Page 85 - Research on Financial Development Mechanism and Path of Forestry Carbon Sequestration in Developing Countries under Double Carbon Targets

Chapter 2 Forestry Carbon Sequestration and Carbon Finance

At present, there are two types of forestry carbon sequestration trading modes in China:
one is the carbon sequestration trading within the domestic carbon trading pilot; Sec-
ond, as one of the important suppliers of the clean development mechanism (CDM),
the CDM forestry carbon sink project was launched. In 2013, the pilot work of carbon
trading was officially launched. The National Development and Reform Commission
(NDRC) has made it clear that it will complete various preparations for the construction
of a national carbon trading market, including national legislation, data preparation,
quota allocation and support system construction, before the end of 2016. From June
2013 to June 2014, domestic carbon trading pilot projects were successively completed
in seven provinces and cities, namely Shenzhen, Beijing, Guangdong, Tianjin, Hubei,
Shanghai and Chongqing. Carbon trading in these provinces and cities basically pro-
poses to use the carbon offset system as a supplementary mechanism, and units with
emission reduction tasks can use Certified Voluntary Emission Reduction (CCER) to
offset part of their annual carbon emissions.
On the other hand, as one of the parties to the Kyoto Protocol, China is eligible
to participate in afforestation and reforestation carbon sink projects under the Clean
Development Mechanism. So far, there are five registered CDM afforestation and
reforestation projects in China. Taking the reforestation project of degraded land in
northwest Guangxi as an example, the carbon sink project in Guangxi passed the quali-
fication certification of a professional third-party certification authority in July 2008. In
June 2009, Guangxi Longlin County Forestry Development Co., Ltd. and the Biocar-
bon Fund of the International Bank for Reconstruction and Development signed a proj-
ect letter, reaching a purchase agreement for 440,000 t of the 1.74 million t of contract
emission reductions generated during the 20-year crediting period from 2008 to 2027,
with a carbon trading price of 5 USD/t. In September 2010, the project was successful-
ly registered by the United Nations CDM Executive Board and became the third CDM
afforestation and reforestation project successfully registered in China. The monitoring
results of the project during this period show that most of the trees in the project area
are growing well and meet the standard requirements of the project. Up to the end of
2014, the total net anthropogenic greenhouse gas removals by sinks (i.e. carbon sinks)
of the project amounted to 10561ltCO plus the carbon sink income from the Biological
Carbon Fund obtained four times, totaling US$ 528,055. After deducting various proj-
ect preparation costs, transaction costs, etc., the actual carbon sink income amounted to
US$ 415,167 (2,588,900 yuan).

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