Many countries have implemented policies to tackle climate change, with Emissions Trading Schemes (ETS) being one of the foremost attempts. Under such schemes, firms receive emission allowances. The firms that are covered by the rules are required to submit allowances for their emissions or, if they emit more than the allocated allowances, to purchase emission reduction from other firms. This imposes an emission price for carbon emissions and provides a cost-effective way for firms to comply.

The household heating energy transition program in China has led to a sharp increase in household heating costs and has exacerbated energy poverty (high ratios of energy expenditure to income). This program is mandatory, with the goal of alleviating environmental problems and accelerating households’ transition to cleaner fuel. Specifically, it is intended to convert household heating fuel from coal to natural gas (coal to gas), electricity (coal to electricity), or cleaner coal (clean coal replacement), through mandates and subsidies.

As an industry intensively using fossil fuel, the power sector is naturally a focus of efforts to slow climate change. In March 2015, China started the third round of power sector reform with the announcement of “Opinions on Further Deepening Power Sector Reform” (referred as the No. 9 Document), trying to promote competition, strengthen regulation and, importantly, achieve green development. But did the reform really achieve its expected goals?

To encourage sustainable use of forests, in 2003 China allowed rural villages to choose among a range of options to manage forests, including individual user rights with joint management. We studied how this individual user rights-based joint management affected forests and households.

Both property rights and voluntary decisions encourage cooperation. This resulted in better forest conservation in these villages in China, with about 10% more forest cover. This is also important because forests store carbon.