Many of the environmental policies proposed by China are a response to the dangerous amount of emissions, especially from Carbon dioxide, their main greenhouse gas emitter.
While the rate slowed down over the next few years due to changes in the economy and some climate reform, emissions once again shot up to keep up with the demand for Air Conditioners.
[2] This mass production using coal dates back to the Seventh Five-Year Plan (1986–1990) where China's division of labor was based on what region specialized in.
As a result, the provinces in the coastal central areas, which are more industrialized, were the main driving forces of China's economy.
Along with the economic growth rhetoric, other provinces, especially the undeveloped, started to adopt the industrial work ethic and along with it, more coal consumption.
Unfortunately, because some of these underdeveloped provinces like Shaanxi and Sichuan do not specialize in industrial work, their production compared to central China is severely lacking when it comes to the economy.
By using the cap-and-trade model, the same molecules that created a climate crisis in China are the ones that will lead towards pollution reduction and environmental preservation while maintaining the growing Chinese economy.
[6] The goal was to develop new methods that support China environmentally, economically, legally, socially, and efficiently while giving full transparency and credibility within the Carbon market.
They would achieve this by promoting the agriculture, forestry, and other land use sector (AFOLU) under the Clean Development Mechanism (CDM) to help the impoverished work under their projects and potentially scale to very efficient methods of a cleaner environment.
The first-ever transaction made under the Panda Standard came from Franshion Properties, affiliated with Sinochem Group, under the impression of gaining carbon neutrality.
The plan also wanted to decrease the growth rate of GDP which posed an extra layer of difficulty in trying to lower emissions.
Because of the Eleventh Five-Year plan's overall success, it proved a challenge to have smaller companies, most of which are working energy-efficient, follow suit.
[12] The purpose of setting up ETS's was to control carbon emissions by reducing them and keeping them low while adapting to greener development without substantial damage to GDP growth.
This, in turn, helps the air quality in a lot of cities, especially in Beijing, one of the pilots of the ETS which opened in late 2013.
The first "1" sets the rules of their services, determines the jobs of all shareholders based on their specialty with respect to their rights, and the government watches over operations.
The second "1" acts as the law of the ETS based on the "Interim Measures for the Management of Emissions Trading in Beijing" document where it gives clarification on the duties of each department and verifies all instruction and supervision within the carbon market.
Its main focus is to provide stability in the capital and liquidity within the trading grounds and also keep track of all purchases to make sure each and every one of them is fair and backed by the public.
[14] The focus this time revolved around thermal-fired power plants which are responsible for China's biggest resource consumption: coal.
[12] Trading did not actually happen until July 2021, when $32 million worth of carbon dioxide orders were made on the first day.
These included other greenhouse gases like methane and nitrous oxide, and this is often seen as another policy to keep emissions low.
Now, with the introduction of the National Carbon Trading Scheme, CCER is planning to return in 2022 with more options for energy in hopes of having a much higher volume than before.
[17] Also in 2022, Beijing started plans for a center dedicated to the new CCER in hopes of emission costs being lowered and innovation towards greener technology.
Meanwhile, Beijing, with a lower population and the capital, adopted this change much better, and as a result, losses were not only minimal but soon gone after a few years.
[20] Throughout the 2020s, the main impact of the Seven-Pilots ETS from China's point of view would be the emergence and success of the National Carbon Trading Scheme.
But this is part of China's long-term goals, and only time will tell if the successful integration of all sectors will be smooth, problematic, or might never happen.
[23] In terms of calculating allowance allocation for each pilot, there are two main ways: grandfathering, which goes off on historical data, and benchmarking, which focuses more on efficiency and innovation today.
Furthermore, the people in charge of running each pilot have little to no idea how to move forward with carbon prices, so they looked to other third parties like the local government for help.
Due to Europe's support that started back when the CBEEX was established, China tried to copy off of them without the same resources.
Even though they are on different sides of China, there needs to be some sort of link between all seven knots, or else the liquidity of carbon would decrease.
Because of these confounding variables, it is hard to gauge if the current Carbon prices in each pilot are actually the most efficient ones.