Standardizing valuation, expanding partnerships for forest carbon

Standardizing the valuation of forest carbon credits

On August 13, the Department of Forestry and Forest Protection released the latest draft of the Decree on Forest Carbon Sequestration and Storage Services. Compared with the earlier consultation draft, this version adds comprehensive regulations on valuation, cooperation mechanisms, project linkages, and financial arrangements.

The scope of regulation has been expanded from Article 1. In addition to principles, conditions, payment levels, and revenue management, the decree now covers “cooperation and linkages in implementing mitigation measures and forest carbon projects.”

The decree also includes a significant increase in appendices, which provide templates for price proposals, starting-price approval plans, cooperation contracts, project dossiers, provincial fund allocations, meeting minutes, commitments, and detailed financial plans.

For the first time, a standardized valuation process has been laid out. Previously, the Ministry of Agriculture and Environment was only tasked with issuing valuation methods, while provincial People’s Committees developed price schedules. The new draft details a complete procedure: from proposing a starting price, dossier verification, approval, and at least 30 days of public disclosure, to negotiation, contracting, or listing on the trading floor.

Timeframes are clearly defined, ranging from 5 to 45 working days for each stage. Project disclosure must specify location, area, starting price, eligibility conditions, and negotiation timelines.

Cooperation mechanisms have also been separated into two distinct articles, depending on whether the forest is publicly or privately owned.

For privately owned forests, owners may sign cooperation contracts with domestic or foreign partners (with investment procedures required in the latter case), establish coordination boards, and follow standard templates issued under the decree.

For publicly owned forests, managing organizations must submit cooperation proposals for appraisal and receive approval within 30 days. Contracts left unimplemented for more than 24 months may be terminated, except in force majeure cases.

The draft also provides a step-by-step process for forest owners with adjacent or interspersed land. Provincial authorities must notify 30 days in advance, and owners then have 45 days to apply. Authorities will inspect within 30 days, commitments must be submitted within 15 days, and approvals must be completed within another 15 days. The previous draft only required a “participation commitment” without clear timelines.

The financial framework has been broadened. Up to 5% of total revenues may now be allocated to the Forest Protection and Development Fund and provincial funds for activities such as developing valuation methods, purchasing forest protection equipment, and fire prevention.

Non-business forest organizations are also allowed to allocate funds for integrated agroforestry and aquaculture, land and forest allocation, livelihood improvement, product marketing, biodiversity conservation, and study tours.

To support implementation, the decree introduces a wide range of templates for cooperation contracts, credit transfers, project dossiers, notifications, participation applications, inspection reports, voluntary commitments, forest owner lists, and financial plans for the national fund, provincial funds, organizational forest owners, and commune-level authorities.

These additions are expected to make the decree operational immediately upon issuance, while opening new financial channels through carbon markets for forest protection and development.

To be submitted to the government in September

At a consultation workshop on August 15, experts raised questions on the creation of forest carbon credits, from determining carbon stocks and applying standards to measurement, reporting, and verification (MRV). Carbon stock, they noted, is only an input and cannot become a tradable credit without independent verification and certification by a recognized standards body.

Another issue discussed was the criteria for credits to qualify for transactions. Beyond additionality and methodological transparency, credits must also comply with environmental and social safeguards, ensure community participation, especially of ethnic minorities, and guarantee fair benefit-sharing.

Delegates expressed concern over the high costs of credit generation, including mitigation measures, dossier preparation, MRV, and account maintenance. Demand-side uncertainties were also flagged, as Vietnam has not yet launched a mandatory carbon market. A pilot exchange is scheduled for 2025, with full operation planned in 2028.

Experts also warned of risks from natural disasters, forest fires, pests, illegal logging, or policy changes, which could lead to credits being revoked or canceled. They called for contingency mechanisms to safeguard the integrity of Vietnam’s carbon market.

Director General Tran Quang Bao emphasized that forests and forestry will be central in achieving Vietnam’s net-zero emissions target by 2050. With more than 14.85 million hectares of forest, protection and development efforts not only cut emissions but also unlock financing opportunities from international partners and enterprises, particularly via carbon credit mechanisms.

“At present, the legal framework for managing and trading forest carbon credits is still incomplete”, Bao said. While the Government has issued decrees on greenhouse gas reduction and ozone protection, there is still no legal foundation specifically for credit verification, certification, trading, and revenue management in the forestry sector.

Existing documents, such as Decree 06/2022, Decree 08/2022, and the pilot transfer of 10 million forest carbon credits to the World Bank, remain limited in scope.

The Ministry of Agriculture and Environment is finalizing the draft decree for submission to the Government in September 2025 after completing the final consultation round. The drafting agency has organized numerous technical workshops and collected feedback from provinces, ministries, international organizations, and the scientific community to ensure the rules are practical, transparent, and aligned with market standards.

“We hope to continue receiving contributions from stakeholders so the decree can soon be applied in practice, creating a transferable value system that serves both environmental goals and economic development”, Bao said.