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A Linkage Framework for the China National Emission Trading System (CETS): Insight from Key Global Carbon Markets

Chunyu Pan, Anil Kumar Shrestha, Guangyu Wang, John L. Innes, Kevin Xinwei Wang, Nuyun Li, Jinliang Li, Yeyun He, Chunguang Sheng and John-O. Niles
Additional contact information
Chunyu Pan: Faculty of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC V6T 1Z4, Canada
Anil Kumar Shrestha: Faculty of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC V6T 1Z4, Canada
Guangyu Wang: Faculty of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC V6T 1Z4, Canada
John L. Innes: Faculty of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC V6T 1Z4, Canada
Kevin Xinwei Wang: Faculty of Forestry, University of British Columbia, 2424 Main Mall, Vancouver, BC V6T 1Z4, Canada
Nuyun Li: China Green Carbon Foundation, No. 18, Hepingli Dongjie, Beijing 100714, China
Jinliang Li: China Green Carbon Foundation, No. 18, Hepingli Dongjie, Beijing 100714, China
Yeyun He: China Green Carbon Foundation, No. 18, Hepingli Dongjie, Beijing 100714, China
Chunguang Sheng: College of Economics and Management, Northeast Forestry University, Harbin 150040, China
John-O. Niles: Department of Biological Sciences, University of California, San Diego, 9500 Gilman Drive, La Jolla, CA 92093, USA

Sustainability, 2021, vol. 13, issue 13, 1-15

Abstract: Given that international collaborative efforts to reduce greenhouse gas (GHG) emissions are urgent and crucial, a critical understanding of challenges and opportunities of linking China’s newly established national ETS with existing domestic or regional ETSs is essential in order to achieve global emission targets, and may attract other jurisdictions to join in global carbon market development. In this backdrop, we analyzed the experiences, lessons, and insights from three key global carbon markets, namely North America, the EU and China, in terms of the barriers to linking the global carbon market, with a focus on China, using thematic analysis. The four most commonly cited linkage design elements (barriers) were the legal basis; monitoring, reporting, and verification; political feasibility; and the price-management mechanism. Like-minded jurisdictions with similar political views and design features will have a higher chance of linking. Additionally, sustaining market liquidity, widening sectoral coverage, minimizing carbon leakage, ensuring offset quality, and a transparent allowance and cap setting rules are crucial steps towards linkage. These outcomes can be used as an ETS linkage-ready design framework for CETS and ETS under development to overcome barriers to future international ETS linkages.

Keywords: carbon market; emission trading systems; linkage; expert opinion (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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