Carbon Markets Linkage in China

In August 2002, China first ratified UNFCCC (United Nations Framework Convention on Climate Change). Five years later, China began to strengthen its commitment to carbon reduction for 45% level of carbon emitted per GDP... [ view full abstract ]

In August 2002, China first ratified UNFCCC (United Nations Framework Convention on Climate Change). Five years later, China began to strengthen its commitment to carbon reduction for 45% level of carbon emitted per GDP comparing to 2005 in 2020 with roadmap by National Development and Reform Commission (NDRC) called ‘National Climate Change Program’ and established seven pilot carbon markets. The Chinese government announced a plan to establish a national carbon market in 2017. The discussion about the possibility of linking carbon markets both domestically and internationally has already started. It is worthwhile considering improving the compatibility of low-carbon incentive policies and market designs in order to reduce the risk of design lock-in which could pose barriers for linkages.

From international experiences of European Emission Trading System (EU ETS), the similar pattern could be observed both in the political developments of Europe after 1945 and EU carbon market, which the later member of states of European Union were moving from small scale co-operation then introduced to European Union’s multidimensional policy ecosystem and became single European market. This development was supported by political theory frameworks, in specific neo-functionalist theory, which emphasized the central role of building up political capacity.

After comparative studies between EU and China, we evaluate interviews with 13 stakeholders including politics, business, non-governmental organizations and academia. It appears the applied neo-functionalist framework could extend to establish hybrid climate policy architecture, combing both top-down and bottom-up elements. This extended policy framework theory could help facilitate the growth and operation a robust climate policy systems by linking of regional, national policies. Also, it provides a hint for potential international linkage between developed and developing countries.