Reports & Papers

Guangdong Province ranks first in economic output among China’s provinces and will play a major role in achieving China’s national climate-change goals. This paper examines the progress of Guangdong Province’s carbon dioxide emissions trading system (ETS) in reducing emissions; design features of the system; challenges it faces with regard to further development; and its relationship to China’s new national ETS.

China’s emissions trading system (ETS) for carbon dioxide (CO₂) will become operational in mid-2021. This paper describes the trading system’s history, design, rules governing implementation, and anticipated developments over the next decade. The ETS is expected to support China’s goals of reaching peak CO₂ emissions by 2030 and of achieving carbon neutrality by 2060.

In this report, we propose a market reform pathway for Yunnan that is both feasible and applicable to address some of these challenges immediately, while aiming for a standard design based on well-documented international experience. Our proposal includes at its heart a pay-for-performance monthly capacity auction that can help cover revenue deficiencies in the energy market. Building on international experience with capacity markets, this approach provides incentives for availability when generation is needed most and is compatible with the adoption of a single energy market for all electricity resources. Out-of-market payments to cover stranded costs of certain firms can thus be minimized. Finally, engaging consumers in both these energy and capacity markets can create high-powered incentives to shift consumption to low-cost months and hours, benefitting the entire province.

The ongoing COVID-19 pandemic is upending our lives and the global economy in ways unimaginable until recently. While the overall impacts are still difficult to quantify, ramifications are sure to be felt for decades to come. Providing secure, reliable, and affordable resources for all without causing devastating environmental consequences is perhaps the greatest challenge of the 21st century. But the pandemic has significantly altered dynamics and changed priorities. How is this impacting the quest for sustainability?

In this paper we analyze these challenges by focusing on the plastic industry. There is no doubt that plastic has molded society in many ways that make our lives easier and safer, but it has also created a global environmental and sustainability crisis. In order to curb our addiction to plastic, the world had been waging a war against virgin plastic, but the pandemic has turned an enemy into a much-needed ally. How can we leverage the advantages of plastic without contributing to the world’s environmental crisis? This dilemma poses a significant challenge, but also opens an opportunity to address sustainability at a systemic level through circularity and the transition to low-carbon alternatives to petroleum-based plastics.

This paper focuses on China and the potential role of renewable hydrogen in accelerating its transition to a low-carbon economy. Our research goal is to provide policymakers and other stakeholders the means to make informed decisions on technology innovation, policy instruments, and long-term investments in enabling infrastructure.