Page 163 - Research on Financial Development Mechanism and Path of Forestry Carbon Sequestration in Developing Countries under Double Carbon Targets

Chapter IV Forestry Carbon Sequestration Financial Practice

Our government is making unremitting efforts to reduce greenhouse gas emissions
and mitigate global warming. It is an important measure for our government to deal
with global climate change to vigorously promote afforestation, protect forests, improve
the ecological environment and increase carbon sink capacity. With the rapid develop-
ment of forest carbon sequestration transactions, more and more forest carbon seques-
tration transactions will take place in China, which will inevitably involve cross-border
capital flows. The trading mechanism and successful practice of forest carbon sinks in
the United States have provided us with useful experience and enlightenment.

1.2.1 the United States Forest Carbon Sequestration Trading Mechanism
1) Establish a centralized carbon sink trading market mechanism
Such markets generally include carbon emission trading market and carbon sink
credit item trading market. At present, the United States has established a number of
carbon dioxide emission trading institutions, among which there are mainly four insti-
tutions engaged in credit trading of forest carbon sinks: First, the Chicago Climate Ex-
change; The second is the California Climate Action Registry. The third is the Regional
Greenhouse Gas Emission Initiative. The fourth is the voluntary reporting of national
greenhouse gas emission plans. Among them. Chicago Climate Exchange has the most
significant impact. During the transaction, the carbon sink project operated by the forest
owners must be certified by the US forest carbon sink certification authority, and must
obtain the forest carbon sink transaction license or carbon sink credit project registra-
tion certificate issued by the government before applying to the exchange for listing
and trading.
2) Establish a forest carbon sink risk guarantee mechanism
At present, the United States has established the following four risk guarantee
mechanisms for forest carbon sinks: first, to develop a forest carbon sink insurance
market. Offering insurance products such as natural disasters, diseases and insect pests,
politics and policies, and long-term risk insurance. The second is to set up forest car-
bon sink futures commodities to provide hedging business for both parties to the forest
carbon sink transaction and reduce the risk loss of carbon sink price. Third, a mutual
fund for forest carbon sink providers should be established to spread the land price risk
and political and policy risks of individual forest carbon sink providers in the form
of mutual aid. The fourth is to establish a forest carbon sink market for securitization
transactions, so as to make the market system and rules clear and standardized, reduce
uncertainty, improve the liquidity of forest carbon sink trading commodities, minimize

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