China's Regional Carbon Trading Experiments and the Development of a National Market: Lessons from China's So2 Trading Programme

Abstract

Seven regions in China are currently conducting trial greenhouse gas emission trading pilot programmes in preparation for the development by 2015 of a nationwide cap and trade programme mandated by the 12th Five-Year Plan. Whilst China's carbon emission trading pilots are relatively recent, China possesses over fifteen years of experience in sulphur dioxide (SO₂) emissions trading. Like the current carbon emission pilots, various SO₂ pilots were conducted covering nine cities and four provinces before adoption of a national SO₂ emissions trading programme. This paper considers how China's nascent greenhouse gas cap and trade programme may evolve and what policymakers can learn from China's own extensive domestic experience with SO₂ emissions trading, which remains largely unexplored in the literature on China's carbon markets.