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Since land use and land use change contribute 25% of global carbon emission, the restoration of vegetation through forestry activities (such as afforestation/reforestation) will promote the absorption of carbon dioxide, which is the main greenhouse gas in the atmosphere. As a result, in the CDM of the Kyoto Protocol, developed countries can obtain carbon emission reduction by supporting afforestation/reforestation activities in developing countries to offset the pressure of their emission reduction.

This chapter is focused on the CDM A/R project developed and implemented in China. It analyzes the policy barriers, capacity barriers, investment and financial obstacles, market, and risk barricades facing forest carbon projects in China, and summarizes the experience gained. Finally, relevant international and domestic countermeasures and recommendations are proposed from policy and technical perspectives.

The “Afforestation and Reforestation Project on the Degraded Land in Northwest Sichuan, China” is the first registered CDM A/R project that has received a gold certificate with the Climate, Community & Biodiversity (CCB) standard. It is also the second in China and the first in Sichuan to be successfully registered as a CDM A/R carbon project. The project is led by the Forestry Department of Sichuan Province, with the support from the State Forestry and Grassland Administration (SFGA), the Conservation International (CI), The Nature Conservancy (TNC), and the Beijing Shanshui Conservation Center, Funded by 3M, the project is launched in November 2004, with the Dadu River Afforestation Bureau of Sichuan Province (hereinafter “the Bureau”) as the operating entity. In July 2007, the PDD was completed. In April 2008, the DOE field verification was passed and the project was approved by the Forestry Bureau and approved by the SFGA. In June 2009, the project passed DOE validation. In November of the same year, the project was endorsed by the NDRC and the CDM-EB registration under the UNFCCC.

The chapter briefs on the general concepts that are involved in forest carbon projects, such as afforestation/reforestation (A/R), project boundary, and forest carbon pool. It elaborates on the development process of CDM forest carbon projects and China’s GHGs voluntary emission reduction project, respectively; compare cooperative development and independent development as two development modes. Using project design document (PDD) of CDM A/R projects as an example, it describes in detail 10 major steps in the development of forest carbon project, including project identification, project boundary determination, crediting period selection, baseline investigation, baseline scenario recognition and additionality demonstration, leakage, participatory rural appraisal, environment impact assessment, biodiversity survey, and A/R operation and design.

Although forest management carbon project is not a qualified CDM project under the Kyoto Protocol, forest management carbon project has developed rapidly in the voluntary carbon market. In the past few years, forest management carbon trading quantity and trading volume have increased exponentially. China’s forestry has made remarkable achievement in the past 30 years, and forest area and volume have increased substantially, but due to deforestation, unreasonable selection of tree species, insufficient investment in A/R, the seedlings and A/R quality are poor.