Emissions Trading in California: Lessons for China
88 Pages Posted: 6 Jul 2022
Date Written: June 17, 2022
This report evaluates California’s two major emissions trading systems (ETS): (i) the Regional Clean Air Incentives Market (RECLAIM) program for conventional air pollutants in southern California, begun in 1993 and now being retired; and (ii) the economy-wide greenhouse gas cap-and-trade program commenced in 2013 and authorized through 2030. We consider these systems in the context of broader critiques about emissions trading systems and take seriously problems of environmental ambition, integrity, and justice. We also explore ways in which emissions trading systems can affect the political economy of climate policy for better or worse.
This report was written with an audience of Chinese regulators and researchers in mind, as China has recently commenced the world’s largest ETS by volume of emissions covered. The material on California is meant to support the design and reform of this system. We have also included a chapter summarizing the current structure of China’s national ETS and offered a series of reform recommendations, drawing on lessons from California.
We hope that a frank assessment of the benefits and shortcomings of emissions trading will allow China and other jurisdictions to avoid the mistakes of existing ETS and to find an appropriate balance among emissions trading and a broader portfolio of climate measures.
Keywords: China, California, emissions trading, climate change
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