on companies from other sectors in carbon
markets.
35
8.5.2 Carbon Emission Regulations
Barely Support the Carbon
Market
China has not imposed a compulsory carbon
emissions permit trading system. Carbon trading
in China is now mainly on a voluntary basis, i.e.
businesses or individuals can voluntarily purchase carbon emission reductions. Although
some provinces and municipalities, including
Hubei and Jiangsu, introduced some local regulations on carbon emissions permit trading, laws
have not been passed at the state level. There are
no uniform settlement standards yet, nor effective
supervision. In addition, it is difficult to give
purchasers long-term economic incentives with
voluntary emissions reduction trading.
36
Once the basic framework of the national
carbon market has been built and the market is
running, each module should be managed by
professional organisations. For instance, the
China Securities Regulatory Commission could
manage carbon trading, and the Certification and
Accreditation Administration of the People’s
Republic of China could review and approve
third parties. Establishing the carbon market will
involve many departments, but China still needs
one department to coordinate all other departments and mobilise forces across the country to
complete the work. While China’s carbon market
is being established, the National Development
and Reform Commission could be responsible
for overall planning and coordination. The most
scientific approach would be dual-level management, with the central government designing
the main rules for market unification and local
government enforcing them.
8.5.3 The Carbon Trading Mechanism
Is not yet Mature
Compared with international carbon markets,
China’s trading mechanism for carbon products
is not sound. Currently, there are many kinds of
carbon trading market in the world, including
curb exchanges, markets regulated by government, and markets that function on a voluntary
basis. They differ in their method of allocating
allowances and in their regulations and emissions
reduction verification mechanisms. Direct trading
between different markets is impossible. The
international carbon finance market is highly
fragmented. Although China is a developing
country, any clean development mechanism
projects it participates in can only be traded in as
a primary market, through the International
Carbon Fund. Trading and circulation between
domestic sub-accounts are not allowed. Domestic
products are isolated from the international carbon trading market, making China’s carbon
emission resources uninfluential. China is at the
end of capital and resource chains. Due to the
separation between China and the UN’s registration mechanisms, the clean development
mechanism cannot properly register carbon
emission reductions.
37
In addition, there is still a dispute over whether China’s future national carbon market
should choose centralised trading at a single
exchange or decentralised trading at several
exchanges under common rules.
The advantages of centralised trading are
unified standards and centralised management,
which is conducive to price discovery. It also
matches China’s “from top to bottom” approach
to energy saving and emissions reduction. The
competent authorities in central government
could make flexible adjustments, creating a
synergy between the carbon trading mechanism
and other energy and climate policies. The
planned national carbon market is expected to
cover 4 billion tonnes of carbon allowances, the
largest in the world. The huge size imposes very
35
Lu Zhengwei and Tang Weiqi, Operation Experience
from Domestic Pilot Carbon Markets and the Construction of a National Market, in Fiscal Science, 2016,
pp. 81–94.
36
Wang Chaoying and Gan Aiping, Problems in the
Unification of China’s Carbon Markets and Countermeasures, in Foreign Economic Relations and Trade, 2015,
pp. 100–103 and 145.
37
Feng Weiwei, China will Launch a Carbon Emissions
Permit Trading Mechanism in 2017, in Energy Conservation and Environmental Protection, 2017, pp. 34–35.
Special Report 4: China’s Energy System Revolution
553
markets.
35
8.5.2 Carbon Emission Regulations
Barely Support the Carbon
Market
China has not imposed a compulsory carbon
emissions permit trading system. Carbon trading
in China is now mainly on a voluntary basis, i.e.
businesses or individuals can voluntarily purchase carbon emission reductions. Although
some provinces and municipalities, including
Hubei and Jiangsu, introduced some local regulations on carbon emissions permit trading, laws
have not been passed at the state level. There are
no uniform settlement standards yet, nor effective
supervision. In addition, it is difficult to give
purchasers long-term economic incentives with
voluntary emissions reduction trading.
36
Once the basic framework of the national
carbon market has been built and the market is
running, each module should be managed by
professional organisations. For instance, the
China Securities Regulatory Commission could
manage carbon trading, and the Certification and
Accreditation Administration of the People’s
Republic of China could review and approve
third parties. Establishing the carbon market will
involve many departments, but China still needs
one department to coordinate all other departments and mobilise forces across the country to
complete the work. While China’s carbon market
is being established, the National Development
and Reform Commission could be responsible
for overall planning and coordination. The most
scientific approach would be dual-level management, with the central government designing
the main rules for market unification and local
government enforcing them.
8.5.3 The Carbon Trading Mechanism
Is not yet Mature
Compared with international carbon markets,
China’s trading mechanism for carbon products
is not sound. Currently, there are many kinds of
carbon trading market in the world, including
curb exchanges, markets regulated by government, and markets that function on a voluntary
basis. They differ in their method of allocating
allowances and in their regulations and emissions
reduction verification mechanisms. Direct trading
between different markets is impossible. The
international carbon finance market is highly
fragmented. Although China is a developing
country, any clean development mechanism
projects it participates in can only be traded in as
a primary market, through the International
Carbon Fund. Trading and circulation between
domestic sub-accounts are not allowed. Domestic
products are isolated from the international carbon trading market, making China’s carbon
emission resources uninfluential. China is at the
end of capital and resource chains. Due to the
separation between China and the UN’s registration mechanisms, the clean development
mechanism cannot properly register carbon
emission reductions.
37
In addition, there is still a dispute over whether China’s future national carbon market
should choose centralised trading at a single
exchange or decentralised trading at several
exchanges under common rules.
The advantages of centralised trading are
unified standards and centralised management,
which is conducive to price discovery. It also
matches China’s “from top to bottom” approach
to energy saving and emissions reduction. The
competent authorities in central government
could make flexible adjustments, creating a
synergy between the carbon trading mechanism
and other energy and climate policies. The
planned national carbon market is expected to
cover 4 billion tonnes of carbon allowances, the
largest in the world. The huge size imposes very
35
Lu Zhengwei and Tang Weiqi, Operation Experience
from Domestic Pilot Carbon Markets and the Construction of a National Market, in Fiscal Science, 2016,
pp. 81–94.
36
Wang Chaoying and Gan Aiping, Problems in the
Unification of China’s Carbon Markets and Countermeasures, in Foreign Economic Relations and Trade, 2015,
pp. 100–103 and 145.
37
Feng Weiwei, China will Launch a Carbon Emissions
Permit Trading Mechanism in 2017, in Energy Conservation and Environmental Protection, 2017, pp. 34–35.
Special Report 4: China’s Energy System Revolution
553