Page 192 - Research on Financial Development Mechanism and Path of Forestry Carbon Sequestration in Developing Countries under Double Carbon Targets

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

4.3 Incorporation of Forestry Carbon Sinks into Carbon
Credit Mechanism

At present, forestry carbon sinks have been incorporated into the major global car-
bon credit mechanisms. The forestry sector has signed the most carbon credits in the
past five years, accounting for 42% of the global total.
The first is to establish a carbon offset mechanism. In order to improve the flexibili-
ty of compliance, most countries and regions have adopted a “first loose and then tight”
carbon emission quota management policy, and established a supporting carbon offset
mechanism. For example, California stipulates that super-emission enterprises can pur-
chase carbon credit units to offset carbon emissions; The EU allows the use of CERs
generated from CDM projects in place of carbon emission quotas (EUAs) for perfor-
mance.
The second is to clarify the rules for the use of carbon credit units. There are gener-
ally limits on the use of carbon credit units. If Australia stipulates that only 50% of the
carbon credit units in the EU system can be used to settle the annual carbon liabilities;
Kyoto Mechanism Carbon Credit Units cannot exceed 12.5%, allowing enterprises to
deposit and overdraft ahead of schedule, but the overdraft ahead of schedule is capped
at 5% of the carbon liabilities in the previous offsetting year. The EU stipulates that in
the first and second stages of performance, enterprises will use the international carbon
credit line to offset the carbon emission quota that does not exceed 11% of the 2008-
2020 free quota or the international carbon credit line in the second stage (whichever is
higher). The offset cap for the newly added emission control subject in the third stage
is 4.5% of the certified carbon emissions in that stage. In terms of scope of use, most
countries are limited to domestic use.
Third, the establishment of a carbon credit incentive and restraint mechanism. If
New Zealand divides forests into two stages according to their years: first, after 1989,
forest owners can claim New Zealand units corresponding to their forest carbon re-
serves to sell for profit; The second is the forest before 1990. There are two kinds of
situations. The first is to apply for a free New Zealand unit and then harvest the forest.
The new Zealand unit must be returned to the government. If the new Zealand unit has
been sold for free, the corresponding New Zealand unit must be purchased based on the
market price and returned to the government. The second case is to destroy the original
forest and then carry out afforestation. All New Zealand units claimed by the original
forest must be returned.

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