Emissions trading : China's practices in a global context

This thesis provides an overview of attempts to mitigate climate change through emissions trading systems (ETS) with a focus on China's recent announcement to implement a national ETS. The report begins with a description of climate change and the inherent difficulties of reducing greenhouse gas (GHG) emissions. Popular policy mechanisms that aim to reduce GHG emissions with a goal of mitigating climate change are described, including the United Nations efforts to implement an international ETS through international climate negotiations. The second chapter reports on international, national and regional ETSs, with a focus on a multitude of critical ETS components. The third chapter outlines the theory of linking ETSs, design considerations, benefits, potential barriers and risks of linking. The fourth chapter focuses on air pollution in China and the state’s response to limit pollution through regional pilot ETSs that may transition into a Chinese national ETS based on the pilot programs' results. The conclusion of the thesis focuses on the potential repercussions of the future implementation of China's national ETS. The thesis concludes that China’s selection of an ETS over other policy mechanisms can enhance other nations' confidence in an ETS's ability to reduce emissions without impeding economic growth. The Chinese system can influence future UNFCCC meetings and may facilitate global agreements. The lessons learned from China's ETS has the potential to encourage the development of existing and future ETSs. Asia could become the global center for emissions trading if China considers linking systems with existing and future ETSs.