Guangdong authorities are calling for more carbon sink projects next year to tap into the potential of the forests covering around 60% of the province, an official who required anonymity told ICIS.
Offsets from forest carbon sink projects feature in the Guangdong emission trading system (ETS). Forestry companies can earn credits for the trees they manage and plant and sell these to companies swept into the ETS.
Hui Hua Furniture in Guangdong bought 1m voluntary emissions reductions (VERs) from Beijing Shengda Huitong Carbon Asset Management Company on Thursday, when the Guangdong system started to trade. It is the first VER project in China certified by the voluntary carbon standard.
The Guangdong government and the National Development and Reform Commission (NDRC) both promote carbon sink projects.
The new Guangdong provincial government plans to “developing the east, west and north districts of Guangdong” this September. The north district of Guangdong has rich resources of forests.
The local government promised to invest CNY6.65b (€665m) in forest carbon sink projects, according to its 2012-2015 plan.
The Guangdong legislative affairs office allows the companies that have caps in the emissions trading system to use forest carbon sink offsets matching up to 10% of all the allowances they submit for compliance.
“The 10% is the highest proportion of offsets [allowed] among all the current [carbon trading] pilots, and it sets a legal term to give a special status to the forest carbon sink projects, so you can see how heavily Guangdong supports the forest carbon sink projects,” said Meng Bingzhan, analyst t SinoCarbon Investment and Innovation, a Beijing carbon asset consulting and training company.
“We welcome forest carbon sink projects in China’s carbon market to add more trading products,” said Xie Zhenhua, vice chairman of NDRC, at the opening ceremony of the Guangdong ETS on Thursday. His emphasis sent a strong signal of approval from the central government.
The forest carbon sink projects in China include reforestation and forest management. Both have the corresponding measurement, reporting and verification regulations. The regulations on the forest management is waiting for the NDRC to approve. Any legal representative in China can develop a forest carbon sink project and trade its emissions reductions.
“The risk is the forest carbon sink project is not very cost-effective. These projects generate few permits to trade – around one-tenth of those from the wind power certified emission reduction programmes,” said Meng. Ling Ma