In June 2021, Harvard Kennedy School released this paper, as part of a project exploring the status of—and prospects for—Guangdong Province’s GHG emissions trading system. The paper was written with the support of Energy Foundation China.

It reviews experiences with sub-national carbon cap-and-trade systems in the United States, including the Regional Greenhouse Gas Initiative and California’s AB-32/398 trading system, and finds that the interactions between national and sub-national climate policies can be problematic, benign, or positive, depending upon the nature, design, and stringency of both the two levels of governance.

The lessons from U.S. experience can be helpful, as China improves its emissions trading systems at both national and sub-national levels.