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Subnational Climate Change Policy in China subnational climate change policy in china Harvard Project on Climate Agreements With the support of the Harvard Global Institute In collaboration with Tsinghua University’s Institute of Energy, Environment, and Economy FEBRUARY 2020 Harvard Project on Climate Agreements Subnational Climate Change Policy in China Harvard Project on Climate Agreements With the support of the Harvard Global Institute In collaboration with Tsinghua University’s Institute of Energy, Environment, and Economy February 2020 THE HARVARD PROJECT ON CLIMATE AGREEMENTS The goal of the Harvard Project on Climate Agreements, which was established in 2007, is to identify and advance scientifically sound, economically sensible, and politically pragmatic public policy options for addressing global climate change. Drawing upon leading thinkers from around the world, the Harvard Project conducts research on policy architecture, key design elements, and institutional dimensions of international and domestic climate-change policy. The Harvard Project is directed by Robert N. Stavins, A.J. Meyer Professor of Energy and Economic Devel- opment, Harvard Kennedy School. For more information, see the Harvard Project’s website: www.hks.harvard.edu/hpca. acknowledgements The Harvard Global Institute provided generous support for the preparation of this volume of briefs and for a research workshop in July 2019 upon which the volume is based. Tsing- hua University’s Institute of Energy, Environment, and Economy, directed by Professor Zhang Xiliang, hosted the research workshop; Professor Zhang and his colleagues have collaborated closely with the Harvard Project throughout. The Harvard Project on Climate Agreements receives additional support from the Harvard University Climate Change Solutions Fund; the Enel Foundation; the Belfer Center for Science and International Affairs at Harvard Kennedy School; and the Harvard University Center for the Environment. The closely affiliated, University-wide Harvard Environmental Economics Program receives support from the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School; BP; Chevron Services Company; and the Enel Endowment for Environmental Econom- ics at Harvard University. Previous sponsors of the Harvard Project on Climate Agreements include: The Ash Center for Democratic Governance and Innovation at Harvard Kennedy School; Christopher P. Kaneb; ClimateWorks Foundation; the Doris Duke Charitable Foundation; the International Emis- sions Trading Association (IETA); the James M. and Cathleen D. Stone Foundation; the Qatar National Food Security Programme; and Shell. citation information Stavins, Robert N. and Robert C. Stowe, eds. Subnational Climate Change Policy in China. Cambridge, Massachusetts: Harvard Project on Climate Agreements, February 2020. The views expressed in Harvard Project on Climate Agreements discussion papers and edited volumes are those of the author(s) and do not necessarily reflect those of Harvard Kennedy School or of Harvard University. Harvard Project publications have not undergone formal review and approval. Such papers are intended to elicit feedback and to encourage debate on important public policy challenges. Copyright belongs to the author(s). Publications may be downloaded for personal use only. table of contents Introduction Robert N. STAVINS Robert C. STOWE English 1 Chinese 4 Compilation of Key Points English 7 Chinese 15 Overview and Framing: Climate-Change Policy in China Subnational Climate-Change Policies in China ZHANG Xiliang 25 ZHOU Li Ten Drivers of Climate Policy Making in China Ye QI 27 Xiaofan ZHAO Institutional Perspectives Creating Subnational Climate Institutions in China Michael DAVIDSON 39 Subnational Implementation Pathways for China’s National Gørild HEGGELUND 41 Pricing System: Challenges and Opportunities China’s Low-Carbon Policies and Results from a Regional TAN Xianchun 45 Case Study More Sticks and Fewer Carrots? Looking Ahead to Implementation Christine WONG 49 of Environmental Policy Under the “New Normal” Emissions-Trading Systems in China: Subnational and National Lessons for National Policy Design from the Pilots Have China’s Emissions Trading Pilots Been Effective? A Multi- Shaozhou QI 55 Dimensional Post-Assessment Preliminary Considerations for Carbon-Pricing Policy Based TIAN Qi 59 on Experience with Hubei Province’s Carbon Market Guangdong’s Emissions-Reduction Progress and Innovative ZENG Xuelan 61 Policy Measures The Fate of the Pilot ETSs under a National Pricing System Coexistence or Obsolescence? The Fate of China’s Emissions- Valerie J. KARPLUS 67 Trading Pilots Under a National System Designing and Implementing China’s National ETS Challenges for China’s National ETS Pu WANG 73 Assessing Regional