UC Berkeley

In this article, we first review the history of carbon dioxide (CO2) emissions from the combustion of fossil fuels for the People's Republic of China (China). As Chinese regulators have announced efforts to directly regulate CO2 emissions, we review the history of institutions charged with climate regulation in China. Next we review China's existing market-based approaches to emission control in the form of the world's largest effluent fee system for air and water pollutants as well as seven pilot carbon markets. We conclude with a discussion of the issues and challenges ahead in adopting market-based instruments to regulate CO2 emissions in China.