Forest carbon credits: A breakthrough direction for green growth

Numerous opportunities

Mr. Pham Hong Luong, Deputy Director of the Forestry and Forest Protection Department (Ministry of Agriculture and Environment), stated that as a province with the largest forest area nationwide and the World Biosphere Reserve spanning over one million hectares, Nghe An is standing before a special opportunity to develop the forest carbon credit market.

In the context of Viet Nam's commitment to achieving net-zero emissions by 2050 and its ongoing efforts to develop a domestic carbon market, quantifying the carbon absorption value of forests not only generates financial resources for localities but also directly contributes to the national goal of green growth. Initial outcomes from the Emission Reductions Payment Agreement (ERPA) in the North Central region show great potential, though they come with considerable challenges related to institutions, techniques, and awareness.

For many years, Nghe An has consistently been a locality with significant contributions to forest protection and development. A forest cover of over 59%, a large natural forest area, and rich endemic ecosystems have laid the foundation for the province to participate in ERPA alongside five other North Central provinces. During the 2018-2024 period, the North Central region reduced CO₂ emissions by 10.3 million tons and received a payment of USD 51.5 million from the World Bank. Nghe An alone is the largest beneficiary, with more than 790,000 hectares eligible for payments. The province has disbursed funds to nearly 28,000 forest owners, including households, communities, organizations, and commune-level authorities. This payment has become a considerable financial resource supporting forest protection and generating additional income for local residents.

However, payments from the ERPA are only an initial step. The forest carbon credit market, especially the international voluntary market worth billions of USD annually, remains largely untapped in Nghe An. Although several domestic and foreign organizations and private enterprises have conducted surveys and explored opportunities to develop carbon projects under international standards such as Verra (VCS) or Gold Standard, none has progressed to actual implementation. The main reasons are legal barriers, particularly the lack of clarity regarding carbon ownership, along with high initial investment costs.

Despite these challenges, Nghe An is still assessed to have enormous potential for developing the forest carbon credit market. With nearly one million hectares of forest, including large areas within the Western Nghe An Biosphere Reserve, which has exceptionally high carbon absorption and biodiversity value, the province is capable of supplying high-quality credits aligned with the global trend toward multiple-benefit credits. At the same time, the national legal framework for the carbon market is rapidly completed. Decree No. 06/2022/ND-CP and Decree No. 119/2025/ND-CP have laid the foundation for emission management and the development of the domestic carbon market. A carbon trading exchange will be piloted from 2028 and officially operated from 2029. When domestic enterprises begin fulfilling emission-reducing obligations, demand for carbon credits is projected to rise sharply, creating a stable market for localities with forests, of which Nghe An holds the greatest advantage.

Additionally, Nghe An also has practical experience from implementing the ERPA, one of the largest REDD+ programs in the country. Through this program, the MRV system, technical officials, benefit-sharing procedures, and coordination mechanisms across levels have initially been established. This is an important advantage as the province enters the phase of carbon market development under new mechanisms that require higher levels of standardization and transparency.

However, to effectively tap into these opportunities, Nghe An must address several core challenges simultaneously. First is the issue of carbon ownership, particularly for natural forests, protection forests, and areas managed by local communities. In addition, MRV capacity remains limited, making it difficult for many grassroots localities to meet the requirements for developing independent projects. Forest data in some areas is inconsistent and not regularly updated, affecting the accuracy of calculations on carbon sequestration or emissions reductions.

Moreover, awareness of some forest owners remains incomplete. Many people still view forest protection as an obligation rather than recognizing its long-term economic benefits. A number of people do not fully understand the nature of the mechanism, their rights, or their responsibilities when participating, which may lead to skepticism, ineffective cooperation, or even vulnerability to exploitation by intermediaries.

Forest carbon market development must be identified as a strategic task and a driver of growth

To overcome these challenges and seize the opportunities, Mr. Pham Hong Luong noted that Nghe An needs a comprehensive strategy and a methodical, systematic development roadmap through 2035, built around synchronized solution groups across three phases. Specifically, the pilot phase through 2028 focuses on finalizing mechanisms and testing a number of internationally certified projects in suitable forest areas. The 2029–2030 phase connects to the national carbon exchange and scales up project implementation. The 2031–2035 phase aims at forming a provincial-level carbon market, attracting private investment, and developing value chains linked to livelihoods, ecotourism, and forest-based products.

Accordingly, the Party Committee, the People’s Council, and the People’s Committee of Nghe An Province must demonstrate the highest level of political determination, identifying the forest carbon market development as a strategic task and a new growth driver for the province. They should provide clear direction for the formulation and early issuance of the "Nghe An Provincial Forest Carbon Market Development Project," including a roadmap, resources, and the assignment of responsibilities.

At the same time, the province should proactively propose to the Central Government the permission to pilot special mechanisms to address the issues of carbon rights and benefit sharing while waiting for the national institutional framework and legal documents to be completed.

For specialized agencies such as the Department of Agriculture and Environment and the Forest Protection and Development Fund, they must play the role of “conductors,” proactively advising and connecting stakeholders, including research institutes, universities, enterprises, international organizations, and local communities. Priority should be given to investing in enhancing human capacity and developing digital forest data infrastructure, considering this a strategic investment for the future. These agencies should also actively seek and mobilize technical and financial support from development partners to implement pilot projects.

The Ministry of Agriculture and Environment and the Ministry of Finance need to accelerate the drafting and issuance of sub-law documents to clarify carbon ownership and develop a fair national benefit-sharing framework applicable to all projects.

Particularly, early completion and operation of the carbon exchange and the national carbon credit registration system are necessary to create a transparent platform that can connect with international markets and avoid risks of double counting.

Deputy Director of the Forestry and Forest Protection Department Pham Hong Luong emphasized that the journey to develop the forest carbon market in Nghe An is a long one that demands persistence, innovative thinking, and close coordination. However, with the right and decisive steps right from now, Nghe An can absolutely become a pioneering locality and a national model in turning "green gold" into a driver of green economic development, paving the way toward a sustainable future for the province.