Linking Emissions Trading Schemes: Economic Valuation of a Joint China–Japan–Korea Carbon Market

Abstract

Linking carbon emissions trading systems across countries has become an important tool for global emission reduction. The three high-emission Asian countries, China, Japan, and South Korea (ROK), all have initiated carbon trading and published ambitious Intended Nationally Determined Contribution targets. Since 2016, the three countries have discussed establishing a long-term unified market for carbon emissions trading, and have sought a scheme for such exchange. This study aimed to investigate whether linking the carbon emissions trading systems of these three countries could potentially achieve more ambitious emission reduction targets. A dynamic energy-environmental version of the Global Trade Analysis Project model was used to simulate carbon market linkages across the three countries. The results indicated that a linked China–Japan–ROK carbon market would be highly cost-effective, have positive economic benefits for all three countries, and improve the carbon market’s liquidity and transaction scale. Under a scenario with no carbon market linking, the economic losses in China, Japan, and ROK would be $51.55 billion, $13.55 billion, and $74.19 billion, respectively. Meanwhile, with carbon trading linking, the losses would be reduced to $47.08 billion, $5.37 billion, and $9.10 billion, respectively. Therefore, a joint China–Japan–ROK carbon market could greatly promote the adoption of market-based tools for emission reduction.

Simulation analysis of carbon peak path in China from a multi-scenario perspective: evidence from random forest and back propagation neural network models

“…Lu ( 2018 ) discovered that energy consumption has a significant positive effect on carbon emissions in twelve Asian countries. Ma et al ( 2019b ) investigated the impact of trade between China, Japan, and South Korea on carbon emissions. Anser et al ( 2020 ) conducted research on the South Asian Association for Regional Cooperation countries, taking into account the impact of population size and urbanization on carbon emissions.…”

Allocation of Greenhouse Gas Emissions Using the Fairness Principle: A Multi-Country Analysis

“…Studies on allocations in China ( [40,41], for example), Chinese regions [42][43][44][45][46], Chinese cities [8], and Chinese sectors and industries [39,43] are particularly abundant. Other studies have focused on groups of countries, such as North America [44][45][46], Latin America [45], or three high-emission Asian countries-China, Japan, and South Korea (ROK)-by Ma, Cai, Ye, and Gu [47].…”