Forest and climate are interrelated and the relationship between them is very interesting. The effect of one on the other is very important and decisive. Climate change will affect the environmental conditions to which forest trees are adapted and expose them to new pests and diseases; thus, create additional challenges for forest management and threats the biological diversity in forest ecosystems. In addition to soils, aspect and elevation; climate dictates what will grow when, where and how well. Therefore, changes in temperature, precipitation and other climatic factors have the potential to dramatically affect forests at national level and similarly worldwide. On the reverse, climate is also shaped and strongly influenced by forests. Global warming and climate change largely depends on both the CO2 and other Green House Gases (GHGs) source from human emissions and the CO2 sink from natural sinks in the terrestrial biosphere which is mainly forests. Therefore, forests affect the situation both as a source and sink of CO2. On the top of the efforts being undertaking to reduce the emissions of GHGs into the atmosphere; forest management solutions such as: reduced deforestation and forest degradation, wildfire management, increased afforestation and reforestation, maintained or increased forest carbon density and others; not only reduce the CO2 emission but also increase the carbon sequestration capacity of forests. In 2010 the overall Ethiopia’s GHGs emission level was estimated to be around 150 Mt CO2e represent less than 0.3% of the global emissions. However, by 2030 it will be more than double (from 150 Mt CO2e to400 Mt CO2e) if current practices are continued. Since more than 87% of GHGs emissions in Ethiopia come from forestry and agriculture sectors and according to IPCC definition of “forest”, the county has a total of 61.62 million ha of “forest” which can sink 2.7 million tons of carbon and can mitigate the impacts of climate change to certain extent. So, Ethiopia can be benefited from the carbon trade and can achieve the zero-emission target of the Climate Resilience Green Economy (CRGE) plan of the country, if a proper forest management practice implemented effectively.