Businesses are allowed to purchase forest carbon credits from July 2026

The decree regulates forest carbon absorption and storage services, including service providers and users, payment mechanisms, forest carbon project development, emission reduction verification, issuance of forest carbon credits, and the exchange and transfer of emission reductions and forest carbon credits.

Under the new regulations, facilities allocated greenhouse gas emission quotas may pay for forest carbon absorption and storage services to offset emissions exceeding their permitted limits. Domestic organizations and individuals seeking to voluntarily reduce greenhouse gas emissions, as well as foreign organizations and individuals legally operating in Viet Nam, are also eligible to use these services.

The issuance of the decree is considered an important step in completing the legal framework for Viet Nam’s carbon market. It also lays the foundation for localities with large forest areas to participate more deeply in emission-reduction programs and generate additional revenue for forest protection activities.

The decree recognizes emission reduction results and forest carbon credits as tradable and transferable assets. Forest greenhouse gas emission reductions are measured as reductions in emissions or increases in forest carbon absorption relative to reference levels. Forest carbon credits may be issued under domestic or international forest carbon standards.

Payments for forest carbon absorption and storage services may be made through two methods: direct and indirect. Under the direct method, service users pay providers through contracts or carbon exchange transactions. Under the indirect method, payments are made through the Forest Protection and Development Fund.

Many experts believe this payment mechanism will help increase the economic value of forests and create stronger incentives for forest owners to invest in forest management and restoration. As global demand for emissions reductions continues to rise, the forest carbon credit sector is seen as having significant development potential.

Payment levels are determined based on one ton of CO2 equivalent or one forest carbon credit. Prices for trading and transferring emission reductions and forest carbon credits may be agreed through contracts, auctions, carbon exchanges, or other legally permitted methods.

Eligible service providers include forest owners under the Law on Forestry, commune-level People’s Committees, and other organizations assigned by the State to manage forests. The decree also allows households, individuals and residential communities that own forests to participate in forest carbon projects under domestic or international standards.

Forest owners may implement projects independently or cooperate, form partnerships or authorize other organizations to develop forest carbon projects. Project documentation must include information on forest area, forest type, forest conditions, planned emission-reduction activities, expected emission reductions or carbon-absorption increases, and benefit-sharing mechanisms among participating parties.

Allowing residential communities and households to participate in forest carbon projects is considered one of the decree’s notable provisions. The regulation expands opportunities for people living near forests to participate in the carbon market while also strengthening community responsibility for sustainable forest protection and development.

For projects involving households, individuals, and communities, the decree requires commitments to voluntary participation. Participants must commit to complying with project regulations and benefit-sharing mechanisms approved under the forest carbon framework.

Revenue generated from forest carbon absorption and storage services, after fulfilling financial obligations, must be used for forest management, protection and development activities in accordance with regulations. For households, individuals and communities, the income earned will be managed and used under current legal provisions.

The decree also requires all forest carbon absorption and storage service activities to ensure transparency, fairness and balanced interests among the State, forest owners and related stakeholders, while remaining consistent with Viet Nam’s international commitments on greenhouse gas emission reductions.

Several localities in Viet Nam have already piloted emission-reduction and forest-carbon credit payment programs, which have initially generated revenue for forest protection and improved local livelihoods. However, experts believe that for the carbon market to operate effectively, Viet Nam still needs to further improve data systems, measurement methodologies, and transparent monitoring mechanisms.

The Ministry of Agriculture and Environment has been assigned responsibility for developing national forest carbon standards, verifying emission reduction results, and issuing forest carbon credits. Provincial People’s Committees will be responsible for organizing the implementation, inspection, and management of related activities at the local level.

The decree will take effect on July 15, creating a legal framework for the registration of forest carbon projects, the issuance of carbon credits, and forest carbon trading activities in Viet Nam.