Implementation Pathways Toward a WU Libo 77 Nationwide Emissions-Trading System in China Accelerating the Establishment of China’s National ETS ZHANG Jianyu 81 China’s National ETS: Impacts on Costs in the Power Sector Fei TENG 85 Comparative Perspectives on Subnational Policy India and Subnational Climate Change: An Emerging Discourse Radhika KHOSLA 89 Subnational Carbon-Pricing Policy in the United States Robert N. STAVINS 93 The Evolution of Carbon Pricing Across Canada: Lessons for Katie SULLIVAN 97 Subnational Climate-Change Policy in China Ellen LOURIE Author Biographies 103 Workshop Agenda and Participants 111 introduction Climate change is a global commons problem and therefore necessitates cooperation at the highest jurisdictional level – that is, international cooperation among national governments – if it is to be adequately addressed. Both national governments and subnational governments can significantly advance efforts to mitigate climate change. Provinces and municipalities around the world have indeed undertaken initiatives – sometimes working together across national bound- aries – to reduce greenhouse-gas emissions. This includes jurisdictions in the largest-emitting countries – China, the United States, and India – as well as in the European Union. This volume examines subnational climate-change policy in China – including how Chinese provinces and municipalities work with the central government to implement policy. The volume focuses to a considerable degree on carbon-pricing policy in China, including how China’s subnational (pilot) emissions-trading systems can inform the emerging national carbon- pricing system. The briefs in this volume draw on presentations and discussion at a research workshop organized by the Harvard Project on Climate Agreements in Beijing on July 18 – 19, 2019. The workshop was hosted and co-sponsored by Tsinghua University’s Institute of Energy, Environment, and Economy, directed by Professor Zhang Xiliang. Workshop participants included 24 researchers and practitioners from China, Australia, Canada, India, Norway, the United Kingdom, and the United States. Chinese participants were based in Guangdong Province, Hubei Province, and Shanghai, as well as Beijing. The agenda and participant list for the workshop are included at the end of the volume. This volume – and the July 2019 workshop – are part of a larger initiative of the Harvard Project on Climate Agreements examining and comparing subnational climate-change policy in China, India, the United States, and Canada. The Harvard Project is conducting a similar workshop in New Delhi in the summer of 2020 and will release a volume of briefs on subnational climate- change policy in India in early 2021. This volume begins with an overview and framing, first in a brief by Zhang Xiliang and Zhou Li that details policies adopted by Chinese provinces and municipalities to address climate change. Ye Qi and Xiaofan Zhao then describe what they see as the most important drivers of climate- change policy in China, providing context for the volume. Next, institutional perspectives are provided in four briefs by experts on center-provincial insti- tutional dynamics in China, with applications to climate-change policy. Michael Davidson explores China’s “quasi-federalist” system, and discusses how this system might be leveraged to develop effective institutions for addressing climate change.1 Gørild Heggelund focuses on 1 Davidson explores this topic in more depth in his paper – also released by the Harvard Project on Climate Agree- ments: “Creating Subnational Climate Institutions in China.” December 2019. www.belfercenter.org/publication/ creating-subnational-climate-institutions-china. HARVARD PROJECT ON CLIMATE AGREEMENTS » 1 China’s national emissions-trading system (ETS), concluding that, among other things, “Capac- ity building at the subnational level is…needed to strengthen understanding of how emissions trading works.” Tan Xianchun provides a concise yet detailed analysis of China’s administrative systems and procedures for addressing climate change – both carbon pricing and other approaches to reduc- ing emissions, including the results of modeling that estimates the potential impact of a range of “[l]ow-carbon measures and policies” in Chongqing municipality and Guangdong Province.2 Providing the final institutional perspective, Christine Wong discusses how the implementation and enforcement of environmental policy in China have evolved over the last decade. She finds that although the central government places greater emphasis on environmental policy than in the past and has provided considerable financial support for implementation and enforcement, renewed financial constraints in a period of low economic growth may prompt subnational
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