Page 194 - 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

for Forestry Carbon Sequestration Projects.
Second, strong financial market support. Forestry carbon sequestration futures can
solve the problem of asymmetric market information, guide the spot price of forestry
carbon sequestration, and thus effectively avoid transaction risks. In 2005, the EU car-
bon market carried out futures, forward, option and swap transactions of EUA, CER
and ERU. In 2021, the unit price of carbon sink futures in Europe exceeded 50 euros/
ton, and more than 90% of the trading volume was contributed by futures. Some fi-
nancial institutions have successively introduced financial derivatives, such as carbon
emission options, futures and swaps, and some are also specialized in intermediary
business such as carbon purchase agency, consultancy and financing guarantee. At
the beginning of forestry carbon sequestration trading, the World Bank designed three
carbon funds: Prototype Carbon Fund (PCF), Community Development Carbon Fund
(CDCF) and Biological Carbon Fund (BIOCF). Support the transaction of forestry
carbon sequestration projects and promote the development of forestry carbon seques-
tration. In 2008, the Forest Carbon Partnership Facility (FCPF) was established to help
developing countries reduce carbon emissions from deforestation and forest degrada-
tion, to strengthen forest management and increase forest carbon sinks.

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