Carbon market: The construction of carbon market is steadily advancing, and forestry carbon sequestration has become a new hot spot (with report)

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Carbon pricing mechanisms are the main means used by governments to implement climate strategies. Increase the cost of carbon emission and reduce the carbon emission of enterprises through the carbon pricing mechanism. Carbon taxes, carbon emissions trading systems and carbon credits are the most common carbon pricing tools. In 2021, the global carbon pricing revenue will be about 84 billion US dollars, a year-on-year increase of 60%, of which the carbon emissions trading system and carbon tax revenue will account for 67% and 33%, respectively. The carbon emissions trading system revenue exceeds the carbon tax revenue for the first time, which is to a certain extent. The above shows that ETS prices are rising faster than fixed price instruments. my country’s carbon emissions trading system officially started trading on July 16, 2021, and is the largest emissions trading system in the existing operating system.

Most countries choose a composite carbon tax policy model. The compound carbon tax policy is a parallel carbon tax with other carbon pricing mechanisms such as carbon trading, which is more common in the EU. In terms of coverage: carbon trading is mainly aimed at fixing large-scale emission measures, and carbon taxation is wide-ranging and applicable to small, scattered and mobile emission sources. In terms of price mechanism, the carbon trading price is not fixed and is easily fluctuated by changes in supply and demand. The long-term low price of carbon trading allowances will reduce the effect of emission reduction. The complementarity of carbon taxation and carbon trading in terms of coverage and pricing mechanisms enables the broad application of composite policies. In addition, the design of foreign carbon tax systems in terms of tax calculation basis, tax collection process, income use, etc. provides a rich reference for my country to introduce carbon tax in the future.

Carbon trading is the most market-oriented way to save energy and reduce emissions. The Kyoto Protocol establishes three carbon emission trading mechanisms: the International Emissions Trading Machine, the Clean Development Mechanism, and the Joint Implementation Mechanism to address global warming. After the UK established the world’s first voluntary carbon emissions trading system in 2002, many countries and regions around the world have established their own carbon emissions trading systems. The market is under construction, covering multiple industries such as power, industry, aviation, and construction. Among them, the EU carbon market is the world’s largest market with the most complete mechanism and the most mature market.

The carbon trading market includes the carbon allowance trading market and the carbon credit trading market. In the carbon allowance trading market, although the free allocation method is easy to promote at first and will not increase the burden on enterprises, this method has many shortcomings in terms of fairness and efficiency, and countries around the world gradually tend to choose the auction allocation method; allowance prices in various regions It shows great differences due to market supply and demand conditions, external policies, and the macro environment. In the carbon credit trading market, most of the growth in the carbon credit market in 2021 comes from new projects issued by the independent carbon credit mechanism. Forestry has issued the most carbon credits, accounting for about 42% of the total global carbon credits, making it the industry with the largest carbon credit issuance in the world.

As a whole, my country’s carbon trading market adopts the idea of ​​first participating in the mature international carbon trading system, and then conducting carbon trading pilot projects in some regions, and then steadily promoting the construction of the national carbon market. my country’s carbon emission rights market started from a local pilot, and since the pilot, the transaction volume has shown an increasing trend; after the national carbon market was launched in July 2021, the market activity has increased significantly, and the transaction mainly presents three characteristics: there is an obvious “tidal phenomenon” , The company’s reluctance to sell is serious, and the transactions are mainly large-scale transactions. my country’s certified voluntary emission reduction market was suspended by the National Development and Reform Commission in March 2017. We believe that there are two main reasons: long-term unhealthy low-price competition and imbalance between supply and demand of carbon assets.

Forestry carbon sinks have become a new hot spot for CCER development in my country. Forestry carbon sinks are currently the most economical means of carbon absorption. In the international carbon credit market, forestry carbon sinks have replaced renewable energy sources and become the main source of carbon credit issuance. At present, my country has 97 forestry carbon sink CCER approval projects and 15 registered projects, with a total emission reduction of 560 million tons. Once CCER is restarted, forestry carbon sinks, as a sub-category of projects with the highest ecological value and the most additionality, will receive more attention. By 2025, China’s forest stock will increase by 1.5 billion cubic meters. During the 14th Five-Year Plan period, the potential value of my country’s forestry carbon sink CCER market is close to 200 billion.

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