China’s Carbon Emission Trading: An Overview of Current Development

The report assesses China's ambition to launch a national carbon trading system by 2015, noting that while the government is determined to move away from inefficient top-down administrative measures, a functional domestic market does not yet exist beyond the Clean Development Mechanism (CDM). It highlights the initiation of seven regional pilots (Beijing, Chongqing, Guangdong, Hunan, Shanghai, Shenzhen, and Tianjin) as critical experiments that will determine the future of Chinese climate policy. The authors identify significant hurdles, including a lack of reliable emission data, the absence of a mature free-market economy, and the need for robust legal frameworks for monitoring, reporting, and verification (MRV).

• China aims to establish a national carbon trading system by 2015, moving away from the 'command and control' measures of the 11th Five Year Plan (2006–2010), which were found to be 'less efficient than a market based trading system'.
• As of 2012, there is no functional regulated carbon market in China; existing activities are almost exclusively based on the Clean Development Mechanism (CDM), and voluntary markets have seen only a 'handful of deals – mostly symbolic'.
• The National Development and Reform Commission (NDRC) approved carbon trading pilots in seven provinces and cities: Beijing, Chongqing, Guangdong, Hunan, Shanghai, Shenzhen, and Tianjin.
• Guangdong Province is identified as a leading pilot, opting for an absolute emission cap rather than an intensity-based target for certain sectors, such as iron and steel production, to avoid dampening growth.
• A critical technical barrier is the lack of reliable carbon emission data and the need for a legal framework to support measurement, reporting, and verification (MRV).
• The report argues that the success of a market-based instrument is threatened by the lack of a mature free-market economy in China, citing 'heavy government control', 'state-owned enterprises', and 'widespread corruption'.
• Previous attempts at environmental pollution trading in China, such as those for sulphur oxides (SO2) in the 1990s and during the 11th FYP, have generally been 'negative' and yielded 'few results'.
• There is an ongoing debate regarding whether to adopt an absolute emissions cap, which makes reductions predictable, or a carbon intensity cap, which is seen as 'less likely to conflict with rapid GDP growth'.

APA

Han, G., Olsson, M., Hallding, K., & Lunsford, D. (2012). China’s Carbon Emission Trading: An Overview of Current Development. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/china-cluster/SEI-FORES-2012-China-Carbon-Emissions.pdf

Chicago

Han, Guoyi, Marie Olsson, Karl Hallding, and David Lunsford. China’s Carbon Emission Trading: An Overview of Current Development. Stockholm Environment Institute, 2012. https://www.sei.org/mediamanager/documents/Publications/china-cluster/SEI-FORES-2012-China-Carbon-Emissions.pdf.

Wikipedia

{{cite report |last1=Han |first1=Guoyi |last2=Olsson |first2=Marie |last3=Hallding |first3=Karl |last4=Lunsford |first4=David |title=China’s Carbon Emission Trading: An Overview of Current Development |publisher=Stockholm Environment Institute |date=2012 |url=https://www.sei.org/mediamanager/documents/Publications/china-cluster/SEI-FORES-2012-China-Carbon-Emissions.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{han2012chinas, author = {Han, Guoyi and Olsson, Marie and Hallding, Karl and Lunsford, David}, title = {{China’s Carbon Emission Trading: An Overview of Current Development}}, institution = {Stockholm Environment Institute}, year = {2012}, url = {https://www.sei.org/mediamanager/documents/Publications/china-cluster/SEI-FORES-2012-China-Carbon-Emissions.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }