Forest carbon credit trading for greenhouse gas neutrality

Toward carbon neutrality, countries with large forest areas, such as Viet Nam, are facing a significant opportunity: leveraging their green assets to reduce emissions and mobilize resources for economic development.

Forests are increasingly being recognized as a key pillar in strategies to reduce greenhouse gas emissions. According to information presented at the consultation workshop “Opportunities for Forest Carbon Credit Trading in Viet Nam,” held under the Technical Assistance program “Analysis of Forest Carbon Credit Trading Opportunities in Viet Nam,” funded by the World Bank and implemented by the consulting consortium including the Viet Nam National Energy and Environment Consultancy (VNEEC) and South Pole Group, forest carbon credits are becoming an important financial resource.

They support forest protection and restoration efforts, contribute to biodiversity conservation, and improve the livelihoods of forest-dependent communities.

Forests as a pillar in greenhouse gas emission reduction

Under the Emission Reduction Payment Agreement for the North Central Region with the World Bank, Viet Nam achieved 16.2 million tCO₂e of verified emission reductions in 2018-2019, independently assessed and certified as eligible for trading. Of this amount, 10.3 million tCO₂e have already been traded, 1 million tCO₂e have been approved by the Government for additional transfer under Resolution 261/NQ-CP dated August 29, 2025, and the remaining 4.9 million tCO₂e could potentially be commercially exploited in the future.

At the same time, forest carbon credit programs such as the Central Highlands - South Central Coast emissions reduction program are expected to generate an additional 20 million tCO₂e during the 2021–2025 period, with 5.15 million tCO₂e already planned for transfer to the organization Emergent. These figures highlight Viet Nam’s significant potential to promote forest carbon trading to support the forestry budget and the green transition.

Despite the relatively large volume of existing and future credits, bringing them to market remains constrained by numerous barriers. According to analyses by consulting teams from VNEEC and South Pole, three major bottlenecks impede commercialization: an incomplete legal and institutional framework; limited technical infrastructure for the carbon market; and weak local implementation capacity.

Viet Nam is expediting the completion of a system of decrees governing the domestic carbon market, international carbon credit exchanges, forest carbon sequestration and storage services, and the national carbon credit registry. This is seen as a critical foundation for ensuring transparency, meeting international requirements, and attracting potential buyers.

In addition, the MRV system still needs to be standardized at a broader scale to ensure the credibility and traceability of credits in the global market.

Highly competitive in the carbon market

Research findings presented at the workshop indicate that the suitability and value of carbon credits depend heavily on their vintage and the market mechanisms they enter. Credits generated during the 2018 - 2019 period may not meet the requirements of compliance markets or the Paris Agreement Article 6 mechanisms, but they can still be traded on the voluntary market. However, time is increasingly becoming a barrier, as older credits tend to lose value and face growing difficulties in market acceptance.

By contrast, credits generated from 2021 onwards offer broader opportunities in compliance markets, such as Article 6.2 and CORSIA, for the aviation sector, where prices are significantly more attractive.

According to the survey, several international corporations and organizations, including Amazon, Eni, and the LEAF Coalition, have engaged with and expressed interest in Viet Nam’s forest carbon credits. Seven out of the fifteen surveyed organizations indicated a desire to engage more deeply with the Government of Viet Nam regarding the purchase of these mitigation outcomes.

This market interest is an encouraging signal, but it also places pressure on Viet Nam to enhance the international competitiveness of its forest carbon credits.

Viet Nam aims to pilot a domestic carbon market from 2025 and to have it fully operational by 2029. This timeline is a critical milestone that will determine the country’s ability to capitalize on existing credits and maintain its attractiveness to international markets.

If progress is delayed, Viet Nam risks missing opportunities to trade the credits already generated, losing financial resources needed for forest protection and development, weakening its competitiveness in the global carbon market, and facing greater difficulty in achieving carbon neutrality targets under international commitments.

Conversely, if seized in a timely and strategic manner, forest carbon credits can become a source of green finance for the forestry sector and the broader economy.

To achieve carbon neutrality by mid-century, forest carbon credits must be a core component of the national emissions-reduction strategy. This will only be possible if institutional, infrastructure, and implementation capacity barriers are addressed at an early stage.

Viet Nam is at a golden moment to assert its role in the global carbon market. With more than 14.7 million hectares of forests, Viet Nam’s forests are not only a "green shield" against climate change but also an asset that can be transformed into a new source of economic value if harnessed effectively.