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SEI brief

China’s Carbon Emission Trading: an Experiment to Watch Closely

This policy brief, based on an SEI/FORES report, examines China’s efforts to establish domestic carbon emissions markets, identifying key unresolved questions and challenges.

Karl Hallding, Guoyi Han, Marion Davis, Marie Jürisoo / Published on 24 April 2012

Written by M. Davis, based on work by G. Han, M. Olsson, K. Hallding and D. Lunsford (2012). China’s Carbon Emission Trading: an Experiment to Watch Closely. SEI Policy Brief.

It finds that China’s domestic carbon emission market is still in the research-and-development stage. There is strong momentum, but no functional carbon trading has emerged yet. Still, there is a growing consensus that the emergence of domestic carbon markets in China, sooner or later, is inevitable.

The carbon trading that does occur in China now is almost exclusively under the Clean Development Mechanism (CDM). China has been the biggest seller of carbon offsets through the CDM system, selling nearly 1.3 billion USD in credits in 2009 alone. However, the rejection of several recent Chinese proposals, combined with uncertainty over the future of the Kyoto Protocol, has made China reluctant to depend significantly on the CDM, politically and economically, for international low-carbon finance.

The coming five years will test the future of carbon markets in China. With the seven regional carbon trading pilots and potentially other sectoral based pilots initiating during the 12th Five Year Plan (FYP) period, China will be moving into an intensive phase of testing carbon trading domestically. The outcome of those experiments will, to a large extent, determine the future of carbon markets development in China.

Download the policy brief (PDF, 403kb)

Read the full report, China’s Carbon Emission Trading: An Overview of Current Development, by Guoyi Han, Marie Olsson, Karl Hallding and David Lunsford »

SEI authors

Guoyi Han
Guoyi Han

Senior Research Fellow

SEI Headquarters

Marie Jürisoo
Marie Jürisoo

Deputy Director, Operations Director and Acting Deputy Director SEI Oxford

Global Operations

SEI Headquarters, SEI Oxford

Topics and subtopics
Climate : Mitigation

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