The Allowance Mechanism of China’s Carbon Trading Pilots: A Comparative Analysis with Schemes in EU and California

TitleThe Allowance Mechanism of China’s Carbon Trading Pilots: A Comparative Analysis with Schemes in EU and California
Publication TypeReport
Year of Publication2017
AuthorsLing Xiong, Bo Shen, Shaozhou Qi, Lynn K Price, Bin Ye
Date Published01/2017
Keywordsallowance allocation, Cap-and-trade, China carbon trading pilot, China Energy Group, climate change, ETS
Abstract

The allowance mechanism is one of the core and sensitive aspects in the design of a carbon emissions trading scheme and affects the compliance cost for each entity covered under the scheme. By examining China’s allowance mechanism from two aspects-allowance allocation and allowance distribution, this paper compares China’s carbon trading pilots with the EU Emissions Trading Scheme and California Cap-and-Trade Program. The comparison identifies the unique features in allowance mechanism and particular issues that affect the efficiency of the pilots. The paper also recommends courses of action to strengthen China’s existing pilots and to build valuable experiences for the establishment of the national cap-and-trade system in China.