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Chinese emissions trading pilots emerge as environmental and climate issues reach the top of the Chinese agenda. The authors discuss emissions trading in China, from the field. Editor's note: This blog post was originally posted on ChinaFAQs.

Earlier this month, WRI launched its “Stories to Watch in 2014.”

All years are important, but decisions made in 2014 will have a striking impact for decades to come. Here are seven potential game-changers:

Confronted with a cooling economy and global headlines declaring an "Airpocalypse", China faces challenges on multiple fronts. While many people are quick to point out the hurdles, the reality is that its leaders are moving ahead with significant policy measures and reforms. If successful, these actions will not only help drive China's economic development, they will address another mounting threat: climate change.

The latest report from the Intergovernmental Panel on Climate Change confirms the risks of climate change and humans' central role in it. China is no less vulnerable. One-third of its coastline is highly vulnerable to rising seas that will probably lead to the relocation of coastal communities. China's agricultural production - including rice, wheat and corn - could fall dramatically within a few decades due to shifts in precipitation and soil quality. Health impacts, including malaria and other infectious diseases, are also expected to mount as global temperatures rise.

As China moves to tackle issues related to the economy, pollution and urbanisation, each carries opportunities to shift the country's emissions trajectory and make progress on climate change.

Coal is emerging as a major topic of conversation at the United Nations climate-change negotiations currently taking place in Warsaw – and rightly so. Indeed, it is a discussion that the world needs to have.

The latest findings of the Intergovernmental Panel on Climate Change conclude that we are quickly using up our carbon “budget” – the amount of carbon that we can afford to emit while still having a good chance of limiting global warming to 2º Celsius. According to the IPCC, keeping the global temperature increase from pre-industrial levels below this threshold – the recognized tipping point beyond which climate change is likely to get seriously out of control – requires that the world emit only about 1,000 gigatonnes of carbon (GtC). More than half of this amount was already emitted by 2011. Unless we shift away from carbon-intensive behavior, the remaining budget will run out in roughly three decades.

Energy and consulting firm Wood Mackenzie, supported by data and analysis from WRI’s Aqueduct Water Risk Atlas, surveyed water risks among the world’s top energy-producing regions. They found that three energy sectors face particularly high water risks: shale gas in the United States, coal production and coal-fired power in China, and crude oil in the Middle East.

Record-setting levels of smog this week shut down Harbin, a city of 11 million people in northeast China. Officials blamed increased coal consumption during the first days of winter heating, underscoring the urgency of the China State Council’s recently announced initiative to address persistent smog in major cities.

But while the Air Pollution Control Action Plan has ambitious goals—cutting air particulates and coal consumption—it may create unintended problems for the country’s water supply.

It is common knowledge that China burns a large amount of coal, with the fuel accounting for nearly 70% of China’s primary energy consumption in recent years. What is less commonly known is that China is also working on ways to reduce the impact of its coal use, including aggressively pursuing research and demonstration of carbon capture, utilization and storage (CCUS) technology.