Linking carbon pricing jurisdictions

This thesis develops our understanding of the linkage and process underlying the international cooperation framework in carbon pricing jurisdictions. The linkage concept is for cap-and-trade systems to capture the benefits in economics, politics and administration along with the emission reductions to meet their mitigation commitments. The thesis also identifies potential barriers in linking carbon pricing jurisdictions. There has been an expanding stream of literatures within linkage field focusing on the international cooperation framework, recently enhanced through the Paris Agreement Article 6. The thesis builds on this perspective and address the current gap in understanding the roles and process of linkage underpin the concept of international cooperation for climate actions. In particular, the research questions consider: the factors that influence the linkage decision for international cooperation; the features of linkage readiness for the cooperation between carbon pricing jurisdictions; how to design an efficiently linked carbon market; and how these implications to policymakers for cooperation at an individual level. The research for the thesis is undertaken within the context of regional and national linkage, at locations in EU and China. Two inductive studies, which adopt a qualitative case study methodology while one deductive study contains a hypothesis test for the efficient in the linkage model. The research findings from qualitative researches are drawn from semi-structured interviews, document analysis, and observations. The quantitative research is derived from a hypothesis test for linkage model in constructing exchanging rate in carbon markets by comparing two marginal abatement costs. The studies make the theoretical contributions by developing the concept of linkage readiness for international cooperation in climate actions; highlighting the complexities of factors and relationships underpinning decision making of linkage; and developing a working definition and determine model for the exchange rate in carbon market, which effectively overcomes the barriers in the existing linkage frameworks proposed by the literatures. On a practical level, the study also introduces the improved frameworks to guide policymakers, who with interests in international cooperation in market-based mechanisms