China’s Carbon Market: Potential for Success?

Open Access Journal | ISSN: 2183-2463

Article | Open Access

China’s Carbon Market: Potential for Success?


  • Gørild Heggelund Fridtjof Nansen Institute, Norway
  • Iselin Stensdal Fridtjof Nansen Institute, Norway
  • Maosheng Duan Tsinghua University, China


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Abstract:  What lessons emerged during the development of China’s national emissions trading scheme (ETS)? It was launched in late 2017 and started operation in July 2021, beginning with online trading of emissions permits. The preceding decade was used for preparing and testing, including seven pilot markets. It was decided to start with the power sector, the largest-emitting sector, and initially cover coal- and gas-fired power plants. This article offers theory-oriented and empirical contributions to domestic-level learning, and asks what happens after a policy has “landed.” We employ an analytical concept originating from diffusion theory—learning—and view internal learning as a key mechanism. We argue that having a slow and well-prepared start contributes to the potential success of the ETS; further, that the lengthy preparatory period enabled China to address various obstacles, providing a strong basis for success, singly and as part of the national mitigation policy complex. Internal learning has proven crucial to the development of the ETS in China, with the learning process continuing as the national ETS becomes operative. We also discuss the possibilities for linking China’s carbon market with other markets, which should heed China’s ETS experience and emphasize learning.

Keywords:  carbon market; China; Emissions Trading Scheme; internal learning; linking carbon markets

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DOI: https://doi.org/10.17645/pag.v10i1.4792


© Gørild Heggelund, Iselin Stensdal, Maosheng Duan. This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 license (http://creativecommons.org/licenses/by/4.0), which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.