Adaptive Policy Innovations and the Construction of Emission Trading Schemes in China: Taking Stock and Looking Forward

Harnessing market instruments of climate governance, such as emission trading schemes (ETS) into an authoritarian and highly fragmented governance system like China can be challenging. It requires tremendous efforts from local states for policy experiments and innovations. This paper examines these local adaptive measures to develop pilot ETS around China. The key finding is that these local policy innovations have played an important role to kick off carbon trading activities effectively, by addressing a number of challenges such as highly imbalanced economic and political contexts, very limited emissions data and technological capacity, and low participants’ awareness of ETS. The implications of such policy innovations to the construction of a nationwide ETS system are also discussed. Some of local policy innovations can be legitimised and adopted into the design of national carbon market, while others are more likely appreciated only at initial stage of market development at local level.