China's Emissions Trading System: What the United States and China Can Teach Each Other

• Date: 01 November 2018

48 ELR 10968 ENVIRONMENTAL LAW REPORTER 11-2018

COMMENTS

China’s Emissions Trading System:

What the United States and

China Can Teach Each Other

by Kimberly Peterson

Kimberly Peterson is a 2019 J.D. candidate at the Elisabeth Haub School of Law at Pace University.

China is working hard on an ambitious policy

to become a world leader in addressing climate

change, with plans to transform its energy policy1

primarily using ca rbon emissions trading.2 True to its pre-

viously announced goal that t he national emissions trad-

ing system (ETS) would begin before the end of 2017, the

China National Development and Reform Commission

(NDRC) announced on December 19, 2017, that it was

deploying its National Carbon Emissions Trading Market

Construction Plan for the Power Generation Industry.3

is rollout will go slowly, in three stages, and actu al

trading is not expected to begin until 2020.4 While the

December NDRC announcement is not exactly the start of

carbon emissions trading that was promised years before,

there is reason to think that the slow rollout of the sys-

tem means that the countr y is taking the task seriously and

attempting to do it right. Yet, there are many legal details

that must be resolved before trading can begin.

Part I of this Comment will rst a nalyze the climate

goals that China’s central government has set for the coun-

try. China’s 13th Five-Year Plan for Economic and Social

Development lays out national greenhouse gas emissions

goals and indicates a desire to move away from coal power

as a source of electricity generation. To successfully reduce

carbon emissions, this national goal must be implemented

on the provincial level.5

1. China Ready to Deliver Promises in Full: Top Climate Envoy, X

N A, Nov. 17, 2017, http://news.xinhuanet.com/english/2017-

11/17/c_136758474.htm.

2. Id.

3. Zuo Zhě liúhóngxiá, 

   [ree Key Words to See the National Carbon Emis-

sions Trading System: e International Market Mechanism for Green Develop-

ment], X N A, Dec. 21, 2017, http://www.xinhuanet.com/

power/2017-12/21/c_1122142304.htm.

4. Yihui Wang, Launch of National Carbon Market Moves China Closer to Clean

Power, NDC Fulllment, SDG K H, Jan. 30, 2018, http://

sdg.iisd.org/news/launch-of-national-carbon-market-moves-china-closer-

to-clean-power-ndc-fulllment/.

5. Ma Tianjie, China Outdid Itself Again in Setting 2020 Low-Carbon Tar-

gets, C, Jan. 5, 2017, https://www.chinadialogue.net/

blog/9113-All-eyes-on-China-s-13th-Five-Year-Plan-for-energy/en.

Part II will ana lyze the legal issues that China must

resolve as it rolls out its national ETS and the dierent

ways the government could resolve the issues. e national

ETS is the nal goal, but the countr y has already started

implementing local and regional ETS.6 Local emissions

trading projects are continuing to launch and expand. I

will analy ze the legal issues that must be resolved in any

emissions trading market, a nd particular lega l issues con-

fronting China’s.

Another issue that could aect the rollout of Ch ina’s

national ETS is the wide-ranging government reshue

the government announced in March 2018.7 One of the

major changes was creating a Ministry of Ecological Envi-

ronment that would combine several environmental agen-

cies, including the carbon emissions trad ing function, with

water protection and environmental protection under one

agency with an expa nded sta.8 It is unclear whether t his

change will be benecia l or a detriment to the rollout of

the national ETS. But it is a development worth watching.

In Part III, I will analyze how emissions trading is con-

ducted in the United States. I will detail t he history of

attempts to create a national ETS and why the attempts

were not successful. en, I will look at the regional ETS

in the United States.

In Part IV, I will analyze t he key legal lessons from Chi-

na’s struggle to roll out a national ETS, and how that could

provide a useful framework if the United States should

decide to roll out its own national system. I will discuss

how the legal systems in Chin a and the United States com-

pare, and how the current political climate in t he United

6. Jun Dong et al., From Pilot to the National Emissions Trading Scheme in Chi-

na: International Practice and Domestic Experiences, 8 S 522,

524 (2016).

7. Lucas Niewenhuis, China Announces Largest Government Reshue in Years,

SC S, Mar. 13, 2018, https://supchina.com/2018/03/13/

china-announces-largest-government-reshue-years/.

8. Li Jing, China’s New Environment Ministry Unveiled, With Huge Sta

Boost, C H N, Apr. 9, 2018, http://www.climatechange-

news.com/2018/04/09/chinas-new-environment-ministry-unveiled-huge-

sta-boost/.

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