Crossing the river by groping for stones: China's pilot emissions trading schemes and the challenges for a national scheme

As the largest emitter of greenhouse gas ('GHG') in the world, China has been considering adopting appropriate environmental policy instruments to reduce its GHG emissions. In addition to the traditional command-andcontrol regulations, a more cost-effective market-based instrument - the emissions trading scheme ('ETS') - is now being tested through specific pilot programs in parts of China. These pilot ETS programs are being implemented in preparation for the rollout of a national ETS in 2016. Given that these programs are approaching the end of the pilot period, it is now of great importance to gain experience and learn lessons from these pilot ETS programs prior to the implementation of a nationwide ETS. This article aims to cross the river between pilot ETS programs and a national ETS by groping for the stones of experience and lessons from these pilot ETS programs. Before reviewing these pilot ETS programs, questions about the necessity and feasibility of implementing an ETS in China are discussed. To provide an overview of the current carbon market in China, a brief comparison of seven pilot ETS programs is made. Then, their strengths and weaknesses are evaluated in terms of design elements and performance. To provide legislative recommendations for the upcoming national ETS, legal challenges from China's current property law and administrative legislation are identified and discussed respectively.