The Government is preparing to issue a decree regulating forest carbon sequestration and storage services, including the transfer of forest carbon credits. The draft decree is currently being consulted and is expected to create a comprehensive legal framework for the trading, payment and management of forest carbon credits when issued...
Vietnam has successfully transferred more than 10 million tons of CO₂ and become the first country among the 15 countries signing the ERPA agreement to transfer 100% of credits in the first period.
Decree No. 107/2022/ND-CP of the Government dated December 28, 12 on piloting the transfer of emission reduction results and financial management of greenhouse gas emission reduction payment agreements in the North Central region, implemented from the date of signing and piloting until December 2022, 31.
ERPA AGREEMENT CREATES FAVORABLE PREMISES
Trading, payment and management of forest carbon credits are important components of Vietnam's carbon market. Since Decree 107 took effect, Vietnam has successfully transferred more than 10 million tons of carbon dioxide (CO₂) to the World Bank's Forest Carbon Partnership Facility (WB) at a price of 5 USD/ton, equivalent to over 50 million USD, and has become the first country among 15 countries signing the ERPA agreement to transfer 100% of credits in the first period.
ERPA is the Greenhouse Gas Emission Reduction Payment Agreement for the North Central Region, signed on October 22, 10 between the Ministry of Agriculture and Rural Development (now the Ministry of Agriculture and Environment) and the International Bank for Reconstruction and Development (IBRD); the IBRD will transfer to the Ministry of Agriculture and Rural Development about 2020% of the signed emission reductions and additional amounts (if any) to be used for Vietnam's Nationally Determined Contribution (NDC).
By the end of 2022, the Government issued Decree No. 107/2022/ND-CP on piloting the transfer of emission reduction results and ERPA management.
Experts believe that promoting the trading of forest carbon credits is a significant driver for climate change mitigation in general and sustainable forest management in particular. Accordingly, the potential financial benefits from forest carbon should be reinvested in forest management and protection; at the same time, considering equitable benefit sharing to achieve forestry sector goals.
According to the draft, forest carbon credits are the amount of CO₂ absorbed through sustainable forestry activities, measured, verified and certified by competent domestic or international authorities, and can be traded on domestic or international markets.
However, the draft decree also stated that the pilot also revealed many limitations. These include the lack of a pricing mechanism; unclear representative of forest carbon assets, while the majority of forests are currently owned by the entire population, managed by the state and assigned to localities and forest owners; lack of a domestic trading floor...
CREATE A COMPLETE LEGAL FRAMEWORK
Statistics from the Ministry of Agriculture and Environment show that the country currently has more than 14,87 million hectares of forest, including over 10 million hectares of natural forest, the rest is planted forest with a forest cover rate of about 42%.
The issuance of the decree regulating forest carbon sequestration and storage services is based on the principle of providing and using forest carbon sequestration and storage services to ensure transparency, responsibility, and harmony of interests between the state, forest owners, and related parties. It stipulates the principles, conditions, subjects, forms, and payment levels; determines the amount of greenhouse gas emission reduction results and forest carbon credits provided; and manages the use of forest carbon sequestration and storage service fees. The subjects of application are state agencies, organizations, households, individuals, and related communities such as forest owners, forest investors, etc.
The draft decree also fully defines the parties participating in the carbon market. Specifically, service providers include forest owners; commune-level People's Committees and other organizations assigned to manage forests according to the provisions of law; foreign organizations and individuals in accordance with the provisions (in Decree No. 06/2022/ND-CP and Decree 119/2025/ND-CP) of Vietnamese law; domestic organizations and individuals not subject to the provisions that need to use emission reduction results and forest carbon credits to voluntarily reduce (offset) greenhouse gas emissions.
Sac Forest - Can Gio Mangrove Forest (HCMC) is known as the "green lung" of HCMC, with great potential in creating and trading carbon credits, especially "blue carbon".
Transactions are carried out in two forms: bilateral contracts between related parties, or through domestic carbon exchanges. Transactions can only be exchanged or transferred in terms of emission reduction results and forest carbon credits after competent state agencies determine the amount of emission reduction results or forest carbon credits provided in accordance with legal regulations.
Payment methods include direct and indirect. In which, direct payment is when the service user pays directly to the service provider according to the contract or according to the domestic carbon trading floor operating mechanism; indirect payment is when the service user pays to the service provider through the Forest Protection and Development Fund according to the contract between the representative of the service provider being a competent state agency.
The draft decree also stipulates the payment level. The payment level is the exchange or transfer price of 1 ton of CO2 or 1 forest carbon credit, calculated in Vietnamese Dong or other foreign currencies.
The determination of exchange and transfer prices for carbon absorption and storage services of forests under the ownership of the entire people is stipulated as follows:
First, the Ministry of Agriculture and Environment prescribes the method for pricing carbon absorption and storage services of forests.
Second, the Provincial People's Committee shall issue a price list for forest carbon absorption and storage services for locally managed forests based on guidance from the Ministry of Agriculture and Environment.
Third, the price of forest carbon absorption and storage services is the basis for determining the starting price on the domestic carbon exchange or for conducting auctions before signing contracts according to the provisions of law.
For the exchange and transfer of emission reduction results and forest carbon credits within 2 or more provinces/cities, the starting price is the highest price from the price lists issued by the People's Committees of the provinces/cities. In cases where there are no regulations on pricing methods and price lists, the Ministry of Agriculture and Environment will negotiate and report to the Prime Minister to decide on the specific price.
Source: https://vneconomy.vn/cbam-va-thi-truong-carbon-co-hoi-tai-dinh-vi-doanh-nghiep-viet.htm
FORMING A CLIMATE FINANCE MARKET
Vietnam has a large forest area with a high coverage rate, so it has an advantage in providing credits from forest carbon absorption and storage. And as mentioned, the trading, payment and management of forest carbon credits is one of the important components of the Vietnamese carbon market, which is identified as an effective climate finance mobilization mechanism.
According to many experts, with great potential for forest carbon, many localities and the private sector are also researching and proposing other pilot projects in the forestry sector.
Currently, the Ministry of Agriculture and Environment is developing an Emission Reduction Trading Agreement for the Central Highlands and South Central Coast regions including Lam Dong, Dak Nong, Dak Lak, Gia Lai, Kon Tum, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan, and Binh Thuan provinces to implement the Letter of Intent with the Alliance for Reducing Emissions through Enhanced Forestry Finance (LEAF).
The forestry sector is also planning to implement many forest carbon credit trading projects. However, to be able to convert advantages into profits or welfare, many technical and institutional challenges need to be overcome.
In fact, the Vietnamese carbon market has not yet been formed; the review, inventory, and monitoring of CO₂ absorption are still limited; the funding for implementing large carbon assessment projects, while there is no specific financial support mechanism; the process of independent auditing and carbon credit authentication has not been clearly established...
In the context of Vietnam's commitment at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) to achieve net zero emissions by 0, this draft decree, when issued, is expected to create a foundation for the forest carbon market to operate stably and transparently, promoting the expansion of international cooperation.
This is also a real opportunity for the forestry sector in the country in general, and forest owners, organizations and individuals planting and exploiting forests in particular, to be self-sufficient in resources, funding and revenue instead of depending on the budget for payment and support.
Source: https://vneconomy.vn/viet-nam-dang-dan-hoan-thien-khung-phap-ly-cho-thi-truong-carbon-rung.htm