China faces many modernization challenges, but perhaps none is more pressing than that posed by climate change. China must find a new economic growth model that is simultaneously environmentally sustainable, can free it from its dependency on fossil fuels, and lift living standards for the majority of its population. But what does such a model look like? And how can China best make the transition from its present macro-economic structure to a low-carbon future?

This ground-breaking economic study, led by the Stockholm Environment Institute and the Chinese Economists 50 Forum, brings together leading international thinkers in economics, climate change, and development, to tackle some of the most challenging issues relating to China's low-carbon development. This study maps out a deep carbon reduction scenario and analyzes economic policies that shift carbon use, and shows how China can take strong and decisive action to make deep reductions in carbon emission over the next forty years while maintaining high economic growth and minimizing adverse effects of a low-carbon transition. Moreover, these reductions can be achieved within the finite global carbon budget for greenhouse gas emissions, as determined by the hard constraints of climate science.

The authors make the compelling case that a transition to a low-carbon economy is an essential part of China's development and modernization. Such a transformation would also present opportunities for China to improve its energy security and move its economy higher up the international value chain. They argue that even in these difficult economic times, climate change action may present more opportunities than costs. Such a transformation, for China and the rest of the world, will not be easy. But it is possible, necessary and worthwhile to pursue.

part |2 pages

Part I – The Economics of Climate Change in China: An Overview of the Possible

chapter |1 pages


chapter |8 pages

The climate challenge

chapter |9 pages

The need for a fair deal

chapter |14 pages

Market mechanisms to price carbon

chapter |9 pages

Innovation and investment

chapter |3 pages

A low-carbon China is a modern China

chapter |2 pages


chapter |3 pages


part |2 pages

Part II – Towards Climate Protection for Development

chapter 1|20 pages

Fair Emissions: Rights, Responsibilities and Obligations

ByFan Gang, Cao Jing, Su Ming

chapter 3|18 pages

Greenhouse Gases and Human Well-Being: China in a Global Perspective

ByElizabeth A. Stanton

chapter 4|10 pages

Carbon Embedded in China’s Trade

ByFrank Ackerman

chapter 5|32 pages

A Deep Carbon Reduction Scenario for China

ByCharlie Heaps

part |2 pages

Part III – Growth, Opportunity and Sustainability

chapter 6|46 pages

Tax Instruments for Reducing Emissions: An Overview

ByOttmar Edenhofer, Robert Pietzcker, Matthias Kalkuhl, Elmar Kriegler

chapter 7|18 pages

Exploring Carbon Tax in China

ByCao Jing

chapter 8|30 pages

Domestic Emissions Trading Systems

BySteffen Brunner, Christian Flachsland, Gunnar Luderer, Ottmar Edenhofer

chapter 9|38 pages

Emission Reduction and Employment

ByCai Fang, Du Yang, Wang Meiyan

part |2 pages

Part IV – Climate Change Mitigation: A Fair, Effective and Efficient Global Deal

chapter 10|54 pages

International Mechanisms for Greenhouse Gas Mitigation Finance and Investment

ByMichael Lazarus, Clifford Polycarp

chapter 11|36 pages

Emissions Trading and the Global Deal

ByChristian Flachsland, Gunnar Luderer, Jan Steckel, Brigitte Knopf, Ottmar Edenhofer

chapter 12|32 pages

Meeting Global Targets through International Cooperation

ByFan Gang, Li Lailai, Han Guoyi

chapter 13|10 pages

Policy Implications of Carbon Pricing for China’s Trade

ByFrank Ackerman