Lessons Learned from Sub-national Emissions Trading Systems

Robert N. Stavins, Director of the Harvard Project on Climate Agreements and A.J. Meyer Professor of Energy and Economic Development, Harvard Kennedy School, prepared this paper on sub-national climate-change policy as background to a research workshop on Guangdong Province’s emissions-trading system. The workshop was conducted June 16–17, 2021, by the Harvard Project and the Research Center for Climate Change, Guangdong University of Technology, directed by Professor Zeng Xuelan.

There are links below to Professor Stavins’ paper, in both Chinese and English.

Professor Zeng and colleagues prepared a second background paper for the workshop, titled “The Guangdong Carbon Emissions Trading Scheme: Progress, Challenges and Trends.” This paper is available, in both Chinese and English, here.

Information on the workshop, including the agenda, participant list, and most presentations, is here. The Harvard Project’s initiative on Guangdong Province’s ETS is supported by Energy Foundation China.

Abstract

Given the global commons nature of the climate change problem, international cooperation is essential, and the highest levels of effective governance — typically countries — should be involved as the key jurisdictions to implement effective GHG mitigation policies. However, if national government action is inadequate or if market failures prevent national policies from being effective, then there are potential roles for sub-national climate policies. Theory and experience of nesting sub-national climate policies within a broader, national climate policy indicate that the interactions between the two levels of governance can be problematic, benign, or positive, depending upon the nature, design, and stringency of the national and the sub-national policies. Of particular concern are situations where the national policies are based on averaging of quantities of emissions, such as with cap-and-trade systems. When the national system is a tradable performance standard, as with China’s national system planned for launch in 2021, the consequences are similar to those with cap-and-trade, but more complex.