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Executive Summary
This paper uses a dynamic multi-country model (the G-Cubed Model) to project a realistic BAU trajectory of CO2 emissions for China, and we find it to be even above the CO2 emissions from the high-growth scenario estimated by the Energy Information Agency in 2007. This outcome is a reminder that it has been usual so far to underestimate the growth in China energy consumption. The paper then compares the merits of the different market-based CO2 reduction mechanisms in China like a carbon tax, a cap-and-trade emissions trading scheme, and the McKibbin-Wilcoxen Hybrid (MWH) emissions trading approach.