have consistently shown economies shifting from energy-intensive industrial bases to service-based structures as income per capita rises, and to recent Chinese policy statements, which reflect a similar ambition. It is also highly salient that major failures in energy and emissions projections can frequently be accounted for in retrospect by failures to anticipate such major economic structural shifts. In conclusion, while the future trajectory of Chinese emissions remains profoundly uncertain, the potential for a significant Chinese macroeconomic transition and its implications for the scale and structure of energy demand will be a crucial factor, to which energy-climate models must pay far more attention. Policy relevance The dramatic growth of Chinese emissions since 2000 has become a major factor in global emission prospects and the international political agenda. Many models project rapid continued emissions growth, but an apparent halt in Chinese emissions in 2014 has amplified debate. Projections and policy need to recognise fundamental uncertainties in emission prospects, because in addition to energy/climate-specific policies, they depend on the progress in Chinese macroeconomic reforms, which are poorly represented in the models we survey. Global projections, the international process, and the design of China's own policies (most obviously, its national cap-and-trade system) need to cope with the possibility of continued growth to peaking in 2030 (the central commitment in China's Intended Nationally Determined Contribution), but must also be prepared to exploit and encourage the possibilities of low-carbon development and much earlier peaking. [ABSTRACT FROM AUTHOR]