Page 93 - 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

development of carbon sink transactions. By carrying out innovative forestry carbon
sequestration insurance business, insurance companies can avoid the risks of investors
and project operators to a certain extent and promote the stable development of forestry
carbon sequestration market.

2.4 Construction of Forestry Carbon Sequestration Financial
System in Developing Countries

2.4.1 the construction of financial mechanisms

1) Carbon market and carbon trading platform
(1) Construction of domestic and international carbon markets
The core elements of the carbon market mechanism. There are several key elements
in the construction of the carbon market, otherwise the carbon market will not be per-
fect. These core elements include aggregate target, quota allocation, coverage, trading
objects, trading entities, etc. In addition, where the turnover comes from, how to deter-
mine the accounting, reporting and verification system of carbon emission monitoring
and how to set up the performance mechanism are all practical issues that must be con-
sidered. The differences between China’s carbon market and the international carbon
market can be found by comparing these core elements.
Development of carbon market in China. The construction of a carbon market in
China started as a pilot project in 2011, increased to eight pilot areas in 2016, and then
officially established the national carbon market on July 16, 2021. It has experienced a
process of “ten years to sharpen one sword” and gradually moved from the pilot to the
national level. In order for a market or an economic instrument to have influence over a
country’s economic situation, it must form a certain scale. From the beginning of trad-
ing in the pilot carbon markets such as Shenzhen on June 18, 2013 to the end of 2021,
the total trading volume of all the pilot carbon markets was approximately RMB12.6
billion. By July 2022, the first anniversary of the establishment of the national carbon
market, the probability of total transactions is expected to be no more than RMB10 bil-
lion. In other words, in 10 years, the total amount of transactions in the carbon market
in China is approximately RMB22 billion. On the one hand, the scale of such transac-
tions cannot affect the economic situation for the time being; on the other hand, it also
indicates that there is still a lot of room for growth in the future.

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