Harnessing market mechanisms to promote sustainable development: Lessons from China

The document examines China's strategic approach to the Clean Development Mechanism (CDM), highlighting the role of powerful ministries, coordinated capacity building, and specific market restrictions to ensure local benefits.

• China transitioned from being 'slow off the mark' in the early years of the Clean Development Mechanism (CDM) to dominating the market, hosting almost half of all CDM projects by 2012.
• The success of the CDM in China is attributed to the involvement of 'heavy-hitting' ministries, specifically the National Development and Reform Commission (NDRC) acting as the chair of the Designated National Authority (DNA), rather than a less influential environment ministry.
• China managed international capacity building by using the NDRC and the Ministry of Science and Technology (MOST) as gatekeepers to prevent project overlap and ensure donor assistance met specific national requirements.
• The Chinese government implemented unique restrictions to protect domestic interests and ensure equitable benefit sharing, including a floor price for Certified Emission Reductions (CERs), which was 8 euros from 2008 until being lowered to 7 euros in early 2012.
• A revenue-sharing levy between 2% and 65% is applied to CER revenues, with the lowest rates for high-benefit projects like renewable energy and the highest for hydrofluorocarbon destruction. These funds are directed to a state-controlled CDM Fund, which exceeds US$1 billion.
• Climate goals have been integrated into national development policy via 5-year plans; the Twelfth Five-Year Plan (2011–2015) includes a 17% carbon intensity reduction goal and a non-fossil fuel energy target of 11.4% for 2015.
• To adapt to the EU Emissions Trading Scheme's Phase III restrictions on CERs, China began developing a domestic emissions trading scheme in pilot cities like Beijing and Shanghai in early 2013, with a goal of a nationwide scheme by 2015.

APA

Kinkead, B. (2012). Harnessing market mechanisms to promote sustainable development: Lessons from China. Climate and Development Knowledge Network. https://cdkn.org/sites/default/files/files/China-InsideStory_final_WEB.pdf

Chicago

Kinkead, Belinda. Harnessing market mechanisms to promote sustainable development: Lessons from China. Climate and Development Knowledge Network, 2012. https://cdkn.org/sites/default/files/files/China-InsideStory_final_WEB.pdf.

Wikipedia

{{cite report |last1=Kinkead |first1=Belinda |title=Harnessing market mechanisms to promote sustainable development: Lessons from China |publisher=Climate and Development Knowledge Network |date=September 2012 |url=https://cdkn.org/sites/default/files/files/China-InsideStory_final_WEB.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kinkead2012harnessing, author = {Kinkead, Belinda}, title = {{Harnessing market mechanisms to promote sustainable development: Lessons from China}}, institution = {Climate and Development Knowledge Network}, year = {2012}, month = sep, url = {https://cdkn.org/sites/default/files/files/China-InsideStory_final_WEB.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }