15.1 Introduction
Carbon pricing is considered the most cost-effective tool for reducing greenhouse
gas (GHG) emissions (Mehling and Tvinnereim 2018). As the primary type of
carbon pricing, emissions trading schemes (ETS) can have significant impacts on
reducing carbon dioxide and energy consumption. As China is the world’s largest
CO 2 emitter, accounting for 30% of global emissions, it is taking action to reduce
emissions. Like the European Union, the United States, Japan, South Korea, and
other countries that have already adopted ambitious policies to reduce carbon
emissions through implementation of carbon pricing, China has been developing
pilot carbon ETS projects in Shenzhen City (hereafter Shenzhen), Shanghai City
(hereafter Shanghai), Beijing City (hereafter Beijing), Guangdong Province (hereafter Guangdong), Tianjin City (hereafter Tianjin), Hubei Province (hereafter
Hubei), Chongqing City (hereafter Chongqing), and Fujian Province (hereafter
Fujian) since 2013. Analysis of the effect of an ETS on emission reductions can
support promotion of the policy. In 2015, China submitted a national voluntary
reduction draft, claiming it would reach its maximum CO 2 emissions target by 2030,
and CO 2 emissions per unit of gross domestic product (GDP) would be reduced by
60–65% compared with 2005 levels. Cap-and-trade ETS pilot projects, including
more than 2000 companies, factories, offices, and institutions, were established. CO 2
emission quotas were approximately 3.3 billion tons coal equivalent by June 2019,
with the aim of achieving national targets (Ministry of Ecology and Environmental
of the People’s Republic of China 2019). Lessons learned from pilot ETS markets
will determine the future of a nationwide ETS.
At the end of 2017, the NDRC announced the implementation of a national
carbon trading scheme (ETS) in the power sector, providing a pilot model in an
additional sector that functions in parallel with the regional pilot model. Before a
national market is launched, it is pertinent to analyze the outcome of the eight pilot
projects to ascertain whether the ETS policy has a practical impact on CO 2 emissions
and energy consumption reduction.
In this chapter, we first focus on the problems mentioned above using comparative analysis to clarify the current situation of each ETS pilot project based on
published statistical data. Then, we use a difference-in-differences (DID) method
with panel data from 2008 to 2017 to analyze the impacts of ETS policy.
It has been approximately 6 years since the first pilot market launched in
Shenzhen City. Although the carbon trading market pilot schemes have been
running for a comparatively long time, many issues are unresolved, including lack
of well-designed guidelines for implementation, of a strategy for building the
capacity essential for constructing an active carbon market, and of an overall strategy
for integrating pilot projects into a national scheme (Kong and Freeman 2013).
In China, ETS policy is still being explored, and implementation is a lengthy
process requiring adjustment and refinement. How effectively are the pilot projects
working as an emission reduction tool? Researchers have recently focused on the
impact of ETS using both qualitative and quantitative analyses. Overviews
274
Y. Ling et al.
Carbon pricing is considered the most cost-effective tool for reducing greenhouse
gas (GHG) emissions (Mehling and Tvinnereim 2018). As the primary type of
carbon pricing, emissions trading schemes (ETS) can have significant impacts on
reducing carbon dioxide and energy consumption. As China is the world’s largest
CO 2 emitter, accounting for 30% of global emissions, it is taking action to reduce
emissions. Like the European Union, the United States, Japan, South Korea, and
other countries that have already adopted ambitious policies to reduce carbon
emissions through implementation of carbon pricing, China has been developing
pilot carbon ETS projects in Shenzhen City (hereafter Shenzhen), Shanghai City
(hereafter Shanghai), Beijing City (hereafter Beijing), Guangdong Province (hereafter Guangdong), Tianjin City (hereafter Tianjin), Hubei Province (hereafter
Hubei), Chongqing City (hereafter Chongqing), and Fujian Province (hereafter
Fujian) since 2013. Analysis of the effect of an ETS on emission reductions can
support promotion of the policy. In 2015, China submitted a national voluntary
reduction draft, claiming it would reach its maximum CO 2 emissions target by 2030,
and CO 2 emissions per unit of gross domestic product (GDP) would be reduced by
60–65% compared with 2005 levels. Cap-and-trade ETS pilot projects, including
more than 2000 companies, factories, offices, and institutions, were established. CO 2
emission quotas were approximately 3.3 billion tons coal equivalent by June 2019,
with the aim of achieving national targets (Ministry of Ecology and Environmental
of the People’s Republic of China 2019). Lessons learned from pilot ETS markets
will determine the future of a nationwide ETS.
At the end of 2017, the NDRC announced the implementation of a national
carbon trading scheme (ETS) in the power sector, providing a pilot model in an
additional sector that functions in parallel with the regional pilot model. Before a
national market is launched, it is pertinent to analyze the outcome of the eight pilot
projects to ascertain whether the ETS policy has a practical impact on CO 2 emissions
and energy consumption reduction.
In this chapter, we first focus on the problems mentioned above using comparative analysis to clarify the current situation of each ETS pilot project based on
published statistical data. Then, we use a difference-in-differences (DID) method
with panel data from 2008 to 2017 to analyze the impacts of ETS policy.
It has been approximately 6 years since the first pilot market launched in
Shenzhen City. Although the carbon trading market pilot schemes have been
running for a comparatively long time, many issues are unresolved, including lack
of well-designed guidelines for implementation, of a strategy for building the
capacity essential for constructing an active carbon market, and of an overall strategy
for integrating pilot projects into a national scheme (Kong and Freeman 2013).
In China, ETS policy is still being explored, and implementation is a lengthy
process requiring adjustment and refinement. How effectively are the pilot projects
working as an emission reduction tool? Researchers have recently focused on the
impact of ETS using both qualitative and quantitative analyses. Overviews
274
Y. Ling et al.