Strengthening Carbon Financing for Grassland Management in the People's Republic of China: Potential Carbon Markets

Publication | February 2014

This report assesses the potential of carbon market mechanisms in the People’s Republic of China to support the achievement of grassland policy objectives.

Carbon emissions trading markets are one of the main policy mechanisms of the People's Republic of China (PRC) to encourage the reduction of greenhouse gas emissions. Grasslands cover 40% of the PRC's land area, and these contain large amounts of carbon. Restoration and sustainable management of these grasslands have large greenhouse gas mitigation potential.

This publication assesses the potential of carbon market mechanisms to support the achievement of grassland policy objectives. It also reviews the state of national policy regarding climate change mitigation, particularly carbon markets, and outlines opportunities and challenges in producing carbon offsets from grasslands.

Findings

With the exception of biogas activities, grassland management and livestock management are new project types. Developing these project types will incur a range of costs and risks, which reduces incentives for private sector investment in early pilot projects. To date, most investments in development of grassland carbon offset projects have been made by international organizations, and examples of ongoing pilot activities are given in the report.

Previous experience of the government's engagement with clean development mechanism and voluntary markets in the PRC suggests that there are a number of ways in which public agencies can support the development of new project types. Public investment in developing new methodologies and implementing pilot project activities will be necessary to provide proof of concept for new project types in the sector.

Contents 

  • Executive Summary
  • Introduction
  • Overview of Climate Policy in the People’s Republic of China
  • Carbon Markets in the People’s Republic of China
  • Eligibility of Grassland and Livestock Offsets in Carbon Markets
  • Barriers and Opportunities in the Supply and Demand for Grassland Offsets
  • Future Demand and Supply of Grassland Offsets in the People’s Republic of China