China’s market-based environmental reforms : from inception to international co-operation and integration

This article critically analyses the background to China’s carbon market reforms and assesses the country’s current progress in introducing cap-and-trade systems for carbon credits, participating in the clean development mechanism provided for in the Kyoto Protocol, and promoting a voluntary carbon market. The article explains how China, using a command and control approach it has employed previously in other spheres, has established cap-and-trade emissions markets as pilot schemes in selected parts of the country, and is now quickly moving towards the creation of a national carbon market. The article then considers the potential for China’s carbon market to be linked with other commensurate markets overseas, in particular that of Australia, a development that would help achieve global emission reduction targets at lower overall cost.