Policy Diffusion of the Emission Trading Scheme in China: Progress and Prospects

Abstract

Chinese national emissions trading scheme (ETS) of greenhouse gas (GHG) was scheduled to start simulation trading in the power sector in 2020. Now it is good timing to review its progress and prospect. This study first examines policy diffusion in relation ETSs in China and particularly those for CO 2 emissions, including the causes, determinants, process, and impacts. It argues in a centralized political system with highly and widely differentiated local circumstances, policy diffusion is progressed through a more complicated process, presented as a three-tier process in the paper, illustrating how international arrangement, national jurisdiction, and local administration interact and influence policy-making in a follower’s jurisdiction. China, which is now the biggest GHG emitter, has been preparing to establish a national ETS since 2017. So far, eight sub-national governments have introduced ETS pilot programs to feedback their experiences and to determine best practice for the national scheme. These eight pilots, especially the relatively successful ones, are found to be motivated by a competitive relationship that aims to stabilize its carbon market, which may eventually contribute to the progress of policy diffusion of the ETS in China.