Climate Policy with Chinese Characteristics

As planned, China’s new emissions-trading scheme (ETS) is doing nothing to reduce its emissions.

Launched in July, the ETS encompasses 2,200 companies that operate coal- and natural-gas-fired power plants — facilities responsible for 40 percent of China’s total greenhouse-gas emissions. It builds upon pilot programs in seven delimited regions — including Beijing, Shanghai, and Chongqing — that began in 2013.

On the opening trading day, July 16, 2021, allowances to emit one ton of carbon dioxide swapped for between 50 and 53 yuan ($7.72 to $8.18), roughly equal to the cost of permits in the Regional...