Vietnam opens door to foreign carbon credit traders

 The Ministry of Agriculture and Rural Development has proposed expanding the list of eligible buyers of emission reduction results and forest carbon credits to foreign organizations and individuals.

The proposal is included in the draft decree on forest carbon sequestration and storage services,

According to the 2017 Law on Forestry, eligible buyers of forest carbon credits were restricted to organizations and individuals involved in high-emission production and business activities. However, the ministry explained that many international partners, including the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition, Amazon, and Eni, have expressed interest in purchasing Vietnam’s forest carbon credits.

If the list of eligible buyers remains restricted under the previous rules, demand for forest carbon credits will be limited, making them less competitive compared to credits from sectors such as agriculture, livestock, energy, transportation, and waste.

A carbon credit is a tradable permit that allows the holder to emit one metric ton of CO₂ or an equivalent amount of another regulated greenhouse gas.

Since 2022, Vietnam has piloted the transfer of forest emission reduction results in the north central region. To date, this pilot program has successfully transferred 10.3 million tons of CO₂ to the World Bank, generating US$51.5 million in revenue.

In addition to the six provinces involved in that pilot, the northern provinces of Lao Cai and Son La have also been approved to trial forest carbon sequestration services. However, implementation in these provinces has stalled due to the absence of a national legal framework governing the exchange and transfer of forest emission reduction results and carbon credits.

In addition to foreign entities, the ministry proposed including domestic enterprises with low emissions and those not subject to greenhouse gas emission quotas as eligible buyers. Many of these companies seek carbon credits to meet their voluntary emission reduction targets.

For public forests, the draft decree requires that any transfer of carbon credits ensure Vietnam’s forestry sector contributes its portion of the nationally determined contributions (NDCs). The sector is responsible for 3.5% of the national emission reduction target of 15.8% in 2030, with efforts focused on publicly owned forest areas.

The draft outlines a pricing methodology for publicly owned forests. Provincial-level People’s Committees will set official forest carbon credit price lists as the basis for Vietnam’s domestic carbon exchange. If no method or list issued, the ministry will negotiate and submit proposed prices to the prime minister for approval. These guidelines also apply to pricing credits from privately owned or household-managed planted forests.

Link to the original article