Forests and finance trends — role of forests in meeting the Paris climate targets

While the Paris agreement solidified the role forests play in the fight against climate change, a recent report indicates that forest carbon trading is not working in developing countries and that voluntary carbon markets remained stagnant amid flagging demand in 2015.

The findings comes from the latest State of Forest Carbon Finance report, released on Wednesday, which looked at the amount of money flowing into forest projects and government programs designed to reduce carbon dioxide emissions, in 2015.

Forest carbon finance refers to the funding of initiatives designed to reduce deforestation, plant new trees and promote carbon-conscious land management — all of which results in a reduction of CO2 emissions. Each ton of CO2 not emitted translates into one carbon credit, which can then be traded on either the voluntary or compliance carbon markets, enabling governments and companies to meet their carbon emission allowances or voluntary targets.
While the report found that $888 million was committed in new forest carbon finance during the year, which is the largest influx of funding into the sector to date, only approximately 20 percent of that money flowed into forest conservation projects in developing countries. The majority of the remainder went to projects in California and Australia.