The Paradox Of SO₂ Emissions Trading Between The Theory And Its Practice In China

The implementation of environmental policy is related to the coordinated development of economic growth and environmental protection.SO₂ emission trading scheme has been implemented as a pilot project more than a decade in China,which is the forerunner to deal with environmental issues under market mechanisms.But a handful of trading records show that it is down.In theory,Emissions Trading Scheme can achieve rational allocation of resources,energy conservation,promote economic growth;In practice,the United States and other Western developed countries has been used the scheme successfully,which is the further evidence of the superiority of this environmental policy.Therefore,the performance of China trying SO₂ emission trading scheme makes us think:There may be a paradox between the theory and China's practice about SO₂ Emission Trading.In view of this,this paper will focus on industrial SO₂ emissions trading market.Through comparing the theoretical basis of the environmental policies?Emissions Trading Scheme and Command and Control Scheme?,reaffirms the theoretical advantage of Emissions Trading Scheme,reveals the existence of the paradox with the performance of SO₂ emissions trading in China.Then based on the basic idea of emissions trading and the Porter hypothesis,analyses the causes of the paradox from market construction and environmental regulation.Finally,by using Data Envelopment Analysis?DEA?,assumes that the market is effective,comparing the Command and Control Scheme,tests the potential effect of the SO₂ emission trading scheme in the unified market.The main findings are as follows:First,Emissions Trading Scheme has great potential to promote economic and environmental win-win development,achieve Potter effect.In the SO₂ emissions trading market,which is effective,the average annual potential economic gains of China is about 3.8 trillion RMB and the average annual environmental gains is 894.6 million tons.The gross value of industrial output,whose growth rate is expected to speed up about a doubling,the pollution emissions will fall by 50 percent.Emissions Trading Scheme has great potential to promote economic and environmental win-win development,achieve Potter effect.Second,the inefficient operation of the market makes SO₂ emissions trading in China lack of inside motivation.For China,the market is still in construction,The allocation of emissions permits is not perfect,there exists administrative interventions in the transaction,and the trading market is inadequate in supply and demand,which makes SO₂ emissions trading in China lack of inside motivation.Third,the weak environmental regulation makes SO₂ emissions trading in China lack of outside constraints.Laws and regulations are imperfect in environmental protection,the foundation of executing laws is insufficient,environmental regulation often interfered by local government,the collusion between firms and the government,which reflect the overall environmental regulation of China is weak,and can't ensure SO₂ emission trading operating fully compliant.This paper has some important policy enlightenments:Firstly,normalized the law enforcement forces of environmental regulation,strengthen law enforcement at the same time.Government should improve the laws and regulations,and make up the foundation of law enforcement.Besides that,the law enforcement forces of environmental regulation should be normalized and strengthen law enforcement to reverse the situation that laws are not fully observed or enforced.Secondly,increase the investment in environmental regulation,and improve the efficiency of environmental protection.Increase investment in environmental regulation,including manpower and capital input in environmental regulation,providing material guarantee for enhancing the efficiency of environmental protection.Thirdly,establish effective public participation mechanisms,encourage public to participate in supervision.Government should guide the public to participate in environmental protection actively,and form a "government-leading and public-participating" mechanism,this will fully promote the circles of the society to play their positive effect.