۱- Introduction

۲- Unfolding China’s pollutant emissions trading practices

۳- Regional comparison of PETSs

۴- Discussion

۵- Conclusion

References

Abstract

Over the past few decades, the pollutant emissions trading policies in China have undergone significant innovation and exploration. It is considered as a market-based approach that became integrated with command-and-control mechanisms such as total emissions control or pollution permits. This study is the first to provide systematic, reflective thinking that tracks the regional initiatives of pollutant emissions trading systems in China. In this article, we divided China’s emissions trading practices into three stages and conducted a comparative qualitative analysis of the country’s eleven provincial emissions trading pilots. We found that provincial pilots are highly diverse and complex regarding the pollutants that can be traded, the industrial sectors involved, the design of trading administration and processes, and the implementation of trading practices such as allowance, pricing and platforms. We also identified four main challenges: legislation setup, monitoring and verification, administrative interference, and the technical quantification of pollutant hotspots. We conclude the article by providing policy implications so that emissions trading policies can be integrated with the newly developed pollution permitting system.

Introduction

The economic incentive approach enables more flexibility and efficiency in environmental management. Emissions trading has been recognized as one of the most effective environmental policies in Western countries (Stavins, 1995; FØRSUND and NÆVDAL, 1997). In the United States, for example, the report on emissions trading policies issued by the Regan Government summarized the practices of banking, bubbles, offsets, and tradable credit (Schwarze and Zapfel, 2000). These practices were integrated into an emissions trading system at the state level, which formalized the market mechanisms to monitor and reduce pollution. The EU Emission Trading System (EU-EST) covers approximately 11 000 power stations and manufacturing plants in the 28 EU Member States, as well as aviation activities in these countries (Boemare and Quirion, 2002). In total, roughly 45% of total EU greenhouse gas emissions are regulated by the EU-ETS.1 China has been piloting pollutant emissions trading systems (PETSs) since the 1980s. Despite the complexities and ambiguities of policy design and implementation, PETS initiatives keep evolving with ongoing challenges of environmental pollution and have become one of the fundamental environmental policies in China for point-source environmental management (Jiang et al., 2016; Guo, 2018). Thus, such initiatives are significantly different from carbon (CO2) emissions trading systems in China (Jotzo and Loschel, € ۲۰۱۴; B. Zhang et al., 2014) since the latter are usually not considered part of China’s fundamental climate mitigation strategies. Most previous studies about PETSs in China apply environmental economics analyses (Cao and Ikeda, 2005; Zhang et al., 2010) to reveal the efficiency of a single emissions trading scheme at the enterprise level, regardless of the regulatory nature of a single pollutant, i.e., CO2 is not considered ak “pollutant” in China at central or local levels. This is probably why the outcomes of PETSs are diverse (Ji et al., 2017; Dickson and Mackenzie, 2018; Xian et al., 2019). Researchers have also pointed out that the maneuverability of the current emissions trading policy, conflicts between different environmental policies, and administrative interference are considered as the main barriers to the success of the SO2 emissions trading programs in China (Wang et al., 2002; Dudek et al. 2004, 2007).