Consideration of some key issues of carbon market development in China

The global carbon market has developed rapidly with two significant trends of globalization and financialization.Deriving economic interest is a nation driven-force behind the international climate negotiation and carbon market.According to deeply analyzed relationships between the carbon market and the key subjects of the climate negotiation,this article reveals that promoting the development of the global carbon market is one of the core interests of developed nations.Based on the background of international carbon market development and domestic carbon market pilots,four suggestions to the key issues of China’s carbon market are provided.The first is that the goal of China’s carbon market should be in line with and contribute to the national objectives and policies addressing climate change.The second is that the Chinese carbon market should mainly target the emission reduction of production-sectors,and contribute to their upgradation and transformation.The third is mat the development of the nation-wide carbon market in China should first take the principle of unbalanced regional development into consideration.The fourth is that linking China’s carbon market to the international market should keep steps in line with international opening-up of China’s financing system.     

China's Voluntary Mitigation Target and Road of Low-carbon Development

China is going through a rapid development stage of industrialization and urbanization.Although tremendous achievements have been made in the aspects of energy conservation,improvement of energy effectiveness and development of new and renewable energies,because of the rapid development of economy,it is difficult to change the huge total amount and fast increase of CO2 emission in the near future.China has to confront the tough challenge to address global climate change.China plans to reduce carbon intensity,that is,CO2 emissions per unit GDP,by 40 to 45% by 2020 compared with the 2005 level.It is a strategic option to coordinate domestic sustainable development with coping with global climate change on the basis of China’s national circumstances,representing the core content and key measures for transforming development pattern and realizing low-carbon development.To achieve the target,more capital and technology inputs are required for energy conservation and low-carbon development during the twelfth and Thirteenth Five Year Plan period than in the Eleventh Five Year Plan period.In addition,energy conservation achieved by structural adjustment,industrial upgrading and product value-added improvement is also expected to play a greater role.Therefore,China should strengthen technological innovation,make greater efforts to transform the development pattern,take advantage of the synergistic effect of policies and measures while coping with global climate change and building a domestic tow-oriented society.China should also establish an industrial system characterized by low-carbon emission.Then China will ultimately achieve a win-win situation in both domestic sustainable development and coping with global climate change.     

Actively Dealing with Climate Change and Striving to Strengthen the Capability of Sustainable Development

Either from the perspective of the finite supply capacity of global resources and energy,or from the perspective of global environment restrictive conditions,developing countries can not repeat the old development road of developed countries,either in view of the international pressure China is currently facing,or in view of China’s own resources endowment and stages of development,we must actively face such a challenge of climate change.We must recognize that the issue of climate change may be a great restraint to the present and future eco-social development,and may also be an important driving force and new opportunity to push forward the transformation of development pattern,to take a new road of industrialization and to realize sustainable development.This demands us,on the one hand,to take the Scientific Outlook of Development as the guide to make efforts to control the emission of greenhouse gases and continuously increase the capability of adapting to climatic change,and set up the overall plan to respond to climate change of our country,and on the other hand,we should unswervingly take the road of sustainable development,save energy,optimize energy structure and strengthen biological protection in slowing and adapting to climate change.     

An Interpretation of the Influential Power of China Development

Through the analysis on China’s economic development, utilization of resource environment and soft power, a basic judgment was made of the influence of "China development". The overall influential power of China development on international community was misunderstood. What we see is the role of "China Factor" in different fields. In the process of economic globalization, what economic system of capitalist market has seen is "China’s cheap labor", "China’s loose economic system environment", "earlier abuse of unlimited resource environment", "China’s broad consumption market" and "demographic dividend". In global or Asian financial crisis, what other countries valued was China’s "foreign currency" accumulated over the years. In global governance or crisis management, what international community expected was "China’s obligations and responsibilities" without the right of speech, etc.. All these are the "passive" roles produced by "a single factor" in definite fields. The active and initiative role China will play in international community still needs time and the continuous efforts of several generations. China once was a big country that had significant influential power on the world, and China’s renaissance is a normal process of development of things. What excessive talks about its influential power reflect may be the lack of China’s influence.     

