Can China benefit from adopting a binding emissions target?

In the run-up to the Copenhagen climate summit, the USA announced an emissions reduction target of 17% by 2020 (relative to 2005), and the EU of 20% to 30% (relative to 1990). China offered a reduction target for the CO2-intensity of its economy, but rejects a legally binding commitment. We use the targets announced by the EU and the USA to analyze the potential gain for China if it were to adopt a binding emissions target and join an international emissions trading scheme. We show that China would likely benefit from choosing a binding target well below its projected baseline emissions for 2020. * Institute for Competition Policy, Humboldt University, Spandauer Str. 1, 10178 Berlin, Germany Tel. 0049-30-20935943, Email: [email protected] ** Potsdam Institute for Climate Impact Research, PO Box 601203, 14412 Potsdam, Germany, and Technische Universität Berlin, Strasse des 17. Juni 145, 10623 Berlin, Germany, Email: [email protected]