Environmental Engineering Reference
In-Depth Information
flexible and efficient trading mechanism (the secondary market). It enhances the
efficiency of low carbon development and provides sufficient liquidity for the
market through the participation of financial institutions. Carbon trading also
achieves market pricing and efficient resource allocation, thereby lowering the
cost of energy saving and emission reduction.
The international carbon market contains two categories: mandatory markets and
voluntary markets. Mandatory markets provide a platform for carbon trading to
countries or companies subject to a cap, through which they may comply with emissions
reduction targets. These markets may further be classified into: (a) allowance-based
trading, which means that buyers purchase emission reduction allowance allocated by
administrator under “cap-and-trade” systems, such as the European Union Allowance
(EUA) under the European Union Emission Trading System (EU-ETS); (b) project-
based emissions reduction trading, which means that buyers purchase verified emission
reductions generated by projects, such as the Clean Development Mechanism (CDM)
and Joint Implementation (JI). Voluntary markets cover carbon trading arising from
other purposes, such as corporate social responsibility, brand building and social
benefits, etc. There is no unified management in the voluntary market. However,
because it is more cost effective, has a more flexible mechanism, and is less time
consuming in terms of application, verification, transaction and issue, it is mainly used
for corporate social responsibility, brand building and other purposes. Currently the
voluntary trading market takes up a small proportion of the total carbon market, but it
has huge potential in the future.
As the experiences of Europe and America show, it is effective to rationalize
resource allocation and reduce GHG emissions by allocating allowances, establishing
allowance trading and developing relevant financial tools. By comparison, China's
carbon market started late, and a fully developed policy and system has not been
established. Nevertheless, there is much room for developing a carbon market and a
huge potential for emissions reduction in China. This paper puts forward some advice
for establishing China's carbon market and looks into the development of China's
carbon market. It seeks to describe China's policies for tackling climate change and
analyze the development of domestic and foreign carbon markets and the construction
of a domestic carbon-trading platform.
7.2
Evolution of China's Policies in Tackling Climate Change
Under the “common but differentiated responsibility” principle put forth in the
United Nations Framework Convention on Climate Change (UNFCCC), China is
currently not subject to mandatory GHG reduction targets. However, the Chinese
government has paid close attention to the subject of climate change and taken
strong accounts to address the problems in recent years. It issued a series of
policy documents, such as China's National Climate Change Program and
China's Policies and Actions for Addressing Climate Change , and has
implemented a series of policies and accounts for mitigating GHG emissions.
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