An in-depth view of climate change:addressing climate change while making a transition on the development mode

While fossil fuels greatly contribute to human society,they pose great challenges to natural resources,the environment,and climate change.Developed countries,like the United States,formulated strategic measures to ensure their sustainable development and leading positions in the world.These measures include new green policies,development of shale gas,revitalization of nuclear power,energy independence,reindustrialization,and new low-carbon development based on a combination of Internet technology and renewable energy.Developing countries are also trying to introduce balanced strategies of poverty alleviation and sustainable development.Globally,industrial civilization is being transformed to ecological civilization and green,low-carbon development is a global trend.Addressing climate change provides new strategic factors to further this development.China should take substantial actions to realize sustainable development in a new road:China is in the critical stage of changing its development mode,so it is vital to choose an appropriate development path.This extensive development comes at the high price of consuming too much resources and scarring the environment.Mitigation and adaptation strategies for addressing climate change can help the transition of development.Based on the analysis of the development data of developed countries,the author introduces the concept of"two-type developed countries"with an understanding that not all developed countries must take the same development mode.He also holds the view that China should achieve modernization in a more energy-saving and more carbon-efficient manner compared with that of two-type developed countries.An analysis of"two competitions"that China is facing shows that changing the developing mode is urgent and China should grasp this opportunity in the next five to ten years,which is a key period for this transition.This paper discusses the low-carbon development goals and the three-step process.Low-carbon development does not necessarily restrict economic development.It,however,can expedite the transition of the development mode and this is a low-carbon and green development path.Transition of the development mode includes implementation of China’s green and low-carbon energy strategies,low-carbon society construction,development of agriculture and forestry,garbage sorting and utilization,innovation of urbanization,etc.Improvement of national infrastructure construction includes water safety,environment and climate monitoring system,intelligent energy web,basic database,etc.Addressing climate change can significantly improve the nation’s basic research level.In summary,it mitigates backward production capability,extensive development,and environmental damage while promoting technological advancement,scientific development,and ecological civilization.     

Competition gives way to cooperation:rethinking Sino-Indian relations in climate change negotiations

In global climate change politics,China and India have worked closely with each other,representing two big emitters from the developing world.This article reviews Sino-Indian cooperation during four UN climate change negotiations from 2009 to 2012.Their collaboration echoed the perception of neorealism in international relations(IR) studies that states will seek "external balancing" for maximizing national "relative gains".China and India are expected to continue their cooperation on climate change issues when sharing the same structural position as big economies and big emitters,the same pressure in carbon emission reductions,and the same goal of improving living standards for their citizens.Encountering the devastating impacts of climate change and the deadlock in responsibility division in current global climate change governance,this work seeks to shed light on the evolving multilateral governance environment and its complex implications for Sino-Indian relations from an IR perspective.     

Geopolitics of global climate change and energy security

Currently,the problem of climate change is already far beyond the category of scientific research,and it affects the economic operation mode,interests pattern,and geographical relationships and becomes the focus of global governance.During the transition period of the international economic and social development and the critical transformation period of the world geopolitical pattern reorganization,China’s industrialization is still at the intermediate stage,and tackling with climate change is also China’s internal demand under this development stage.With more influence of climate change on national competitiveness,climate change and geopolitics present complex multiple relations,and climate change in the era of geopolitical landscape gradually affected the national strategy and diplomacy.This article offered some relevant suggestions based on evaluating the new geopolitical characteristics of climate change:(1)weighing of interests and properly handling the complex relations among major powers during international climate negotiations;(2)strengthening risk judgments and actively cooperating with the United States and the European Union on energy and climate change;(3)relying on the"One Belt(Silk Road Economic Belt)and One Road(twenty-first century Maritime Silk Road)"to ensure China’s energy security and actively participating in the global energy governance;(4)strengthening the"south-south cooperation"mechanism innovation and increasing the investment.     

