Analysis Of The Impacts Of International Emissions Trading And Its Development Trends On China's Economy

As the global climate is warming, to reduce the emissions of greenhouse gases(GHGs) and relieve the greenhouse effect is becoming more and more important. International society pays much attention to the climate issue and takes measures to solve this issue. United Nations Framework Convention on Climate Change(UNFCCC) provides a legal framework for international society to respond to the global climate change. Kyoto Protocol provides the details of quantitative restrictions and emissions reduction in the field of how to reduce the GHGs for those countries that fulfill the GHGs emissions reduction obligations. Meanwhile, Kyoto Protocol provides three flexible mechanisms about the reduction approaches: Clean Development Mechanism, Joint Implementation and Emissions Trading. Clean Development Mechanism is the mechanism that allows Annex I countries to carry out those projects that can reduce GHGs emissions in the territory of non-Annex I countries or eliminate GHGs from the atmosphere through carbon sequestration or carbon sinks to attain Certified Emission Reductions-CERs to offset their greenhouse gases emissions reduction obligations. Joint Implementation allows Annex I countries or enterprises in these countries to implement those projects that limit or reduce GHGs emissions or increase carbon sinks to share emissions reduction units. Emissions trading to achieve environmental purposes through market-based instruments. That is to say that allowing those countries that emissions reduction is lower than that required to use or trade domestic GHGs remaining emissions allowances or abroad to make up the emissions from other GHGs emissions sources. International emissions trading is the trading that to buy and sell GHGs emissions allowances among countries. The GHGs emissions allowances are traded as commodities. One party of the trading buys a certain amount of GHGs emissions reduction allowances in order to achieve their emissions reduction targets.Based on the preceding research work, this paper selects the international emissions trading for the specific study and makes a systematic analysis about the development trends of international emissions trading and its impact on China's economy using both qualitative analysis and quantitative analysis through general and specific, inductive and deductive research methods and also puts forward some corresponding suggestions.The first chapter of this paper makes a simple outline of the background to implement international emissions trading, the study subject of this paper and the significance of study international emissions trading and its development trends.The second chapter makes relevant theoretical analysis about international emissions trading. External influences of GHGs emissions lead to the largest market failure in the world. To solve the issue of external influences of GHGs emissions, international emissions trading is more effective than carbon tax. The differences of the GHGs emissions reduction costs between countries is the economic root cause.The third chapter reviews several international emissions trading systems that has begun to implement in the world at present including the trading periods, gases, sources and participants, allocation methodology and penalty and price cap.The fourth chapter and the fifth are the main and important parts. The fourth chapter analyses the development trends of the international emissions trading in the future period through inductive and deductive methods. The credit styles of international emissions trading will increase. The range of the entities such as country entities and company entities that participate in international emissions trading will enlarge. The geographical range of international emissions trading will enlarge and China will be involved. The range of industries of international emissions trading will enlarge from iron and steel, cement, chemical industry to natural gas, refining and forestry products. The fifth chapter analyses the effects of international emissions trading and its development trends on China's economy. International emissions trading and its development trends will have trade effects on China's economy. The GHGs emissions reduction technology used in the CDM projects driven by international emissions trading will have spillover effects in China. The investments of CDM projects will have employment effects in China. Meanwhile, the GHGs leakage issue will also have some negative effects on China's economy.The sixth chapter puts forward some suggestions about China how to respond to the international emissions trading and its development trends. China should continue to actively carry out CDM projects to participate in global GHGs emissions reduction action, develop low-carbon economy to achieve sustainable development, actively participate in carbon emissions trading market and actively participate in international climate change negotiations to win an advantageous position for China in the future international emissions trading.