Carbon governance in China by the creation of a carbon market

Anyone interested in global CO₂ emission levels or the emergence of global carbon markets must eventually consider China and its rapidly growing CO₂ emissions. In an attempt to reconcile energy security needs with environmental goals, the Chinese government has voluntarily announced that it intends to reduce the CO₂ intensity per unit GDP of its industrial production; however, its total emissions are nevertheless expected to grow until 2030. In 2013, seven pilot Emission Trading Schemes (ETSs) were introduced to experiment with this policy tool, in addition to other instruments that might help the government to achieve its goals. However, China’s experiments with ETSs face poorly developed carbon markets, and the effectiveness of this approach is a matter of fierce debate. While some emphasise that carbon markets provide incentives for developing countries without the imposition of binding emission targets, which allows them to implement voluntary mitigation policies (Carbon Finance at the World Bank/Ecofys 2013: 28), critics doubt that carbon markets will contribute to the transition towards a low-carbon economy. Instead, they fear that these markets will lead to a variety of negative side effects such as increased land-grabbing in developing countries, rising inequality and a further decrease in the democratic quality of the international carbon regime (Alianca Redes de Cooperacao Comunitaria Sem Fronteiros Asociacion Ambiente y Sociedad et al. 2013). The weakness of the European Union ETS (EU ETS) prompts another caveat: if regulators cannot prevent the market from becoming oversaturated with unused emission allowances, the market might function as a price setting device (as a low price reflects the supply and demand relationship), but it would not deliver any environmental improvements.