The Concept and Theoretical Implications of Carbon Emissions Rights Based on Individual Equity

Climate change has become a hot topic in international environmental negotiations.For post-Kyoto international climate regime negotiations,many countries have proposed a variety of frameworks to share the emission reduction responsibilities and allocate carbon emission rights,and have tried to quantify the emission reduction obligations of all countries based on the perspectives of international equity and individual equity.In this paper,the authors have distinguished the concepts of carbon emissions rights based on these two perspectives respectively,have analyzed the relationship between carbon emissions per capita and economic development,and have calculated and compared the proportion of cumulative emissions per capita of different countries in history and future,and then authors conclude that emission reduction obligations should be allocated based on each country’s conditions,including historical emissions,development stage,and future demands.Developed countries should take the initiative to significantly reduce their emissions because they have already accomplished their industrialization process.However,developing countries are still in the process of industrialization,which requires more emission rights to meet their development needs.For China,the concept of carbon emissions based on individual equity can be used as a theoretical tool for the allocating the international carbon emissions rights.     

Target Gap of Emission Reduction for China:Analysis based on Elastic Decoupling

The present paper analyzes historically the relationship between carbon emission and economic development by different stages through adopting elastic decoupling methods and Tapio evaluation criteria along with a comparison with the national Five Year Plans. The analysis shows that the influencing factors to the relationship between carbon emission and economy in China are different, and economic development and carbon emission have less connection in the recent 30 years of reform and opening-up in China. It is a difficult task to realize the promise that we will reduce carbon emission by 40%-50% in 2020 based on the data from historical experience and different expectations for economic development from economists. Through constructing the calcula- tion model of carbon emission intensity gap according to different development scenarios, the analysis shows that economic growth, infrastructure investment and further development of industrial-ization are the main drivers to the increase of carbon emission, technological progress, and particularly, the reduction of energy consumption is the primary means to reduce carbon emission in China. It is imperative to transform the economic growth pattern, and it is a grand task to perform and there is a long way to go for China to maintain economic growth and reduce carbon intensity.     

Towards a new climate economics:research areas and prospects

International cooperation to address climate change now stands at a crossroads.With a new international regime for emissions reduction established by the Durban Platform, "New Climate Economics(NCE)" has become a research hotspot.The need for urgent action to combat climate change has prompted discussion on reforms of economic growth patterns and the energy system.The industrial civilization,therefore,now faces a transition towards a new pathway for ecological sustainability.NCE explores new economic concepts,theories,and analytical methods to design a balanced pathway for sustainable growth and emission reduction.Instead of getting trapped in discussions on allocation of emission reduction responsibilities and obligations among countries,NCE pays more attention to developing win-win multilateral cooperation mechanisms that facilitate collaborative RD and knowledge sharing.In addition,NCE studies incentives for low-carbon transition,turning carbon emission reduction into a domestic need for countries to increase their international competitiveness.To achieve the 2°C target,most countries around the world face challenges of insufficient emission allowances to cover expected emissions associated with their projected economic growth.As carbon emissions rights becomes an increasingly scarce resource,increasing the carbon productivity of the economy turns to be the critical path to address the dilemma of green or growth.NCE studies the historical evolution of carbon productivity for countries at different development stages as well as ways to enhance such carbon productivity.This type of study provides invaluable lessons for emerging economies to reach their own emission peaks without losing the momentum of growth.Replacing fossil fuels with new and renewable energy has proven to be an inevitable choice for reshaping the energy system and addressing climate change- it has already become a global trend.NCE studies incentives for new energy technology innovation and deployment provided by carbon pricing,and sheds light on the co-benefits of climate change mitigation,such as resource conservation,environmental protection,and energy security.The role of carbon pricing in promoting intemational RD cooperation and technical transfer will also be studied.The shift in consumption patterns is another key factor enabling a low-carbon transformation.Therefore,NCE also explores the theoretical work on new values of wealth,welfare and consumption,new lifestyles in the context of ecological civilization,concepts and implementation of low-carbon urban planning in developing countries,and the impacts of consumption pattern changes on social development,material production,and urban infrastructure construction.     

