The Rise of Carbon Markets in China: Established design principles - novel practices

In their current 12th Five-Year Plan (2011-2015), China has published a climate target  to cut their carbon intensity (carbon emissions per GDP) by 40-45% below 2005 levels by 2020. In order to achieve this target China will start seven regional carbon pilot schemes in 2013 in the provinces Guangdong and Hubei and five cities (Beijing, Chongqing, Shanghai, Shenzhen, Tianjin) with the aim to test various options to inform the design of a national carbon trading system. Chinese Universities will play a major role in the policymaking process. This project aims to foster the collaboration between UNSW and several leading universities in China and other institutions actively involved in the area of carbon market design.

Carbon markets are designer markets: governments create and can change the rules. There is, therefore, an enormous amount of flexibility in how such markets are structured, which allows them to be adapted to fit specific circumstances. Carbon markets have so far been established in countries such as in the European Union (EU) and recently in Australia. China has been a major player in the International Carbon Market which allows countries without reduction target to take part through the Clean Development Mechanism. This project will be an opportunity for both UNSW and Chinese Universities to address the dearth of English literature on Chinese carbon markets and explore the differences to existing carbon markets in Australia and the European Union. It will also facilitate exchange of graduate students, in order to learn from each other experiences in the design process and nurture close, lasting relationships with Chinese Universities, particularly Tsinghua and Fudan University. In 2013 the project will have the following activities:

1) Launch the project at the Australia-China Climate Change Forum and separate workshop prior to the Forum with a focus on carbon market design (the presentations can be found here)

2) Facilitate exchange between UNSW and Chinese academics

3) Host two symposia in China at the end of 2013, one in Shanghai, and another in Beijing. 

Project team

Regina Betz
Maria Balatbat
Iain MacGill
Xinyang Wei
Peiyao Shen


Event Presenter Type Research area Location Date
Distributional Effects of the Australian Renewable Energy Target via Wholesale, Retail Price Impacts Iain MacGill , Johanna Cludius, Samuel Forrest Workshop Electricity Markets & Restructuring, Large-scale Renewable Energy International Energy Workshop (IEW), Beijing, China Wednesday, June 4, 2014
Reflections on China's carbon markets Dr David Tang Seminar Emissions trading Room G22 (Ground Floor), Tyree Technology Building, Kensington Campus, UNSW Thursday, April 3, 2014
China-Australia Carbon Market Development Expert Symposium Various Workshop Emissions trading LG05, Tyree Energy Technology Building, UNSW, Kensington, Sydney Friday, February 14, 2014
Modelling the effect of emissions pricing on electricity sector investments in China Iain MacGill Public forum Electricity Markets & Restructuring, Emissions trading AARES Conference – mini-Symposium on Emissions Trading in China, Port Macquarie Wednesday, February 5, 2014
China-Australia Carbon Market Design Expert Workshop: Allocation Approaches and lessons learnt so far Various Workshop Emissions trading Institute of Energy, Environment and Economy, Tsinghua University, China Saturday, October 12, 2013
China-Australia Carbon Market Design Expert Workshop Various Workshop Emissions trading School of Economics, Fudan University, China Wednesday, September 11, 2013