This study looked at whether existing environmental policies conflict with China’s emissions trading approach and reduce its effectiveness. The study used an agent-based model to assess the SO₂ emissions trading market in the Chinese province of Jiangsu.  It was found that four main policies are in conflict with the emissions trading approach. Of these, China’s Regional Total Pollution Control Policy has the most significant impact. In all, the study’s modeling shows that policy conflicts reduce both the quantity of emissions traded and the potential cost savings that the emissions trading approach can bring. The study recommends a hybrid policy approach that combines an emissions trading policy with a low emissions discharge levy.