Studies On The Emission Trading Scheme

The EU Emission Trading Scheme which was first launched by the European Unionin2005has achieved certain environmental and economic benefits, and some othercountries have also begun to follow suit. In view of the current situation of greenhouse gasemissions in China, to replace the traditional command and control mode by amarket-based mechanism is imperative. However, the construction of emission tradingscheme involves many aspects of legal issues which should be clarified at first.The first section of this paper briefly describes the theoretical basis and practicaldevelopment of the emission trading scheme in general. The second section analyzes indepth of the legal nature of emission reduction credits and challenges the “emission right”theory which is advocated by many scholars of China. Learning from the new propertytheory, this paper defines the emission reduction credits as a kind of new property right.The third part mainly expounds the emission allowance system, including the point ofapplication of the overall limit on GHG emissions in the production and consumptionchain, the allocation mode and licensing system. This paper suggests that the downstreamdesign and auction mode are most ideal. But in the early term of the emission tradingscheme, it is appropriate to adopt the upstream design and grandfathering modeconsidering the difficulty of implementation. The fourth section discusses the legal issuesrelated to the emission trading and points out that emission trading is a civil juristic actwhich subjects to the strict supervision of the environmental authorities for the speciallegal nature of the emission reduction credits. Taking into the consideration of the actualsituation of the emission trading scheme’s development in China, the last section proposesa framework proposal in order to provide some theoretical preparation for the building ofnational emission trading scheme of China in the future.