Existing global emission rights markets include:

 

· "Total control + trading" emission rights trading market, such as the European carbon trading market, China's carbon trading market, etc.;

 

· The trading market of sulfur dioxide in the United States;

 

· Nitrogen oxide trading market;

 

· Particulate matter trading market, mainly through cross-border air pollution control;

 

· HFCs, methane, and black carbon can also be converted into tradable markets;

 

· Surface ozone and POPs (persistent organic pollutants), etc.

 

· Some are not air pollutants or emission sources but can be reduced by controlling some conditions. Such as congestion charges, low-emission zones, etc.

 

Can they be connected? This is a huge problem. There are about 42 carbon pricing mechanisms in the world, some in the United States, and Europe is the largest. There are seven pilot projects in China, which will be integrated this year. China is a huge market. India, Japan, and South Korea also have similar markets, but they are not connected to each other. Therefore, even the carbon trading market is not united. These markets account for 20%-30% of global carbon emissions. Some are markets, and some are pricing mechanisms. The range from US$1/ton to US$40/ton is economically inefficient because the price is too much. The cost may drop by 4-5 US dollars per ton if these markets and plans can be connected.

 

India wants to switch from coal to clean energy, consuming 900 million tons of coal annually. We want to support more green and clean energy, including renewable energy. The carbon pricing mechanism has great potential in the future. If the market can cooperate with each other, it can be reduced from 40 US dollars/ton to 4-5 US dollars/ton.

 

How did joint and separate markets emerge? It depends on how they are created. Like some market intervention mechanisms, cap&trade limits the total amount of emissions. Those who reduce emissions need to buy quotas, and those who reduce emissions can sell quotas. There is also a policy role because air pollution is cross-border, and the governments of several countries can adopt joint policies and measures at the same time. For example, clean the air, clean the sky, this is a very big project. There is also policy implementation and the failure of law enforcement. It would be nice to install dust collectors in coal power plants, but no one monitor or checks. Particulate matter can also be traded. If emissions increase, you need to pay more. From the perspective of economic cost, it is hoped that the emission of particulate matter can be reduced.

 

If the market can interact with each other, it is a federated market. If you don't interact, if you don't trade, it is a separate market. Even if the markets can be interconnected, even if they can act at the same time, it cannot be done without a hardware connection between the two markets.

 

I want to provide a four-quadrant analysis of how separate and combined markets work. For example, the same area or different areas. The same region, like China, or a combination of several countries, such as Germany, or different regions, such as the European Union. In terms of emission types, there may be one or more types, including multiple greenhouse gases.

 

 

Next, I will give a few examples. The EU's carbon trading market trades all carbon, and different countries are united. China's carbon trading market is separate. If its seven markets are combined, it will be a joint market. Different PM2.5 and carbon dioxide markets in different regions mainly shift from diesel to natural gas fuel, and both can be treated simultaneously. Now that there is such a joint market, I am not saying that the market must be good, and the market will definitely be able to solve the problem of action. However, it has a set of mechanisms that enable good policies to be implemented well.

 

Synergistic effects are often generated, but the cost of synergistic effects is not the same. If you want to reduce the carbon dioxide emissions of power plants, you may need to switch to coal-to-gas or solar energy, and the transition cost is very expensive. In contrast, if it is only to control local pollution, for example, the cost of electrostatic adsorption of particulate matter is 5:1, and energy transformation costs much higher than that of controlling existing pollutants. If the cost is 5 times higher, who will bear these costs? This is a question, is it our country, the local area, or the international community? In developing countries, local governments are responsible for controlling air pollution, but the greenhouse effect is not on the local government's list of responsibilities. Different regions and different emissions are very complicated and difficult

 

Professor Garg took control of vehicle exhaust emissions as an example, such as implementing the European Union's No. 6 standard. The markets involved here are carbon dioxide, nitrogen oxides, and particulate matter. Let me give you the first answer. Fundamentally, they are separate. Because the level of PM and the level of nitrogen oxides will be reduced, but the carbon dioxide will not, and the emission of carbon dioxide depends on the composition of the fuel itself. This is a fundamentally united market if you want to use the same mechanism for electric vehicles, where the batteries are charged using solar energy. Using solar energy means no CO2, NOx, and particulate matter, using batteries. Fundamentally, markets are connected. If you use solar power to charge batteries, you connect the market together. What if the battery is charged with thermal power? This means CO2 will not drop, but others will. So, they are separate markets.

 

Part of the pollution sources, such as VOC and PM2.5, are the same, and maybe the technology is the same, but it is a completely separate market. So, the EU has different projects. The United States is a completely unconnected market, and the air pollutant trading market in the United States is completely separated from the carbon market. China also has a carbon market, which will be turned into a joint market this year or later. Maybe later, China and Europe will be connected and become a unified market. This is a good thing.

 

The Chinese government's three-year action plan to win the blue sky defense war proposes a coordinated reduction of greenhouse gas emissions. It proposes a comprehensive solution for the Beijing-Tianjin-Hebei 2+26 cities. The permit system for controlling pollutant discharge has comprehensively controlled air, water, and soil pollution and has been piloted in 11 provinces since 2007. Professor Garg thinks this is a very effective policy system.