By 2024, Vietnam has made initial steps for the development of the carbon credit trading market through profitable projects under the management and authorization of government organizations. Typically, the two ERPA agreements are in the North Central region and the ERPA in the South-Central region and the Central Highlands. Below is some important information related to these two initial agreements in Vietnam’s carbon market.
The World Bank (WB) in its capacity as the trustee of the Forest Carbon Partnership Facility (FCPF) and the Ministry of Agriculture and Rural Development signed the ERPA Agreement for the North Central Region on October 22, 2020. The agreement aims to transfer 10.3 million tons of GPT carbon dioxide in the North Central Region between 2018 and 2024, at a unit price of 5 USD/ton of carbon, or 51.5 million USD (1,200 billion VND). About 95% of the transfer results will be transferred back to Vietnam to contribute to the national commitment to greenhouse gas emission reduction (NDC).
However, according to the Emission Reduction Results Report for the first period (2018 – 2019) confirmed by the WB, the emission reduction results in the North Central Region reached 16.21 million tons of carbon. Vietnam completed the transfer of 10.3 million tons of carbon to the WB and received 51.5 million USD. For the remaining 5.91 million tons of carbon, the WB has agreed to purchase an additional 1 million tons of carbon, leaving 4.91 million tons of credits. The ministry continues to coordinate with the WB to measure and confirm the credits of phase 2 (2020 – 2022); phase 3 (2023 – 2024), seek partners who are interested in receiving them to negotiate the transfer, ensure national interests and mobilize additional resources for forest protection and development in the North Central region.
Delegates sign an Emissions Reduction Purchase Agreement (ERPA) at a ceremony on Thursday. VNA/VNS Photo
On October 31, 2021, at COP26, in the presence of Prime Minister Pham Minh Chinh, Minister of Agriculture and Rural Development Le Minh Hoan, and the Enhanced Forest Finance Organization (Emergent), the trustee of the Reducing Emissions through Forest Finance Alliance (LEAF), signed the ERPA Agreement for the South Central and Central Highlands. Vietnam will thus transfer 5.15 million tons of carbon emissions reduction from forests in the Central Highlands and South-Central regions to LEAF/Emergent between 2022 and 2026. With a total value of 51.5 million USD, LEAF/Emergent will pay for this service at a minimum cost of 10 USD per ton of carbon. 4.26 million hectares are the recognized area of commercial forests for emission reduction services, of which 3.24 million hectares are natural forests and 1.02 million hectares are planted forests.
Prime Minister Pham Minh Chinh attended and witnessed the signing ceremony and exchange of 26 cooperation agreements between Vietnamese ministries, sectors and enterprises and British partners.
Currently, the Ministry of Agriculture and Rural Development has finished registering to issue credits in compliance with the TREES standard, which is also referred to as the REDD+ ideal environmental standard. Technical negotiation sessions with the Emergent Organization are being arranged urgently to finish the negotiation project and submit a report to the prime minister for deliberation and decision.
Many countries in the world believe that Vietnam is a potential market and can make a big breakthrough in the future with the exchange of carbon credits in the region and the world. However, up to now, no law in Vietnam clearly stipulates the definition of forest carbon credits, whether they are considered forest products or not. This is also a barrier that makes Vietnam’s carbon credit exchange, and sale activities still lag behind other countries in the region and the world.
The government must take part in bilateral agreements between nations and organizations in order to promote this market. In addition, a specific legal framework for the purchase and sale of carbon credits must be implemented. By doing so, the government will not only contribute to the global reduction of greenhouse gas emissions but will also positively impact the economy by generating green cash flow. According to the Ministry of Agriculture and Rural Development, the official carbon credit trading floor will be organized and run starting in 2028. Additionally, activities pertaining to the exchange and connection of domestic carbon credits with regional and global carbon markets would be regulated.
Sources:
Government News, (2024). Forming Vietnam’s forest carbon credit market.
In China, people in Zhejiang province have been able to earn a profit of more than 1,000 billion VND from selling carbon credit created from bamboo forests capable of processing 1.6 tons of CO2, which motivates people to actively participate in this credit market.
