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2018-08-31 | Peer Reviewed

Carbon Trading Scheme in the People’s Republic of China: Evaluating the Performance of Seven Pilot Projects

Chen, Xing and Jintao Xu, 2018, “Carbon Trading Scheme in the People’s Republic of China: Evaluating the Performance of Seven Pilot Projects,” Asian Development Review, vol.35, no. 2, pp. 131-152.
Download reference Doi:10.1162/adev_a_00117

The People’s Republic of China (PRC) launched seven emissions trading scheme (ETS) pilot projects in 2013–2014 to explore a cost-effective approach for low-carbon development. The central government subsequently announced its plans for the full-fledged implementation of ETS in the entire PRC in late 2017. To ensure the success of ETS in the PRC, it is necessary to gain a better understanding of the experiences and lessons learned in the pilot projects.

In this paper, we provide a policy overview of the seven pilot projects, including policy design, legislative basis, and market performance. We use the synthetic control method to evaluate the carbon mitigation effect of each of the seven ETS pilots. Our findings are that success has been limited and uneven across the pilot projects, which warrants deeper evaluation of the differences between them and caution in scheme expansion. Results from the analysis also shed light on policy improvements that can benefit the nationwide development of ETS.