Chinese Business at The Dawn of its Domestic Emissions Trading Scheme: Incentives and Barriers to Participation in Carbon Trading

Abstract

This article explores the incentives and challenges for Chinese business companies in participating in carbon emissions trading schemes (ETSs). Based on extensive interviews with the business managers and government officers who are currently involved in the ongoing policy experiments of pilot ETS programmes across China, the article identifies factors that either motivate or discourage companies in participating in carbon trading activities. It argues that different business groups, i.e. capped enterprises, uncapped enterprises, and carbon intermediaries, are affected by these factors to significantly different extents in terms of formulating their specific carbon strategies. It also illustrates some factors, such as a lack of stakeholder pressure and fragmented political interests, which have a distinctive Chinese character and are believed will have a fundamental impact on the quality and efficiency of Chinese ETSs in the future.