The Great China Carbon Trading: Political Economy of Climate Change Governance
Keywords:china, carbon trading, climate change, political economy
This study aims to analyze the political economy aspect of carbon trading markets in China and how it will influence climate change governance. It is essential to understand the underpinning political economy aspects of emerging carbon trading markets in China because China will operate the world’s largest carbon market. China’s work on carbon trading represents higher requirements for China’s national industries and a higher commitment to addressing climate change. This study uses an exploratory qualitative approach to examine the history of carbon trading in China, its political economy aspects, and how China's carbon trading can significantly contribute to climate change. When China launched its national carbon trading scheme in 2021, the size of China's carbon trading became the world's most extensive climate policy scheme. This study shows that China’s rigorous environmental policy experimentations to gradually establish carbon trading by implementing the CDM projects, setting up regional carbon trading pilots in six cities, finalizing regulations, and establishing a mechanism for national carbon trading have been successful. The prospect and potential of China's carbon trading are enormous, considering the size of the CDM projects in China, China’s position as one of the largest emitters in the world, and the scale of industries included in the national carbon trading scheme in China. However, there are still uncertainties in the prospect of carbon trading in China, historically weak climate policy enforcement, and misreporting of data that can affect the integrity of China’s calculation.
Bell, R. G. (2015). Op-Ed: Will China Cheat on Cap-and-Trade? Retrieved January 2, 2022, from Los Angeles Times website: https://www.latimes.com/opinion/op-ed/la-oe-greenspan-china-cap-and-trade-20151001-story.html
Böhm, S., & Dabhi, S. (2009). Upsetting the Offset: The Political Economy of Carbon Markets. London: MayFlyBooks.
Böhringer, C. (2003). The Kyoto Protocol: A Review and Perspectives. Oxford Review of Economic Policy, 19(3), 451–466. https://doi.org/10.1093/oxrep/19.3.451
Carlson, D. A., Robinson, S. ann, Blair, C., & McDonough, M. (2021). China’s Climate Ambition: Revisiting its First Nationally Determined Contribution and Centering a Just Transition to Clean Energy. Energy Policy, 155, 112350. https://doi.org/10.1016/j.enpol.2021.112350
Carpenter, S. (2021). Toothless Initially, China’s New Carbon Market Could Be Fearsome. Retrieved February 3, 2022, from Forbes website: https://www.forbes.com/sites/scottcarpenter/2021/03/02/toothless-at-first-chinas-carbon-market-could-be-fearsome/?sh=1cb37f682af1
Carr, M. (2013). China May Not Import CO2 Credits as UN Seeks New Market. Retrieved January 20, 2022, from Bloomberg website: https://www.bloomberg.com/news/articles/2013-05-15/biggest-emitter-china-may-not-import-carbon-credits-for-decades
Creswell, J. W., Goodchild, L., & Turner, P. (1996). Integrated Qualitative and Quantitative Research: Epistemology, History and Designs. In Higher Education: Handbook of Theory and Research (Vol. 11, pp. 90–136). New Jersey: Agathon Press.
Deng, Z., Li, D., Pang, T., & Duan, M. (2018). Effectiveness of Pilot Carbon Emissions Trading Systems in China. Climate Policy, 18(8), 992–1011. https://doi.org/10.1080/14693062.2018.1438245
Ellerman, A. D., & Buchner, B. K. (2007). The European Union Emissions Trading Scheme: Origins, Allocation, and Early Results. Review of Environmental Economics and Policy, 1(1), 66–87. https://doi.org/10.1093/reep/rem003
Friedlingstein, P., O’Sullivan, M., Jones, M. W., Andrew, R. M., Hauck, J., Olsen, A., … Zaehle, S. (2020). Global Carbon Budget 2020. Earth Syst. Sci. Data, 12(4), 3269–3340. https://doi.org/10.5194/essd-12-3269-2020
Hongqiao, L. (2021). In-Depth Q&A: Will China’s Emissions Trading Scheme Help Tackle Climate Change? Retrieved from https://www.carbonbrief.org/in-depth-qa-will-chinas-emissions-trading-scheme-help-tackle-climate-change
Huang, Y. (2013). Policy Experimentation and the Emergence of Domestic Voluntary Carbon Trading in China. East Asia, Vol. 30, pp. 67–89. Springer. https://doi.org/10.1007/s12140-013-9188-5
Hübler, M., Voigt, S., & Löschel, A. (2014). Designing an Emissions Trading Scheme for China-An up-to-Date Climate Policy Assessment. Energy Policy, 75, 57–72. https://doi.org/10.1016/j.enpol.2014.02.019
International Carbon Action Partnership. (2021). Emissions Trading Worldwide: ICAP Status Report 2021. In International Carbon Action Partnership. Berlin. Retrieved from https://icapcarbonaction.com/en/?option=com_attach&task=download&id=723
Koh, K. L., Lye, L.-H., & Lin, J. (2010). Crucial Issues in Climate Change and the Kyoto Protocol: Asia and the World. Singapore: World Scientific. https://doi.org/10.1142/7347
Kusmer, A. (2021). China Launches World’s Largest Carbon Market. Retrieved January 22, 2022, from theworld.org website: https://theworld.org/stories/2021-02-11/china-launches-world-s-largest-carbon-market
Li, Y., & Gallagher, K. P. (2019). The Environmental Impact of China-financed Coal-fired Power Plants in South East Asia. In Global China Initiative Working Paper (Vol. 7). Boston. Retrieved from https://www.bu.edu/gdp/files/2019/04/GCI-WP-7-Coal-Satellite-Li-Gallagher-2019-1.pdf