Impacts of climate change in rapidly urbanizing region-a case study in Hangzhou(China)

Climate change is expected to be a major driving force of landscape in the coming decades.It will have a multitude of potential impacts that vary in intensity and effect according to region and sector.In the context of global warming,the climate of China has changed significantly in the recent 100 years.The reason for climate change in China is mainly due to irrational land use caused by human activities,which chiefly results in the rapid industrialization and urbanization process.Based on an assessment model,this research represents a picture of the impacts of climate change in six districts of Hangzhou region.The aim of this paper is to conclude,on the one hand,some of Hangzhou sensitivities in relation to the primary effects of climate change.On the other hand,a reflection is made on a methodology to formulate preconditions on a scientific basis for further research by design of integrated adaptation options for the future spatial developments in function to upgrade Hangzhou resilience in relation to climate change challenges.     

Climate capacity:the measurement for adaptation to climate change

This article proposed the concept of"climate capacity"as a way of measuring human’s adaptiveness to climate change.This article also focused on the related concepts like ecological carrying capacity,water resources carrying capacity,land carrying capacity as well as population carrying capacity.The concept of climate capacity was articulated against a background of global climate and environmental change.Essentially,China’s efforts to adapt to climate change was a matter of improving climate capacity,which is the ecosystem as well as the frequency,the intensity and the scale of human’s social activities that the climatic resources of a particular geographic area were supposed to support.The climate capacity has two components.One is the natural climate capacity,which includes temperature,sunlight,precipitation,extreme climatic events,etc.The other is the derived climate capacity,which includes water resources,land resources,ecological systems,climatic risks,etc.The climate capacity can be developed or be transferred between regions by taking engineering,technology or regime-based adaptive measures.However,these adaptive measures must be implemented under the principle of economic rationalism,ecological integrity,climate protection,and social justice.It is expected that by combining the climate capacity and its threshold value with the assessment of climate change risks,we are able to predict the optimal population carrying capacity and the scale of socioeconomic development,and furthermore,provide policy support for the socioeconomic development strategy and adaptive planning.In the regions with high climate capacity,there is a symbiotic relationship between adaptation and socioeconomic development.But,in the regions with limited climate capacity,irrational development may further damage the environment.Taking the Yangtze River delta,a region with high climate capacity,and a region of Ningxia,a region with limited climate capacity,as illustrative examples,the authors of this article analyzed the policy implications of climate capacity and further made suggestions on the problems of capacitylimited adaptation and development-driven adaptation.This article argued that the concept of climate capacity can not only be used as an analytical instrument of climate change economics,but also it can provide research support for planning regional adaptation and development with climate change impact and risk assessments.     

Energy revolution:for a sustainable future

The discovery and use of fossil fuels have not only helped the evolution of human society from agricultural civilization to industrial civilization,but also caused serious environmental and climate problems.The earth is calling for a sustainable future,and a change from industrial civilization to ecological civilization based on the new"energy revolution".A macroscopic quantitative analysis of China’s environmental capacity and climate capacity shows that China is in urgent need of changing the extensive developing mode and having an energy revolution.It is foreseeable that fossil fuels will remain the most consumed source of energies in China now and in the next few decades.Although the efficient and clean use of fossil fuels are very important,this is not an energy revolution or the fundamental solution to environmental and climate problems.Unconventional gases including shale gas play an important role in the mitigation of environmental problems and climate change,but"shale gas revolution"or"shale gas era"is not suitable to China since the proportion of natural gas in primary energy structure in China can only be increased by a maximum of 20%.The transition of Chinese energy structure from fossil-fuels-dominating stage to multiple-energy-sources stage and then to a nonfossil-fuels-dominating stage is the inevitable future,with the help of great contribution from renewable energy and nuclear energy.Among renewable energies,the proportion of non-hydro renewable energies will gradually increase.Improvement of their market competitiveness(economic efficiency)relies on technological innovation.Renewable energies will be the main energy source for the earth in future.Despite the impact of the Fukushima nuclear disaster,the whole world,including China,will not give up nuclear energy development.Safe,steady,and large-scale development of nuclear power is a rational choice of China.Transition from nuclear fission power plant to nuclear fusion power plant is the inevitable future.Nuclear energy will be a sustainable energy source and another main energy source of the earth in future.China needs to enhance energy security consciousness,promote energy saving,and change the energy supply-demand patterns,that is the transition from"meet a too-fast-growing demand with an extensive supply"to"meet a reasonable demand with a rational supply".All countries need to work together to address global environmental problems and climate change.Energy revolution is the foundation for a sustainable future.With a wide range of international cooperation,the win-win cooperation is the only way of overcoming these challenges.     

