KUCHING: Sales of carbon credit is set to be a new resource of revenue for Vietnam.
According to the country’s Agriculture and Rural Development Ministry (MARD), Vietnam can sell 57 million carbon credits to international organisations each year, earning hundreds of millions in US dollar.
The carbon credits can fetch up to US$5 each, according to an earlier Vietnamese news report.
“This (carbon credit) is considered a new resource and if managed well will generate a considerable source of funds to increase incomes of forest growers and make a significant contribution to the protection and development of forests in Vietnam.
“However, in order to take advantage of the potential of forest carbon credits trading, MARD has indicated the country need to improve the legal framework for forests,” said International Tropical Timber Organisation (ITTO) tropical timber market report (Jan 16-31, 2023).
The report said the Vietnamese government has issued a decree last year to provide “Regulations and Reduction of Greenhouse Gas Emissions and Protection of the Ozone Layer”.
The decree also provides detailed provisions for the “Establishment and Development of the Carbon Market” of the Law on Environmental Protection 2020.
For the carbon market, the decree specifies that companies will be given guidance on the scheme and undergo some pilot market operation followed by full operation of the carbon credit trading market to be formally launched in 2028.
In 2020, forest reserves in Vietnam stood at around 900 million cubic metres (cu m), and the figure can reach up to 1.25 billion cu m in the next 10 years.
Carbon storage services are available in at least 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 about one million tonnes of carbon every year, meaning one million carbon credits can be put up for sale internationally.
The report said Quang Nam 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 six million carbon credits for about US$30 million by 2025.
Vietnam has been implementing three major carbon credit trade agreements on a trial basis.
These include the Emission Reductions Payment Agreement signed with the World Bank’s Forest Carbon Partnership Facility 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 US$51.5 million.
MRAD has also signed 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 south central region and central highlands between 2022 and 2026.
The country will be paid US$51.1 million for this service.
The report said experts view carbon credits as new resources in Vietnam, giving the country’s much-needed funding to improve the income for forest growers and to protect and expand forest coverage.
Vietnam Environment and Natural Resources Ministry’s Department of Climate Change vice director Nguyen Tuan Quang had said that Vietnam has been implementing the Vietnam Partnership for Market Readiness Project over the last five years, with pilot studies conducted in steel production and solid waste management.
The project marks a step forward for Vietnam in forming and developing domestic carbon market and reaching the global carbon market, he added.
On the performance of the Vietnam timber industry, the ITTO report said in 2022,the country’s exports of wood and wood products slowed to US$16.9 billion.
Despite the slowdown of export growth last year, the industry is forecasting a recovery in first quarter of 2023.
