Analysis of the Core Problems in China's Carbon Emission Trading Market

Chinese pilot carbon trading programs have been established by the central and local governments. Beijing, Tianjin, Shenzhen, Guangdong, and Shanghai began trading last year. However, the trading volumes and prices of every pilot region were very different. However, owing to the lack of relative capacity, there are several important problems that limit the further development of carbon trading in China, especially the historical emission data quality, the regional GDP or industrial value added, the grandfathering permit allocation methods, and the MRV system. Therefore, the following important ideas should be considered in China: (i) establishing a national reporting and monitoring system for greenhouse gas (GHG) emissions at the enterprise level; (ii) integrating the carbon trading schemes with a carbon tax scheme to include enterprises with fewer emissions; and (iii) considering the linkage between carbon trading and pollution trading.