From Carbon Market to Climate Finance: The Use of ETS Revenues

This paper pursues the question of whether revenues from Chinese emission trading scheme (ETS) pilots, and a future national carbon market, should be used for national climate action in China and what topics should be addressed. Firstly, it will discuss why carbon market revenues should be used for climate finance and how this may be accomplished in theory. The paper then describes the experience of other countries, particularly in the EU, in using ETS revenues for climate actions. Finally recommendations are provided for the Chinese pilot ETS.