Impact of Climate Change on Urban Agglomerations in China’s Coastal Region

Climate change and urbanization issues are the two key factors that make humans liable to be affected by disasters, which are overlapped in urban agglomeration. The five big urban agglomerations of China with strong economic power are the important engines for national economic and social development. However, being in the sea-land mutual interaction belts with a vast hazard-bearing body, they are affected by sea-land compound disasters, and are liable to suffer heavy disaster losses with climate change. It is suggested that government departments concerned should fully recognize the impact of climate change on coastal urban agglomerations, propose strategies as soon as possible, and integrate the impact of climate change and adaptation countermeasures into the various kinds of social-economic development plans for coastal urban regions.     

Review and Prospect of the UN Efforts for Sustainable Development

The present paper reviews the UN important efforts to promote global sustainable development in the chronological order since UN Conference on Human Environment in 1972, and analyzes the progress and gap. The results show that the UN system has made great efforts for global sustainable development since the UN Conference on Human Environment, especially since UN Conference on Environment and Development, promoted the formation of important consensus and multilateral international conventions on many fields, boosted the development of partnership in the field of sustainable development, and accelerated actions for sustainable development of many countries and regions. However, at present, the progress made is still far below the level required, prominently reflected in the slow progress toward the millen- nium development goals, the difficulties in negotiations in the field of environment and development, insufficient fulfillment of international agreements and conventions, and undesirable effects of partnership in the field of sustainable development. Based on these, the paper puts forward four suggestions for UN Conference on Sustainable Development in 2012(Rio+20):(1) to revitalize the "spirit of Rio" and accelerate the implementation of existing politi- cal commitments; (2) to make new political commitments focusing on climate change and other major global challenges under the Rio principles; (3) to lay out a blueprint of green economy under the Rio principles; and (4) to promote South-South cooperation as the focus of international cooperation.     

Dynamic Changes, Regional Differences, and Influencing Factors of CO2 Emission Performance in China

This paper proposes to use DEA models with undesirable outputs to construct the Malmquist index that can be use to investigate the dynamic changes of CO 2 emission performance.With the index,the authors have measured the CO 2 emission performance of 28 provinces and autonomous regions in China from 1996 to 2007;with the convergence theory and panel data regression model,the authors analyze the regional differences and the influencing factors.It is found that the performance of CO 2 emissions in China has been continuously improved mainly due to the technological progress,and the average improvement rate is 3.25%,with a cumulative improvement rate of 40.86%.In addition,the CO 2 emission performance varies across four regions.As a whole,the performance score of eastern China is the highest.The northeastern and central China has relatively lower performance scores,and the western China is relatively backward.The regional differences are decreasing,and the performance of CO 2 emissions is convergent.The influence of some factors on the performance of CO 2 emissions is significant,such as the level of economic development,the level of industrial structure,energy intensity,and ownership structure.The influence of some factors,such as opening-up to the outside world,on the performance of CO 2 emissions is not significant..     

