Feasible carbon-trade model for low-carbon density ecosystem

China has set a carbon-neutrality target for 2060; carbon sinks are vital
tools to meet this target. China is leading the effort in greening the
world through the restoration of low-carbon density ecosystems (LCDEs).
The potential carbon sinks of LCDEs provide opportunities for carbon
trading projects that make cash benefits accessible to the owners, thereby
incentivizing ecosystem restoration. Unfortunately, carbon trading in
LCDEs has, to date, been unsuccessful in China. Therefore, it is important
to identify the barriers in the development of carbon trading projects in
LCDEs. This study aimed at creating a feasible model for carbon trading in
LCDEs in China. We first accounted for the carbon sink of LCDEs based on
field sampling of 169 quadrants and 3,471 plants. Thereafter, we
investigated the trade-off between the cost and efficiency of carbon
projects in LCDEs. Finally, we explored the feasibility of the
corresponding carbon sink potential by considering carbon price
fluctuations and public–private partnership models. The main findings were
as follows: (i) Carbon trading in LCDEs is not economically feasible at
the current market price of carbon. In the pilot case, the LCDE carbon
trading could only recover 41.72% of the project cost. This partially
explains the scarcity of carbon trading for LCDEs in the current emission
trading scheme; (ii) A benefit transfer model is essential, wherein the
costs of ecosystem restoration are paid by the central government, and the
benefits of carbon trade are transferred to the owners of LCDEs, providing
sufficient incentives for the owners to participate in carbon trading.
Policy implications. Given the scarcity of large-scale organisations and
expertise, carbon trading in low-carbon density ecosystems (LCDEs) should
not be treated as a purely commercial project. A public–private
partnership network is a suitable model for engaging stakeholders to
complete the carbon trading process in LCDEs. For the success of carbon
trading in LCDEs, viable carbon prices and transfer of benefits from
public investments are policy issues that need to be further explored. Our
findings provide a policy basis for the Chinese government to mobilise
more LCDE owners to enter the carbon market and achieve carbon-neutrality.