For several years, the EU and China have cooperated on the design and implementation of carbon markets. Since 2018, the Ecologic Institute has become part of an international consortium led by ICF to deliver capacity building, training and joint research activities in support of a national Emissions Trading System for China. Ecologic experts Benjamin Görlach and Michael Mehling are part of a joint research team, comprised of European and Chinese experts, on the issue of market oversight rules, mechanisms and institutions for a national carbon market in China.
Carbon market oversight is key to provide a liquid market for carbon allowances, which can then fulfill the functions it is expected to have: effective price discovery as well as an efficient, cost-minimising distribution of mitigation efforts between emitters - while at the same time ensuring the integrity of the carbon market, preventing fraud and market abuse. Effective carbon market oversights concerns both the rules governing carbon market functioning, and the institutional arrangements for effective oversight. While solutions are necessarily contingent on the specific legal, institutional and administrative arrangements in the respective country, one of the main tasks of Benjamin Görlach and Michael Mehling will be to provide an overview of market oversight solutions found in other carbon markets around the world, and distill relevant insights for the developing Chinese national ETS.