Liu, L., Chen, C., Zhao, Y., & Zhao, E. (2015). China׳s Carbon-Emissions Trading: Overview, Challenges and Future. Renewable and Sustainable Energy Reviews, 49, 254–266. https://doi.org/10.1016/j.rser.2015.04.076
Liu, Z., Deng, Z., He, G., Wang, H., Zhang, X., Lin, J., … Liang, X. (2021). Challenges and Opportunities for Carbon Neutrality in China. Nature Reviews Earth and Environment, 3, 141–155. https://doi.org/10.1038/s43017-021-00244-x
MoFA China. (2007). President Hu Jintao Attends Developing Nations Leaders Collective Meeting. Retrieved January 23, 2022, from MoFA China website: https://www.mfa.gov.cn/ce/cezanew//eng/zgxw/t327924.htm
Raiser, M., Eckardt, S., & Ruta, G. (2021). Carbon Market Could Drive Climate Action. Retrieved January 23, 2022, from China Daily website: https://global.chinadaily.com.cn/a/202107/20/WS60f4d69fa310efa1bd662b91.html
Reklev, Stian Chen, K. (2014). China Carbon Cash Party Over as U.N. Credit Stream Dries up. Retrieved January 22, 2022, from Reuters website: https://www.reuters.com/article/china-carbon-idUSL3N0N725A20140422
Schreurs, M. A. (2016). The Paris Climate Agreement and the Three Largest Emitters: China, the United States, and the European Union. Politics and Governance, 4(3), 219–223. https://doi.org/10.17645/pag.v4i3.666
Scotney, R., Chapman, S., Hepburn, C., & Jie, C. (2012). Carbon Markets and Climate Policy in China: China’s Pursuit of a Clean Energy Future. In Climate Bridge. Shanghai. Retrieved from https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.467.4894&rep=rep1&type=pdf
Shen, W. (2011). Understanding the Dominance of Unilateral CDM Projects in China: Origins and Implications for Governing Carbon Markets. Development, 16, 15. Retrieved from https://tyndall.ac.uk/wp-content/uploads/2021/09/TWP-149.pdf
Simms, A. (2013). Ecological Debt: Global Warming and the Wealth of Nations. In Encyclopedia of Political Theory. New York: Pluto Press.
Sitaraman, S. (2007). Regulating the Belching Dragon: Rule of Law, Politics of Enforcement, and Pollution Prevention in Post-Mao Industrial China. Colorado Journal of International Environmental Law and Policy, 18, 267–334. Retrieved from https://heinonline.org/HOL/LandingPage?handle=hein.journals/colenvlp18&div=14&id=&page=
Sorrell, S., & Sijm, J. (2003). Carbon Trading in the Policy Mix. Oxford Review of Economic Policy, 19(3), 420–437. https://doi.org/10.1093/oxrep/19.3.420
Springer, C., Evans, S., Lin, J., & Roland-Holst, D. (2019). Low Carbon Growth in China: The Role of Emissions Trading in a Transitioning Economy. Applied Energy, 235, 1118–1125. https://doi.org/10.1016/j.apenergy.2018.11.046
UNEP DTU Partnership. (2022). UNEP DTU CDM/JI Pipeline Analysis and Database. Retrieved January 22, 2022, from UNEP DTU Partnership website: https://www.cdmpipeline.org/
United Nations Climate Change. (2022). What is the United Nations Framework Convention on Climate Change? Retrieved January 22, 2022, from United Nations Climate Change website: https://unfccc.int/process-and-meetings/the-convention/what-is-the-united-nations-framework-convention-on-climate-change
Wang, B. (2010). Can CDM Bring Technology Transfer to China?-An Empirical Study of Technology Transfer in China’s CDM Projects. Energy Policy, 38(5), 2572–2585. https://doi.org/10.1016/j.enpol.2009.12.052
Wang, X., Zhu, L., & Fan, Y. (2018). Transaction Costs, Market Structure and Efficient Coverage of Emissions Trading Scheme: A Microlevel Study from the Pilots in China. Applied Energy, 220, 657–671. https://doi.org/10.1016/j.apenergy.2018.03.080
Wang, Y., & Wang, W. (2016). Risk Identification and Regulatory System Design for the Carbon Market. Chinese Journal of Population Resources and Environment, 14(2), 59–67. https://doi.org/10.1080/10042857.2015.1078495
Wardhani, W., Hamrun, H., & Putra, M. A. P. (2021). Strategi Pemerintah Daerah dalam Pengembangan Sumber Daya Genetik Rumput Laut di Kabupaten Bantaeng. Kybernology : Journal of Government Studies, 1(1), 1–15. Retrieved from https://journal.unismuh.ac.id/index.php/kybernology/article/view/5005
Weeks, J. (2008). Carbon Trading. Washington D.C. Retrieved from http://library.cqpress.com/cqresearcher/cqrglobal2008110014
Weng, Q., & Xu, H. (2018). A Review of China’s Carbon Trading Market. Renewable and Sustainable Energy Reviews, 91, 613–619. https://doi.org/10.1016/j.rser.2018.04.026
Xuetong, Y. (2018). Chinese Values vs. Liberalism: What Ideology Will Shape the International Normative Order? Chinese Journal of International Politics, 11(1), 1–22. https://doi.org/10.1093/CJIP/POY001
Yang, M., & Yang, F. (2012). Negotiation in Decentralization: Case Study of China’s Carbon Trading in the Power Sector. Berlin: Springer Science & Business Media.
How to Cite
Copyright (c) 2022 Wahyu Indriyadi
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under an Attribution 4.0 International (CC BY 4.0) that allows others to share — copy and redistribute the material in any medium or format and adapt — remix, transform, and build upon the material for any purpose, even commercially with an acknowledgment of the work's authorship and initial publication in this journal.