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Will Forest Carbon Credits Easier to Develop in China?

Three years after the Afforestation Carbon Sink Methodology was first drafted, it is finally undergoing revision. Although final implementation may still take time, for practitioners who are struggling to hold on in this field, it is a ray of light in the darkness.

The Bottlenecks

Although CCER trading has been increasing, offshore wind power projects have dominated this volume, leaving forestry carbon sink projects absent from this trading boom. This is a strange phenomenon because forestry carbon sinks were among the earliest approved CCER methodologies, and forestry carbon sink projects represent more than half of all CCER projects. So far, the number of forestry carbon sink projects with registered carbon credits stands at zero. Only emission reductions that have been formally registered and issued can be traded, transferred, or pledged on the national trading platform. In other words, no forestry carbon sink project has yet generated tradable carbon credits.

The obstacles arise from land eligibility and additionality demonstration. 

For land eligibility, many project owners face difficulties in providing evidence to prove that the project land was not forest prior to development. Many initiatives are retrospective projects where the afforestation has already taken place. This requires project owners to look back to the pre-afforestation period and locate historical evidence spanning three consecutive years. The challenge, however, is that early records—such as remote sensing imagery, land-use maps, forest and grassland resource surveys, operational plans, and project acceptance documentation—are not always complete. This is particularly true for projects involving small plots, marginal land, village collective land, roadside greening, mine site restoration, and urban landscaping.

Additionality is one of the aspects that consumes the most time and incurs the highest costs in terms of explanation. Project owners need to answer whether the carbon sinks generated by the project are additional to what would have occurred without the project. However, many forestry carbon sink projects were not initially designed simply to sell carbon credits, but were often driven by multiple motivations such as ecological restoration and rural greening. Proving additionality is undoubtedly troublesome for these forestry carbon sink projects.

As a result, the reality is characterized by slow approval processes, delayed market entry, and returns that remain a distant prospect.

The Revision

The most important adjustment is that eligible afforestation projects are exempted from additionality demonstration. This directly reduces one of the most uncertain parts of project development. Instead of asking every project owner to defend the counterfactual case individually, the revised methodology places more weight on project eligibility rules and baseline assumptions. The draft defines the baseline as the continuation of pre-afforestation land use and management, with baseline removals treated as zero. 

This is a meaningful simplification, but it also changes where the integrity burden lies. In this revision, the MEE appears to place substantial value on the broader co-benefits of forestry carbon sink projects, rather than treating them purely as delivered carbon removals. The document explains the reason for the exemption as follows:

To further shorten development timelines and reduce costs, it is necessary to consider that afforestation is primarily driven by public-interest objectives—such as enhancing forest ecological functions and improving biodiversity and living environments—yet entails high costs for planting and subsequent maintenance; as it is difficult to generate revenue beyond that derived from emission reductions, such projects lack financial attractiveness.

If additionality is no longer demonstrated project by project, then land eligibility, conservative accounting, and third-party verification become more important. In other words, the revision lowers the explanation burden, but it does not remove the credibility challenge.

Another important change is the expansion of land eligibility. As the remaining area of conventional forest land suitable for afforestation becomes increasingly limited, the revised methodology extends support beyond traditional forestry land such as barren hills and wasteland. It newly includes greening projects on non-forestry land, such as transport corridors, urban and rural settlements, and industrial or mining sites. This is important because many potential forestry carbon sink projects in China are not located in large, clean, continuous forestland, but in fragmented and mixed land-use settings created by urbanization, infrastructure development, and land rehabilitation. At the same time, the methodology continues to exclude economic forests in order to strictly adhere to the baseline requirement of additionality.

Other changes include clarifying the methods for proving ownership of emission reduction benefits and optimizing and simplifying accounting methodologies. In addition, the revised methodology is also intended to increase project development returns. These changes will require further adaptation in front-line implementation.

Summary

To summarize, the revision of the Afforestation Carbon Sink Methodology provides a more enabling policy framework for developing forest carbon credits in China. In the past, the forestry carbon sink sector was constrained by narrow eligibility rules and high development costs, leaving many potential forest and greening resources outside the project pipeline. If the details of this revision are effectively implemented, a large number of dormant forestlands and greening assets could be activated. 

The revision may also diversify the types of participants in the sector. Traditionally, forestry carbon sink project owners have mainly been large state-owned forest farms or leading forestry enterprises. After the methodology is revised, local urban investment companies, ecological restoration firms, and even village cooperatives may find new opportunities to enter the market.

If you are involved in afforestation projects in China or elsewhere, feel free to leave a comment and share your field experience, policy observations, or views on the opportunities for developing carbon assets.

Reference

[1]https://www.mee.gov.cn/xxgk2018/xxgk/xxgk06/202606/t20260626_1160307.html

[2]https://m.bjx.com.cn/mnews/20260629/1501907.shtml

[3]https://mp.weixin.qq.com/s/oLSxhWZyf9Fx4V9Rdnl39w







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