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Achieving Effective Cap-and-Trade Programs to Reduce CO2 Emissions in China

Aug 2016 to Jul 2017

Researcher(s)

Sponsor(s)

Energy Foundation

In recent years China has undertaken several efforts to reduce emissions of CO2 and other greenhouse gases, including the establishment of seven pilot cap-and-trade programs that span several cities and provinces. The nation also has pledged to begin implementing a nationwide cap-and-trade program next year. In collaboration with Richard Morgenstern of Resources for the Future, I am embarking on an initiative to draw lessons from the experience with China’s recent cap-and-trade pilot programs and offer analyses and recommendations related to the design of its forthcoming nationwide program. A key notion underlying this initiative is the idea that the effectiveness of any cap-and-trade program depends not only on the design of the program itself but also on institutional arrangements and the associated incentives of decision makers throughout the economy. For this reason, this initiative focuses on both the design of cap and trade itself as well as the sectoral and institutional reforms that could influence the program’s success. The key element of this initiative is a workshop that will take place at Stanford on Thursday and Friday, January 12 and 13, 2017. It will bring together about 25 researchers and decision makers from China, the US, and elsewhere. Significant participation by researchers and decision makers from China is considered a critical component of the workshop.