International carbon markets under the Paris Agreement: Basic form and development prospects

Article 6 of the Paris Agreement introduces two international carbon markets that receive extensive attention and are expected to play an important role in the post-2020 climate regime. Three key elements of the two international carbon markets, including the scope, the types of tradable units and the governance, are identified, as the basis to clarify their basic forms. Based on the key issues and their different designs identified in negotiations, this study analyzes the contributions and challenges for China to participate in international carbon markets. Considering the inherent needs of climate change mitigation, climate finance, the development of a green “Belt and Road” and the China South–South cooperation in climate change, along with the existing domestic capacities on market mechanisms, this study puts forward the short-, medium- and long-term development prospects of the two international carbon markets.