Measuring and issuing forest carbon credits: Completely dependent on international standards

Promote the carbon credit market

The Department of Forestry said the unit is establishing an application for forest carbon credits in the Central Highlands and South Central regions, including registration documents and emission reduction credit reports for 2021 and 2022. After seeking advice from the Ministry of Agriculture and Rural Development, the Department continues to complete procedures to sign a support agreement with the Department of Transformation and Sustainable Development, Ministry of Climate and Environment of Norway, to appraise and verify registration documents for carbon credit.

Previously, the Emergent Organization signed a Letter of Intent with the Ministry of Agriculture and Rural Development. In 2023, this organization surveyed, evaluated in-depth and selected the Vietnam Forest Protection and Development Fund as a financial intermediary to implement the Emission Reductions Payment Agreement (ERPA) to reduce greenhouse gas emissions in the North Central region.

This agreement was signed between the Ministry of Agriculture and Rural Development and the International Bank for Reconstruction and Development (IBRD). At the same time, IBRD transferred to the Ministry of Agriculture and Rural Development about 95% of the signed emission reduction amount and the additional amount (if any) for use in Vietnam's Nationally Determined Contributions (NDC).

To determine the carbon credit market as a sustainable direction for the forestry industry, units have focused investment resources on this new field. In particular, the University of Forestry has implemented short-term training courses on forest carbon credit management.

Mr. Tran Lam Dong, Deputy Director of the Vietnam Academy of Forest Sciences, shared that our country's assessment, measurement, and issuance of carbon credits currently relies entirely on international organizations. However, the international and domestic inspection and review process may have certain discrepancies. Some countries with conditions similar to Vietnam's, such as Indonesia and Thailand, have established and approved carbon credit-granting organizations under international practices. He proposed that the Ministry of Agriculture and Rural Development consider and create conditions to develop domestic organizations competent to issue carbon credits.

Vietnam has great potential in the forest carbon credit market. An investigation by the Forestry Department at the end of 2023 shows that the country may have a reserve of 50-70 million credits. With a unit price of US$ 5/credit, Vietnam can earn US$ 200-300 million, equivalent to thousands of billions of VND.

However, in reality, some localities are still facing this problem. For example, Quang Nam is a province with nearly 60% forest coverage, among the top in the country. Three years ago, the province was selected to implement a pilot plan for forest carbon credit business to reduce greenhouse gas emissions by preventing deforestation and forest degradation, sustainable management of forest resources, and reducing emissions from Deforestation and Forest Degradation (REDD+). But until now, the plan has not been approved by the Government.

Mr. Tran Ut, Deputy Director of Quang Nam Department of Agriculture and Rural Development, stated some difficulties, such as The province must reach an agreement on a contract to purchase forest carbon credits at a price not lower than US$ 5/credit; Investors must provide financing in advance; The system of legal documents does not regulate the approach to trading forest carbon credits from REDD+.

Therefore, despite being allowed by the Prime Minister to choose investors for cooperation, Quang Nam has not yet finalized a plan, even though up to 5 international organizations have approached.

Promote sustainable forestry development

Since 2007, the world has established a forest carbon credit market according to the mechanism established within the framework of the United Nations Framework Convention on Climate Change. Accordingly, developed countries with low greenhouse gas emission quotas and emissions exceeding the allowed quota will seek to buy forest carbon credits from the results of REDD+ activities in developing countries that have not yet wholly used greenhouse gas emission quotas.

Among the 60 countries capable of participating in the carbon credit market, Vietnam promptly entered the 15th position. Currently, many organizations and individuals want to participate in this potential market. Still, the implementation process faces many difficulties due to a lack of experience and not ensuring technical and financial resources.

Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri shared that he recently worked with a JICA working group to request support for Vietnam to quickly make REDD+ payments to provinces in the Northwest, Northeast and South Central.

The leader of the Ministry of Agriculture and Rural Development added that the entire industry is moving exceptionally strongly right from the beginning of 2024, clearly demonstrated by the early issuance of many projects and decisions on forestry, creating a new momentum for forestry workers. At the same time, export value in the first two months of the year grew positively, approximately the record year of 2022. The speed of forest development, timber exploitation from planted forests, and collection of forest environmental services are stable per the plan.

Regarding carbon credits, the Deputy Minister highly appreciated the achievements made in 2023, especially the transfer of more than 10 million credits in the North Central region. He further noted that some still do not understand the selling price of US$ 5/credit. This is a voluntary selling price, so it is lower than the mandatory price.

Through surveys in a number of countries that have sold carbon credits in a voluntary form, the average price is about US$ 3.8/credit. Some places sell it lower, about US$ 2.5/credit; others sell it for US$ 7/credit.