Carbon Emissions Trading in China : Features and Compliance of Pilots and Their Transition to a Nationwide Scheme

The Chinese government has approved seven pilot carbon trading schemes. These pilot regions are deliberately selected to be at varying stages of development and are given considerable leeway to design their own schemes. These schemes have features in common, but vary considerably in their approach to a variety of issues, such as the coverage of sectors, allocation of allowances, price uncertainty, and enforcement and compliance. This article examines key features and compliance of China's carbon trading pilots, lessons learned in the pilots, and the transition from the pilots to a national carbon trading scheme. Insights offered into the design, implementation and compliance of China's carbon trading pilots and potential pathways help make these pilots work reliably and effectively and smooth the transition from the pilots to a national carbon trading scheme