Earth Chat

Carbon Sink and Voluntary Carbon Market

The Glasgow Climate Change Conference (COP26) continues in full swing in Scotland. For the expectations towards COP26, this is the first conference of the parties after the Paris Agreement has entered the implementation stage, affecting how well and efficient it will be promoted. In COP26, the Secretary-General of the United Nations, Antonio Manuel de Oliveira Guterres, announced to the public that climate change pushed humankind to a grave life-or-death crisis. He urged all countries and people to face up to the issue of climate change.

China actively participates in the international green and low-carbon development transformation. Last year, China announced their "dual carbon” goals, setting an example in combating climate change among developing countries in the world. In order to achieve the "dual carbon” goals as planned, one important step is to enhance the carbon sink capacity of the ecological system, utilizing the carbon fixation properties of forests, grasslands, wetlands, oceans, soil and permafrost.

This can increase number of carbon sinks, form a carbon sink trading platform, and realize a diverse market-based carbon sink market. As an example, forest carbon sinks play a special role in combating climate change. With reference to the UN Food and Agriculture Organization’s Global Forest Resources Assessment 2020, global forest area is 4.06 billion hectares with a carbon sequestration potential reaching 662 billion tonnes.

In China, forest carbon sinks are trending in finance, insurance and national level policies. Policy-based financing programs will drive forward the combination of carbon sink afforestation and the strategy of developing rural areas in the country. It also establishes a basis for carbon sinks entering the national carbon trading market.

Carbon sink trading has been going on around the world for some time, but it does not seem to be closely related to personal behavior. In 2013, when carbon sink CCERs (China Certified Emission Reductions) first entered the domestic trading market, it was designed for companies with emission reduction needs. Thresholds for individuals to participate in carbon sink trading cooled the voluntary emission reduction (VER) market.

Yet, with the "dual carbon” goals and the global trend, the develop of internet and blockchain technology have made people accept the concept of "sharing” and "non-possession”. Carbon trading has been embedded in everyone's life, which will surely trigger a huge carbon sink trading demand.

If personal carbon credit trading is realized, our low-carbon behavior can be monitored credibly through blockchain, and they can be turned into measurable, cumulative, and tangible carbon emission reduction and credits. Accumulated carbon credits can be sold to individuals, companies, or even traded on the international market. It is expected that there could be an explosive growth in VER market.

On one hand, the price of carbon sink transactions will increase with market development, transforming individual emission reduction behaviors into long-term economic benefits. On the other hand, it encourages afforestation in low-income households and ultimately transform green behavior into a combination of income, public welfare and ecological benefits.

Currently, the VER market can be understood as a spontaneous, public and certifiable carbon credits, in addition to the clean development mechanism (CDM) of the Kyoto Protocol. In terms of auditing and verification, VER is developed and implemented following CDM methodology, but with a shortened approval process, thereby saving cost and time.

Similarly, due to restrictions, most companies and individuals cannot participate in CDM. To those companies and individuals who pay close attention to corporate sustainability and branding and have positive expectations and want to profit in future emission reductions will closely follow the VER market.

Interested Topic:
Climate Change
Green Economy

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