China ET Working Paper

There's been tremendous interest in emissions trading in Asia in recent months -- new emissions exchanges have opened up in Beijing, Shanghai, and Tianjin -- and a recent article in the October 2008 issue of Environmental Finance ("Making Markets," by Joshua Speckman) covered the scene.  While most of the article's focus was on carbon trading, it also included the following:

"Asia has to create demand," adds Roger Raufer, a New Jersey-based emissions trading expert and former consultant to Hong Kong Exchanges and Clearing (HKEx), "and my strong belief is that to get them to address demand you need to get them to tackle the visible environmental pollution.  From any government's point of view, local public health is more important…. So you want to structure markets to put a price on all pollutants."

This is a very tough problem to tackle -- and experience to date has not been very encouraging.  But I've been working in China for quite a while now, and -- along with my colleague Li Shaoyi (see previous posting) --- have developed a new 'leapfrog' emissions trading approach which could explicitly tackle immediate public health and compliance concerns within a market-oriented framework.

Integrated ICS/PEMS/ET approach

We've written it up in a working paper, and we'll be submitting it to the journal Energy.  In the meantime -- email comments &/or feedback about the proposed approach would certainly be appreciated!  (And please don't let the figure scare you off....  the approach is really quite straightforward!)  [Note: the paper, which was originally posted here, has now been accepted by Energy; please see the 'China ET paper' posting above.]