The Necessity Of Establishing Carbon Trading Market And The Path Research In China

Emissions trading market is one of the important policy tools in reducing greenhouse gas (GHG) emissions and development of low-carbon economy. However, China has not yet established the domestic GHG emissions trading market till now, so it’s of great theoretical and practical significance to analyze the necessity, the feasibility and the pathway of the establishment of the emissions trading market in china, by means of designing the analytical theories and framework as well as summarizing the status, issues and trends of the international GHG emissions trading market and the domestic CDM market mechanism.The first chapter reviews the background and the significance of the research, defines the research theme and research methodology and raises research questions.The second chapter studies the literature review of existing researches and makes analysis of the status of the field research of climate change, low-carbon economy and emissions trading market both home and abroad.Chapter III designs the analytical theories and framework of the emissions trading market, mainly in three aspects. The first one proposes Total Climate Change Management theory(TCCM) and Total Emission Reduction Management theory(TERM) which are based on the Total Quality Management theory (TQM), Four characteristics of global climate change problem and emissions reduction management has been discussed. The second one is the identification of the elements of the emissions trading market, which followed by the outline of the framework of the emissions trading market. The third one identifies the broad and narrow concept of emissions trading market based on the value chain theory, smiling curve and competition of value chain theory. The paper proposes value chain and smiling curve of emissions trading market. These three aspects compose the theoretical basis and serves as the link of the paper.Chapters IV and V is the empirical analysis, theory application and testing parts of the paper, which makes a thorough analysis on the international and domestic emissions trading market. From the perspective of empirical analysis, Chapters IV summarizes the status and characteristics and problems and the trends of the international emissions trading market, examines policies and practices of the major international markets, summarizes the possible inspiration and reference value. Chapters V summarizes the status and characteristics and problems of the domestic CDM market, in addition to review the policies about climate change and low-carbon economics and emissions trading market. Chapter V also analyzes buyer’s market concentration and market structure in China’s CDM market. The paper discovers a certain buyer’s market power in China’s CDM market while the concentration experiences a declining trend which leads the market from monopoly into compitition. From the the perspective of theoretical application and assessment, the TCCM and TERM theories have been applied in these two chapters in summarizing the feature, problems and the trends of the international emissions trading market as well as in raising the problems of the domestic emissions trading market. The paper argues that the current emissions market is not complete, and the process is to be optimized, the scope of participants is limited, and the tools and methods are simple. The research findings offer the evidence that the two theories serve as feasible and effective tools to the analysis of carbon Market.Respectively, Chapter VI, VII and VIII analyse the necessity and feasibility and the pathway of the establishment of domestic emissions trading market. And the three chapters answer the research questions and propose solution in the paper.Considering the needs of realistic and long-term and the pressure of internal and external, Chapter VI tries to demonstrate the necessity of the establishment of the market in four aspects. namely, the protection of the real economic interests, in compliance with pressure of the international climate negotiations, fostering the transformation of economy growth and sustainable development and the competitive advantage of the nation. In addition, the chapter proposes differential pricing theory by summarizing the price gap among various market segments. The root cause, which is the lack of demands and the over-supplies,.of the low price of the CER from China has been explored.And the chapter summarizes the pressure to emissions reduction for the enterprises and industries and the country as a whole, proposes the idea of "domestic emission reduction, internationally recognized". Furthermore, the chapter summarizes the relationship among three pillars of low-carbon economy, namely, low-carbon technologies, carbon finance and low carbon industries, In addition, the chapter also enriches and tests the value Chain theory of emissions trading market through designing a prototype according to a real CDM project.Through the application of SWOT analysis, Chapter VII examines the feasibility of the establishment of carbon trading marketing in China based on the studies on the strengths, weaknesses, opportunities and challenges.. Firstly, Its core advantage is that China has plentiful supplies of carbon emissions both in actual and potential, also has a huge demands on carbon emissions both domestic and international, and the combination of supply and demand provides the conditions and possibilities for the establishment of markets. Secondly, the disadvantage is that the emissions trading market in China faces the challenges of lack of knowledge, institutional barriers, lack of market infrastructure and capacity shortage. Thirdly, It’s opportunity lies in the commitment from the central government and the broad development space from the international emissions trading market. Lastly, threats to the market include limited participation, political risk, market risk and operational risk.Chapter VIII studies the pathway to establish the domestic emissions trading market in four perspectives, namely, the effective composition, and the spatial, time and the actual operation dimensions of the market. From the view-point of the key elements and effective composition, China should improve the existing CDM market, and at the same time, should establish the carbon market and at first the voluntary carbon market. The paper proposes five principles of the establishment of the voluntary market and identifies the potential problems in addition to a discussion of the possible solution which designs trading tool at the principle of "One goal, Two control limits " within the framework of strength-indicator systems. The paper argues that China should build integrated markets and professional markets, and proposes that energy industry and forest industry are the best choice for professional market. China should gradually establish a complete and diversify markets including basis and derivatives product of the carbon credits. And China should build and strengthen the industrial chains of emissions trading services, including exchanges, carbon funds, banks, DOEs and market research institutions. The paper proposes that the central government shall take the responsibility for the approval of the establishment of the exchange. The paper proposes to establish four types of carbon funds and to focus on the standard of competition and to made possible competitive strategy. From the spatial dimensions of emissions trading market, we should establish the regional markets and national markets at the same time, and gradually establish the links to the international market. Correspondently, the chapter analyzes three way to link the regional markets and national markets, it also analyzes the five possible levels of the linkages to the international market. From the time dimension of the emissions trading market, the paper designs the road map to the establishment of emissions trading market in China, which includes five stages, namely the preparation, introduction, demonstration, mature and the overall promotion period, which integrated the carbon tax and pace of internationalization of the market. From the actual operational perspective of the emissions trading market, the paper argues that China should build unified platforms for trading systems and information systems and regulatory systems.Chapter IX, the last part of the paper, gives the summary and outlook of the research.