As of August 2023, the World Bank (WB) has paid $41.2 million for the first batch of carbon credits, equivalent to 997 billion VND. Currently, Vietnam has transferred the remaining carbon credits, and the WB is in the process of making the final payment of $10.3 million (about 250 billion VND).
Vietnam has recently received nearly 1,000 billion VND from the World Bank for the transfer of forest carbon credits. In 2020, the Ministry of Agriculture and Rural Development (MARD) and the World Bank (WB) were authorized by the Forest Carbon Partnership Facility (FCPF) to pay for greenhouse gas emission reductions in the North Central Region.
Carbon Credits Promote Green and Sustainable Economic DevelopmentUnder this agreement, Vietnam will transfer 10.3 million tons of CO2 emissions reductions in the North Central Region from 2018 to 2024 to the Forest Carbon Partnership Facility through the World Bank. The transfer price is $5 per ton, amounting to $51.5 million, or about 1,250 billion VND.
Notably, the transferred emissions reductions were generated from natural forests during the 2018-2019 period. This presents an opportunity for Vietnam to access the voluntary carbon market, creating a financial source for forest protection and development in the North Central Region.
Under this agreement, Vietnam will transfer 10.3 million tons of CO2 emissions reductions in the North Central Region from 2018 to 2024 to the Forest Carbon Partnership Facility through the World Bank. The transfer price is $5 per ton, amounting to $51.5 million, or about 1,250 billion VND. Ảnh: TL
As of August 2023, the World Bank (WB) has paid $41.2 million for the first batch of carbon credits, equivalent to 997 billion VND. Currently, Vietnam has transferred the remaining carbon credits, and the WB is in the process of making the final payment of $10.3 million (about 250 billion VND).
These funds will be used to pay forest owners, local governments, and organizations responsible for managing natural forests. Additionally, a portion of the money will be allocated to other groups involved in activities related to forest development, reducing deforestation, combating forest degradation, improving incomes, and enhancing livelihoods for forest-dependent communities.
Mr. Le Van Thanh, Deputy Director of the Vietnam Forest Protection and Development Fund, the organization receiving the payment for the first batch to distribute to forest owners, stated: "Since October 2023, this agency has coordinated over 962 billion VND for the Forest Protection and Development Fund of six provinces in the North Central region."
Among them, Thanh Hoa Province received nearly 163 billion VND; Nghe An Province received nearly 283 billion VND; Ha Tinh Province received nearly 123 billion VND; Quang Binh Province received over 235 billion VND; Quang Tri Province received over 51 billion VND; and Thua Thien-Hue Province received over 107 billion VND.
“Participating in the forest carbon credit market helps forest owners and farmers directly involved in forest conservation earn additional income. Localities also gain financial resources to manage, protect, and improve the quality of forest ecosystems in the region,” Mr. Thanh said.
Potential for Tens of Thousands of Billion VND but Businesses Are Reluctant to InvestMr. Le Van Thanh shared that Vietnam has more than 14.7 million hectares of forests, with a forest cover rate of over 42%, including more than 10 million hectares of natural forests. It is estimated that during the period from 2021 to 2030, Vietnam could have around 40-70 million forest carbon credits available for sale in the global carbon credit market.
With around 40-70 million forest carbon credits, in the future, Vietnam could earn tens of thousands of billion VND from forest carbon credit transfers. More importantly, Vietnam’s ecological environment will continue to improve through forest conservation and development, helping the country achieve its goal of net-zero emissions by 2050, as pledged at COP26.
“According to the latest updates, in addition to the agreement for greenhouse gas emission reduction payments in the North Central region that we are currently piloting, some international organizations and foreign companies have approached and proposed to Vietnam for negotiations on buying, selling, exchanging, and transferring forest carbon credits,” Mr. Thanh revealed.
For example, Vietnam is expected to transfer 5.15 million forest carbon credits in the Central Highlands and South Central region from 2022 to 2026, with a price of $10 per ton of CO2. The Ministry of Agriculture and Rural Development (MARD) is actively preparing documents and conditions to negotiate and reach an agreement for this program.
In addition, many localities have proactively developed proposals and requested the Prime Minister to approve a pilot program for forest carbon absorption and storage services.
Thus, it can be seen that the demand for the exchange, transfer, and commercialization of forest carbon credits within the country is rapidly developing. However, Vietnam still lacks specific regulations and guidelines, and there are no regulations regarding international interconnected markets; there is also a lack of a greenhouse gas emissions trading platform and carbon credit exchange. This situation makes businesses hesitant to invest.
Mr. Tran Quang Bao, Director of the Department of Forestry (MARD), said that the Ministry of Finance and the Ministry of Natural Resources and Environment (MONRE) are completing the proposal to establish a domestic carbon market. MARD is also presenting the draft Decree amending and supplementing certain provisions of Decree 156/2018, which includes a proposal to add content about the pilot program for carbon absorption and storage services, reducing greenhouse gas emissions from limiting deforestation and forest degradation, sustainable forest management, and green growth.
“We hope that after the amendment and supplement of some provisions of Decree 156/2018 is issued, along with the initial results of the pilot greenhouse gas emission reduction agreement in the North Central region, it will create a legal framework and important foundation to successfully implement forest carbon absorption and storage services nationwide. This will serve as a key foundation to quickly connect and adapt when the carbon credit exchange platform officially operates in 2028,” Mr. Bao shared.
At the meeting on the Proposal to Establish a Carbon Credit Market in Vietnam on January 8, Deputy Minister of Finance Le Tan Can said: One of the goals of the carbon credit market is to enhance the competitiveness of Vietnamese enterprises, aim for the development of a low-carbon economy, and proactively respond to climate change.
The goods in Vietnam's carbon credit market consist of two types: greenhouse gas emission quotas and carbon credits certified by the Ministry of Natural Resources and Environment (MONRE), which are traded on the domestic carbon credit exchange platform.
Based on the experience of many countries that have established carbon credit exchanges, the Ministry of Finance has proposed implementing this model in Vietnam. In addition, Vietnam's carbon credit market must be connected to the global market so that foreign enterprises can feel secure about investing in production and business activities.
Author of the article: ISATS Institute
Source: thunghiemngaynay.vn