Linking China's ETS with the EU ETS : possibilities and institutional challenges

The 2015 Paris Agreement encourages countries to commit to taking part in a global mitigation regime through their support for carbon markets, among other mitigation mechanisms. Measures outlined in the Agreement, such as periodic reviews of national climate policies, shared fulfilment, and common guidance on accounting, provide a new momentum for the development of carbon markets and the process of linking them.1 In this context, China's National Development and Reform Commission (NDRC) announced that China would soon launch a national emissions trading scheme (ETS).2 Since 2013, China has been in preparation, testing a series of mandatory emissions trading programmes in four municipalities (Beijing, Shanghai, Tianjin and Chongqing), two provinces (Guangdong and Hubei), and one city (Shenzhen). Lessons learned from these pilot programmes are to pave the way for the national ETS. Once China's national carbon market has been established, China is likely to seek to link it with other ETS schemes, in particular that of the European Union (EU).