Vietnam takes steps towards carbon credit market

Illustrative photo. (Source: kinhtemoitruong.vn)

Hanoi (VNA) – Vietnam’s carbon market is expected to thrive in the near future, given that the country has large forest reserves and many corporations stand ready to pour billions of US dollar to purchase forest carbon credits from Vietnam.
 
It was estimated that Vietnam will be able to sell 57 million carbon credits to international organisations annually. Each of the credits can fetch as much as 5 USD.
 
In 2020, forest reserves in Vietnam stood around 990 million cu.m and the figure can reach up to 1.25 million cu.m in the next 10 years. Carbon storage services are now available in 23 cities and provinces nationwide, including Quang Nam.
 
With total of 628,000 hectares of forest, the south-central province of Quang Nam can store approximately one million tonnes of carbon every year, meaning one million carbon credits can be put up for sale internationally.
 
The province has asked for the government’s permission to be the first in the country to join the voluntary carbon market. It expects to sell some 6 million carbon credits for about 30 million USD by 2025.
 
Vietnam has been implementing three major carbon credit trade agreements on a trial basis. They include the Emission Reductions Payment Agreement (ERPA) signed with the World Bank’s Forest Carbon Partnership Facility (FCPF) in October 2020. Under the deal, Vietnam will reduce 10.3 million tonnes of carbon dioxide emissions from six North Central provinces until 2025 to receive up to 51.5 million USD.
 
The Ministry of Agriculture and Rural Development has also inked a Letter of Intent with the Organisation for Forest Financing (Emergent), a trustee of the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition, enabling Vietnam to transfer to LEAF/Emergent 5.15 million tonnes of carbon dioxide emissions reduction from forests in the South Central region and Central Highlands between 2022 and 2026. The country will be paid total of 51.5 million USD for this service.
 
Carbon credits are viewed by experts as new resources in Vietnam, giving the country much-needed funding to improve income for forest growers and to protect and expand forest coverage.
 
Nguyen Tuan Quang, Vice Director of the Ministry of Environment and Natural Resources (MoNRE)’ Department of Climate Change, said Vietnam has been implementing the Vietnam Partnership for Market Readiness Project (VNPMR) over the last five years, with pilot studies conducted in steel production and solid waste management.
 
Now almost completed, the project has marked a step forward for Vietnam in forming and developing domestic carbon market and reaching the global carbon market, he added.
 
Deputy Prime Minister Le Van Thanh has recently demanded the Ministry of Finance to coordinate with the MoNRE and concerned agencies to draft a domestic carbon market development plan in line with the 2020 Law on Environment Protection.
 
Experts have also urged Vietnam to develop legal framework for forming the carbon market and build a system for calculating and monitoring greenhouse gas emissions and a transparent and reliable Monitoring, Reporting and Verification (MRV) system at the national, sectoral and sub-sectoral levels to ensure the successful operation of the carbon credit market./.