Overview and evaluation of the mitigation efficiency for China’s seven pilot ETS

ABSTRACT

China’s pilot emission trading schemes (CP-ETS) have been operating for five years since the first pilot ETS launched its carbon market in 2013. The seven pilots have a common framework but different details. In this study, an assessment model which is used to evaluate mitigation efficiency, is constructed by combining the DID method and an evaluation matrix. Results show that the five CP-ETS have been effective in promoting emission reduction, whereas the pilot ETS of Shanghai and Chongqing have failed to drive the covered enterprises to reduce their GHG emission directly. Our findings reveal that at least three key elements, namely, allowance cap, the covered enterprises’ potential emission reduction capacity, and economic structure stability, affect the mitigation efficiency of the CP-ETS. The mitigation efficiency of the CP-ETS may be enhanced by conducting a pre-evaluation of the potential mitigation capacity of the covered enterprises, setting a mechanism for the evaluation and adjustment of the allowance cap, and employing financial tools to maintain the carbon price within a reasonable range that most covered enterprises can afford.

KEYWORDS:

• Emission trading schemes (ETS)
• Evaluation
• China
• GHG emission reduction
• Mitigation efficiency

A detailed list of acronyms

BJ-ETS:	=	Beijing Emission Trading System
CCER:	=	Chinese Certified Emission Redcution
CP-ETS:	=	China’s pilot emission trading schemes
CHEX:	=	China Hubei Emission Exchange
CQ-ETS:	=	Chongqing Emission Trading System
DID:	=	Difference in Differences
ETS:	=	Emission Trading System
ETSME:	=	Emission Trade System Mitigation Efficiency Evaluation
FETS:	=	Failed ETS
GD:	=	Guangdong Province
GD-ETS:	=	Guangdong Emission Trading System
GDP:	=	Gross Domestic Production
GHG:	=	Greenhouse Gas
HU-ETS:	=	Hubei Emission Trading System
MRV:	=	Monitoring, Reporting, Verification)
SEEX:	=	Shanghai Environment and Energy Exchange
SETS:	=	Strong ETS
SH-ETS:	=	Shanghai Emission Trading System
SZ-ETS:	=	Shenzhen Emission Trading System
TCE:	=	Tianjin Climate Exchange
TJ-ETS:	=	Tianjin Emission Trading System
WETS:	=	Weak ETS

Notes

1. This study uses energy consumption data to substitute for carbon emissions data, because the pilot regions’ carbon emissions statistics in the control period (2005–2010) are unavailable, and carbon emissions from energy consumption account for over 95% of total carbon emissions.

Additional information

Funding

This work was supported by the Guangdong Government Low-Carbon Development Fund [ZHC201606]; and the Guangdong Social Sciences Planning Fund [GD16CGL02]; and Provincial science and technology plan project of Guangdong province [2018A050501011].

Notes on contributors

Wenjun Wang

Wenjun Wang is a senior researcher  since the year of 2012 in Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences. She had received her PhD from Chinese Academy of Social Sciences in 2010. Her research field is in addressing climate change strategy, carbon trading system, low carbon development. Up to now, she has undertaken more than 6 national projects as the project leader.

Pengcheng Xie

Pengcheng Xie is an assistant researcher in Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences. She focus on the GHGs emission inventory compilation and urban low carbon development in recent years.

Wenxiu Wang

Wenxiu Wang is an assistant researcher at Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences. She received her PhD from Guangzhou Institute of Geochemistry, Chinese Academy of Sciences and she has been involved in various research projects related to energy strategy and human geography. Her research field is in energy strategy and low carbon economy and ecological civilization. In recent years, she has presided over or mainly participated in more than 10 national, provincial and ministeriallevel projects, and published 20 papers.

Daiqing Zhao

Daiqing Zhao is the director of the Energy Strategy Research Center,  Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences. She has been working on energy strategy research for a long time.