Page 87 - 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

and uncontrollable. However, the supporting measures for forestry carbon sequestration
insurance are quite inadequate, which results in the lack of basic guarantee for forestry
carbon sequestration projects. Human risk can be divided into political risk and market
risk. Once these two kinds of risks occur, the project is difficult to continue to imple-
ment, which brings huge losses to stakeholders.

2.2.4 A single carbon sink financing instrument

In recent years, with the implementation of low-carbon concept, more and more
commercial banks began to participate in the green financial market spontaneously.
However, China’s current carbon sequestration financing mode is mainly based on
green credit provided by banks. Although this relieves the financial pressure of forestry
carbon sequestration projects to a certain extent, the initial capital investment of forest-
ry carbon sequestration projects is large, the investment payback period is long, and the
risk level is high. A single financing instrument cannot fully meet the financing demand
of carbon sequestration projects. Foreign countries have developed relatively perfect
carbon trading markets, and have developed various innovative financing instruments,
such as green bonds, green indexes, green asset-backed securities, green investment
funds, etc., to meet the funding requirements at different stages of the project.

2.3 Countermeasures and Suggestions for Improving Forestry
Carbon Sequestration Financing

2.3.1 the establishment of a national forest carbon sequestration market

Forest carbon sink trading market is an effective way to realize the value of forest
ecological products through market mechanism. In order to improve the market and
relevant financial institutions’ recognition of forestry carbon sinks and highlight the
economic value, ecological value and social value of forestry carbon sinks, a national
forestry carbon sink trading market needs to be established urgently, which can be im-
plemented in the following aspects:
1) Combining with the pilot experience and introducing regulations and policies
The government can increase the afforestation area, increase the carbon sink
strength, stimulate the enthusiasm of forest farmers for afforestation, and promote the
modernization of forestry by means of carbon sink subsidies, partial tax relief and the

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