Coping with Climate Change by fostering a carbon trading market

Take Shanghai as an example. The city has extensively explored effective practices and innovation in terms of institutional design, system development and market management, providing important references to the development of a carbon trading market nationwide.<br />
First, establishing sound and robust institutions. In drafting the pilot plan, Shanghai emphasized on the role of market forces and mechanisms. On that basis, policies and management models are designed to let the market play a major role in greenhouse gases control, forming a relatively sound market management system. <br />
Second, phased implementation. The Shanghai pilot scheme was conducted in two phases. In phase I, enterprises reported their carbon emissions to local authorities, got quotas accordingly as a benchmark for administration, and were subject to oversight and monitoring. In phase II, the scheme was rolled out to more emitting enterprises in a larger range of sectors and the market was connected to the national carbon trading markets. <br />
Third, innovation in carbon finance. Apart from quota trading, Shanghai’s innovation in carbon finance also includes carbon pledge and borrowing, carbon quota buyback, carbon funds, and carbon quota futures.