Forest carbon credits: Great potential

Since the Government decided to close forests, localities in the Central Highlands have implemented many solutions to restore and protect forests. As a result, forested areas have expanded and thrived, creating significant economic development potential under the forest canopy, particularly through carbon credits. However, many forest owners have struggled to implement carbon credit initiatives, as the concept is still relatively new and lacks specific guidance.

Potential for forest-based economic development

Located along National Highway 28, Ta Dung National Park in Ta Dung commune, Lam Dong province (formerly Dak Nong), encompasses rolling primeval forest with diverse ecosystems and numerous rare flora and fauna listed in the Red Book. The park covers approximately 21,000 ha, of which nearly half is primeval forest, while the remainder consists of various types of secondary forest, with a cover rate of over 85%. It is one of the tropical moist evergreen forests typical of the Central Highlands, with significant potential for carbon sequestration. In addition, Ta Dung National Park has around 5,000 ha of restored forest currently in a rapid growth phase, giving it an advantage in carbon absorption and storage. In particular, bamboo and mixed bamboo-wood forests are also assessed to have higher carbon absorption and storage potential than other forest types.

According to Mr. Khuong Thanh Long, Director of Ta Dung National Park, with its extensive natural forest area, Ta Dung is considered a major carbon storehouse. Implementing carbon credits would help increase the park’s revenue, better supporting forest care, protection, and development.

Similarly, the Thac Mo Protection Forest in Tuy Duc commune, Lam Dong province, covers more than 6,500 ha of evergreen forest. According to Mr. Nguyen Xuan Khuong, Director of the Thac Mo Protection Forest Management Board, Thac Mo is classified as one of the forests of importance for conserving rare flora and fauna listed in the Red Book. Thanks to its largely intact primeval forest ecosystem, this area also holds the potential for developing the carbon credit market.

"Developing forest carbon credits means that all tasks and solutions to improve forest quality must be effectively implemented. The locality will focus on managing existing forest areas well, strengthening forest development, and promoting forest-based economic development. Carbon credit development is an opportunity to supplement financial resources, increase income, and improve livelihoods for forest owners and local communities, thereby supporting forest management and protection," Mr. Khuong stated.

Mr. Nguyen Ngoc Binh, Chairman of Nam Tay Nguyen Forestry One-Member Limited Liability Company—forest owner of Nam Tay Nguyen forest, said that forest carbon credits are determined by the amount of CO₂ generated from greenhouse gas emission reduction through deforestation and forest degradation, sustainable management of forest resources, and conservation and enhancement of forest carbon stocks. Forest owners can convert the forest area they manage and protect into CO₂ absorption, which is then sold as carbon credits. However, in reality, generating revenue from carbon credits is far from simple, requiring numerous complex steps and procedures.

"Participating in the carbon market not only helps reduce environmental compliance costs but also opens up opportunities to access green finance, enhance brand image, and meet increasingly strict standards on ESG (the Environmental–Social–Governance criteria for sustainable development) in global supply chains," said Mr. Khuong Thanh Long.

Remaining several barriers

According to experts, Viet Nam's forest cover currently reaches over 42%, equivalent to nearly 15 million hectares. This represents significant potential for developing the carbon credit market and for implementing projects such as REDD+ (Reducing Emissions from Deforestation and Forest Degradation) or new reforestation initiatives. In 2023, Viet Nam successfully sold 10.3 million forest carbon credits to the World Bank, earning more than USD 51 million. This figure demonstrates the enormous financial potential of this resource.

Forest carbon trading refers to the commercialization of forests’ capacity to absorb carbon. Viet Nam is one of the countries with the potential of forest resources and forest carbon credit projects. It is estimated that, over the 2021–2030 period, Viet Nam will have around 40–70 million forest carbon credits available for sale on the international carbon market, valued at tens of trillions of dong.

Regarding carbon credits, in June, the Government issued Decree 119/2025/ND-CP amending and supplementing several provisions of Decree 06/2022/ND-CP on emission reduction. The decree takes effect on August 1. Under this framework, from now until the end of 2028, the Government will develop and pilot the operation of a domestic carbon exchange; implement mechanisms for domestic carbon credit trading and offsetting; and from 2020, establish and apply a greenhouse gas emission quota auction mechanism.

From 2029 onward, the Government will develop and implement the auction mechanism for greenhouse gas emission quotas; finalize regulations on carbon credit management and the trading of emission quotas and carbon credits; and complete the legal regulations on the organization, management, and operation of the domestic carbon market as well as participation in the global carbon market.

Viet Nam is currently one of the few countries in Asia with a legal framework that recognizes the role of forest carbon in climate change adaptation and mitigation as well as orients the development of forest carbon credit trading.

However, for the carbon market to become a strategic instrument that helps Viet Nam achieve its Net Zero target while driving green growth across the economy, the State needs to implement several measures. These include completing the legal framework, particularly regulations related to Measurement, Reporting, and Verification (MRV), carbon credit ownership, emission quota allocation and auction mechanisms, and mechanisms for resolving disputes and handling violations.

It is also essential to establish a national carbon credit trading exchange soon, creating a transparent and accessible market for businesses. At the same time, policies are needed to support small and medium-sized enterprises, including access to green credit, technical training, and climate investment funds such as the Green Climate Fund (GCF), JETP, or capital from international organizations like the World Bank and the Asian Development Bank.

* USD 1 = VND 26,136 (Source: Vietcombank)