Research On How To Build A Sino-ETS Under Cap-And-trade Policy

In order to honor the carbon intensity lowering down promise that China made on the COP 15 Copenhagen,the State Council of People's Republic of China released "The Program of Control of Greenhouse Gas Emission during the 12th Five Year Plan Period" in 2011.In order to ensure the accomplishment of this Green Gas Emission control target this program is putting forward to establish sub-national ETS pilots,to set a mechanism based on a cap-and-trade(allowance)strategy,to formulate corresponding regulations and management scenario and to design allowance allocation plans.The State Council further released "The Program of Control of Greenhouse Gas Emission during the 13th Five Year Plan Period" in 2016 which cleared that the Sino-ETS will be launched in 2017.On such a background,there will be certain theoretical and practical significance to do research on how to establish a Sino-ETS and to design its market framework.Based on the Pollutant Emission Theory,General Equilibrium Theory and Sustainable Development Theory which are within the Theory of Low Carbon Economy,by using the method of qualitative analysis and quantitative analysis this paper profiled the development of the international carbon trading market and the other countries' ETS framework design.The current status of China's carbon trading market and the effect factors of the Sino-ETS are analyzed specifically.An Environmental—carbon trading CGE model was designed to model the operation of Sino-ETS and further got some conclusions of the relationship between Sino-ETS and China's GDP development as well as its environment.Then it also solves the cap target setting problem.After that some suggestions are made on how to design the market framework of Sino-ETS.Main conclusions are as follows:Firstly,how to build a Sino-ETS was established as the research target after a thorough review of the relative literatures both domestic and abroad.Several vital concepts related to this research are defined such as cap-and-trade policy and allowance,etc.The theory of pollutant emission and the General Equilibrium Theory and Sustainable Development Theory which are within the Theory of Low Carbon Economy constructed the theoretical basis of this research.The policy development of the international carbon emissions trading market path has been outlined and the future trend of the international carbon emissions trading market also been predicted which could help us to secure the place of Sino-ETS.Comparisons are made between two high-profiled carbon emissions trading systems,the EU's carbon emissions trading system(EU ETS)and Australia's carbon emissions trading system.The system framework design and trading mechanism and operation could provide useful suggestions.Secondly,this paper analyzed the current status of China's carbon emissions trading system,especially on the seven regional pilots.It is found that these pilots are the pioneers of the Sino-ETS and the framework of the whole market has been established to some certain extent.But there are still several factors which could affect the Sion-ETS establishment,such as the cap target and allocation of the allowances;how to issue the allowances to the enterprise who are included in the ETS;how to improve the framework of the ETS which involves many details such as the diversification of trading subjects and objects,the design of the trading mechanism and how to build the whole supporting system efficiently.Thirdly,an innovative environmental-carbon trading CGE model was built up to analyze a simulative Sino-ETS in 2010.This model solved the most crucial issues of the Sino-ETS which includes the cap target setting combined with the shadow price of the allowance and on the other hand it unveiled the final economic and environmental impact of the operation of this ETS.Here are the main conclusions:under a 10%cap target combined with a emission price at 40 yuan per ton of CO2e could maximize the social welfare both economically and environmentally;Higher cap target could do better work at the environment improvement at the expense of the GDP decline and vice versa.;Higher emission price leads to better environment but when the price reaches a certain level its impact was limited which means it should be contented in a certain level to reach an ideal environment improvement.This paper also conducted a multiplier analysis based on SAM which could further suggest that there will be minimal impact on the structure of energy consumption of the targeted enterprise.How to improve the energy using efficiency is more important than the energy using structure adjustment.Finally,some suggestions are made on how to build a Sino-ETS which stick to the rational cap target set up,allowance management and how to diversify the market participants and trading products,how to standardize the trading mechanism to achieve the economic and environmental equilibrium with the basic principles as efficiency,safety,innovation and harmony.