Cameron Hepburn

Carbon Markets and Climate Policy in China: China’s pursuit of a clean energy future

with Chapman, Cui and Scotney The Climate Institute and Climate Bridge, October 2012.

• China has, for self-interested reasons, moved to slow the growth rate of its greenhouse emissions. China has reduced its energy intensity, become a world leader in renewable energy, and is rapidly establishing carbon trading systems. These actions not only have positive impact on the climate, they also drive economic growth, reduce fuel dependency and create export opportunities.

• China’s main exposure to the carbon market has been through the Clean Development Mechanism (CDM). The CDM has driven renewable energy development and built capabilities in carbon measurement and auditing. This positive experience with carbon markets has contributed to China choosing to establish its own domestic carbon trading scheme.

• Emissions trading schemes are set to play an important part in the next phase of China’s climate change policy. China’s ambitious pilot schemes will already represent the world’s second largest emission trading schemes and are expected to lead to a nationwide system in 2015-2016.

• The establishment of an emissions trading scheme in China should be viewed in the broader context of developments in the Asia-Pacific and globally. China’s scheme dovetails with other global schemes, paving the way for a global climate change agreement coming into force in 2020.