China is already pricing carbon using an emissions trading system (ETS; aka Cap-and-trade) in 7 pilots . Each of these pilots is operational and is already reducing carbon emissions. The Chinese pilots alone raised the percentage of global emissions covered by a carbon market from 8% to 11% . As of October 2014 those pilots had traded 13.75 million metric tons of CO2 and generated 500 million Yuan (£50 million) for the Chinese Government.
Each of the programs has penalties for non-compliance. For example, in the province of Hubei, industrial firms busting their cap lose double the permits they failed to submit from next year’s allowance, and are fined up to three times the market price for each allowance not submitted. In 2016 China plans to merge their pilots and form a national emissions trading system .
- International Carbon Action Partnership. https://icapcarbonaction.com/ April 15, 2015.
- “China Plans National Carbon Market by 2016 Amid Emission Pledge.” Bloomberg Business. Nov 25, 2014. http://www.bloomberg.com/news/articles/2014-11-25/china-plans-national-carbon-market-by-2016-amid-emission-pledge