| Emission trading as a cost-effective policy instrument has been gaining momentum around the world in mitigating greenhouse gases and other pollutants.However,emission trading will hardly be initiated in a policy vacuum.Policy interaction may arise when emission trading coexist with other policies.Although the Clean Development Mechanism(CDM),the project-based carbon emission trading scheme,clearly specifies the "additionality" criterion,every carbon trading scheme will essentially face the same concern that other policy may influence their policy effects.CER(Certified Emission Reduction,CER)price collapsed and CDM market was in downturn in 2013.Wind projects continues to develop and newly added installed capacity of wind power has started to rise since 2013 which is dramatically different from China's CDM projects' development.Wind projects,the traditional CDM projects,should meet additionality rule of the CDM,that wind projects would not have been implemented without CDM.Therefore,the development of China's wind power and China's CDM projects has consistency.According to the development of China's wind power and the registeration of China's wind CDM projects,this study analyse the determinants of wind projects'implementation and registration and then examine the policy interaction of China's renewable energy policy and carbon emission trading.We propose a new theory to explain the actual relationships among CER prices,wind energy development in China and CDM registration.The decisions on China's investing in wind energy and registering in CDM are separated.The former decision has little to do with CER prices while the latter compares CER prices with transaction costs.Therefore,the collapse of CER price in 2013 had no impact on the development of China's wind power.CER price in 2013 was under transaction costs per CER,that prevented the CDM registeration and CER transaction of these projects.Then this study measured the CER benchmark price and transaction costs.Empirical analysis on CER benchmark price and transaction costs for China's wind CDM projects verifies the necessary conditions for the theoretical explanation.The non-financial incentives determine the implementation of China's wind project and China's wind power deployment has been driven by renewable energy policy such as the targets of the installed capacity set for wind power.Thus,China's wind projects are non-additional.Under the condition that CDM mechanism and renewable energy development policy are implemented at the same time,the non-additional CERs will enter the carbon market and then increase the global carbon emissions and discourage the efforts to cut carbon emissions from developing countries to some degree.CER price is the determinant of CER transaction,that means carbon price determines carbon emission trading.Thus,non-additional CERs in the carbon market distort the operation of carbon trading due to the invalidity of emission permit prices in mitigation decisions and the resulting potential "dumping"problem,and hamper the development of carbon emission trading.Additionality makes CDM incompatible with the developing country's efforts to carbon mitigation and this problem is difficult to correct.CDM should be replaced by a scheme that can achieve the "win-win" policy effect and avoid the problem resulted by the additionality criteria.At the same time,policy interaction should be taken into consideration for the design and optimization of the increasing carbon emission trading schemes and national carbon emission trading in China. |
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