Inspection and Enforcement in Chinese Carbon Emissions Trading: Progress,Problems, and Prospect

摘要

China is establishing a carbon emissions trading scheme and has initiated a number of pilot projects with robust measurement, reporting, and verification systems and rigorous sanctions for noncompliance. Although the project designs vary, they share a number of features, including favoring self-monitoring, self-reporting, and third-party verification. Policymakers are also considering a program of emissions permits and monitoring, and there are indications that the program will include the authority to impose major financial penalties for noncompliance. Establishing an enforcement system has its challenges, however, particularly around the legality of rules adopted in the pilot projects and the authority of the central and local governmental entities that will be enforcing these requirements. A multi-level enforcement system implemented by central and local authorities that is consistent with the Chinese legal system and a gradual harmonization or centralization of authority may hold promise for developing an effective system.