Compromises of Bali Roadmap

The Bali Roadmap, as the breakthrough on intergovernmental negotiation of climate change mitigation, having brought United States on track, is still a result of compromises. The major compromises of the Bali Roadmap are centered around three issues of quantifying emission reduction targets, developing countries＇ obligations as well as quantifying developed countries＇ financial assistance in developing countries＇ capacity building on climate change. It is found that the rationalities behind these compromises are the national interests. Due to the fact, achieving cohesion among all nations in climate change actions is very difficult. Therefore, the Bali Roadmap may lead to a tough way with distant hope. However, technology innovation and well-designed economic instruments would be helpful and supportive for further international negotiation and cooperation.     

Energy and economic impacts of an international multi-regional carbon market

The establishment of a global multi-regional carbon market is considered to be a cost effective approach to facilitate global emission abatement and has been widely concerned.The ongoing planned linkage between the European Union’s carbon market and a new emission trading system in Australia in 2015 would be an important attempt to the practice of building up an international carbon market across different regions.To understand the abatement effect of such a global carbon market and to study its energy and economic impact on different market participants,this article adopts a global dynamic computable general equilibrium model with a detailed representation of the interactions between energy and economic systems.Our model includes 20 economic sectors and 19 regions,and describes in detail 17 energy technologies.Bundled with fossil fuel consumptions,the emission permits are considered to be essential inputs in each of the production and consumption activities in the economic system to simulate global carbon market policies.Carbon emission permits are endogenously set in the model,and can be traded between sectors and regions.Considering the current development of the global carbon market,this study takes 2020 as the study period.Four scenarios(reference scenario,independent carbon market scenario,Europe Union（EUh-Australia scenario,and China-EU-Australia scenario） are designed to evaluate the impact of the global carbon market involving China,the EU,and Australia.We find that the carbon price in the three countries varies a lot,from $32/tCO₂ in Australia,to $17.5/tCO₂ in the EU,and to $10/tCO₂ in China.Though the relative emission reduction（3%） in China is lower than that in the EU（9%） and Australia（18%）,the absolute emission reduction in China is far greater than that in the EU and Australia.When China is included in the carbon market,which already includes the EU and Australia,the prevailing global carbon price falls from $22 per ton carbon dioxide（CO₂） to $12/tCO₂,due to the relatively lower abatement cost in China.Seventy-one percent of the EU’s and eighty-one percent of Australia’s domestic reduction burden would be transferred to China,increasing 0.03%of the EU’s and 0.06%of Australia’s welfare.The emission constraint improves the energy efficiency of China’s industry sector by 1.4%,reduces coal consumption by3.3%,and increases clean energy by 3.5%.     

Roles of State Strategy of Adaptation to Climate Change in China

For the adverse impacts of climate change, China government should place the problem of adaptation to climate change on the agenda. It is time to institute and implement a state adaptive strategy to reduce the adverse impacts on economy, community and people＇s health and life by international cooperation and our own endeavor. A state strategy of adaptation to climate change should be closely linked with other current interrelated national strategies, and they should be supplemented and improved by each other. This paper discusses the roles of the state strategy of adaptation to climate change in the state climate change integrative strategy, the environmental protection strategy, and the sustainable development strategy in China. Furthermore, it proposes the main aims of the state adaptive strategy of China.     

Environmental Capital,Negative Externality and Carbon Finance Innovation

In the context of global climate change,the internalization of negative externality,which is brought about by the traditional mode of economic growth,has become an inevitable choice.In order to achieve the internalization,it is necessary to make innovations on the market mechanism and system,find the value of environmental capital,establish a new mode of economic growth based on environmental capital,and then transform the environmental capital,an exogenous factor of economic growth,into an endogenous factor.Of this,the key of market mechanism and system innovation is the financial innovation that is based on environmental capital and negative externality;the government defines the initial property right of environmental resources and establishes environment energy trading market,so as to guide enterprises to trade environmental resources(represented by carbon emission permit trading) based on the Clean Development Mechanism,and to vigorously develop environmental finance and carbon finance.