Forest carbon offset (FCO) projects play an increasingly important role in mitigating climate change through market mechanisms in both compliance and voluntary markets. However, there are challenges and barriers to developing an FCO project, such as carbon leakage and cost-effectiveness. There have been few attempts to summarize and synthesize all types and aspects of existing challenges and possible solutions for FCO projects. This paper systematically reviews and discusses the current challenges involved in developing FCO projects, and then draws on the experience and lessons of existing projects to show how those challenges were addressed in world-leading voluntary carbon standards, namely the Verified Carbon Standard, the American Carbon Registry, the Climate Action Reserve, and Plan Vivo. These voluntary markets have rich experience in FCO projects and are responsible for a significant share of the market. From the 53 publications used in this analysis, three broad thematic categories of challenges emerged. These were related to methodology, socio-economic implications, and implementation. Methodological challenges, particularly additionality, permanence, and leakage, were the focus of 46% of the selected research papers, while socio-economic challenges, including transaction, social, and opportunity costs, were addressed by 35%. The remaining 19% of the research articles focused on implementational challenges related to monitoring, reporting, and verification. Major voluntary standards adequately addressed most of the methodological and implementational barriers by adopting various approaches. However, the standards did not adequately address socio-economic issues, despite these being the second most frequently discussed theme in the papers analyzed. More research is clearly needed on the socio-economic challenges involved in the development of FCO projects. For the development of high-quality forestry carbon offset projects, there are many challenges and no simple, universal recipe for addressing them. However, it is crucial to build upon the current science and move forward with carbon projects which ensure effective, long-term carbon sinks and maximize benefits for biodiversity and people; this is particularly important with a growing public and private interest in this field.

Given that international collaborative efforts to reduce greenhouse gas (GHG) emissions are urgent and crucial, a critical understanding of challenges and opportunities of linking China’s newly established national ETS with existing domestic or regional ETSs is essential in order to achieve global emission targets, and may attract other jurisdictions to join in global carbon market development. In this backdrop, we analyzed the experiences, lessons, and insights from three key global carbon markets, namely North America, the EU and China, in terms of the barriers to linking the global carbon market, with a focus on China, using thematic analysis. The four most commonly cited linkage design elements (barriers) were the legal basis; monitoring, reporting, and verification; political feasibility; and the price-management mechanism. Like-minded jurisdictions with similar political views and design features will have a higher chance of linking. Additionally, sustaining market liquidity, widening sectoral coverage, minimizing carbon leakage, ensuring offset quality, and a transparent allowance and cap setting rules are crucial steps towards linkage. These outcomes can be used as an ETS linkage-ready design framework for CETS and ETS under development to overcome barriers to future international ETS linkages.

China, taking the concept of sustainable development as the premise, puts forward Intended Nationally Determined Contributions (INDC) to reduce the greenhouse gas emissions in response to climate change. In this context, with the purpose of seeking solutions to a carbon financial market pricing mechanism to build China’s carbon finance market actively and thus achieving the goal of sustainable development, this paper, based on the autoregressive integrated moving average (ARIMA) model, established a carbon price prediction model for the carbon financial market, and studied the relationship between Certified Emission Reduction (CER) futures prices and spot prices, as well as the relationship between European Union allowances (EUA) futures prices and CER futures prices in an empirical manner. In this paper, EUA and CER futures prices of the European Climate Exchange (ECX) and EUA and CER spot prices of the BlueNext Environmental Exchange were selected as research objects. Granger causality test, co-integration test, and ECM were used to form a progressive econometric analysis framework. The results show that firstly, the ARIMA model can effectively predict carbon futures prices; secondly, CER futures prices cannot guide spot price, and the futures pricing function does not play a role in this market; thirdly, EUA futures price can, in the short term, effectively guide the trend of CER futures prices, with the futures pricing function between the two markets. In the long run, however, the future pricing function of the two markets is not obvious. Therefore, great differences among maturity of the two markets, degree of policy influence, and market share lead to the failure of long-run futures pricing functions.

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