Unlocking carbon credit potential: [1] Toward a green economy

The carbon credit market is emerging as an effective economic tool, not only creating revenue for localities but also enhancing competitiveness and promoting the development of a green, circular economy. With a vast forest area and diverse ecosystems, Thanh Hoa is becoming one of the pioneering provinces in tapping into this potential.

Significant potential from forests and agriculture

Thanh Hoa possesses 647,000 ha of forest, including 393,361 ha of natural forest and 254,076 ha of planted forest. The forest cover rate in 2024 reached 53.91%, more than 11% higher than the national average. This is an important carbon resource, creating favorable conditions for the province to develop its supply of forest carbon credits and move toward green growth and a circular economy.

Besides, Thanh Hoa also has hundreds of thousands of ha of agricultural land, including 6,000 ha of rice registered for a pilot program to generate carbon credits through the alternate wetting and drying (AWD) irrigation method. In the future, the province aims to accelerate emission-reducing agricultural models, with 100,000 ha of rice applied with AWD irrigation and 15,000 ha of sugarcane and Lam Son raw material areas implemented in accordance with international standards.

At the same time, Thanh Hoa will continue enhancing carbon absorption across 647,000 ha of forest, expanding reforestation, increasing forest cover, and improving the people’s livelihoods. The province aims to reduce an average of 1.8 tons of CO₂e/ha/year. Developing low-carbon agriculture not only helps cut emissions but also raises the value of agricultural production.

Piloting carbon credit generation from forests

Viet Nam's carbon market is developed based on Decree 107/2022/ND-CP, which authorizes the implementation of  the Emission Reductions Payment Agreement (ERPA). Immediately after the decree was issued, despite challenges posed by the diseases and an economic downturn, the Thanh Hoa Provincial People’s Committee directed the Department of Agriculture and Environment, along with relevant agencies, to formulate a methodical ERPA implementation plan.

Implementation activities have been carried out synchronously, including reviewing forest areas, identifying beneficiaries, setting up payment-receiving accounts, conducting environmental and social safeguards screening, and organizing training sessions and guidance on silvicultural methods. All activities aim to ensure transparency, publicity, and compliance with regulations.

After three years of implementation, the program has delivered clear effects. The entire province has 365,758 ha of natural forest eligible for ERPA payments, benefiting over 25,000 households, 264 communities, 38 organizations, and 39 communes temporarily assigned to manage forests. As of November 2025, Thanh Hoa had received VND 199.3 billion, with an additional VND 20.5 billion expected soon from the transfer of 1 million tons of CO₂ to the World Bank. The revenue from carbon credits has been effectively used for forest protection, livelihood improvement, and support for highland communities. As a result, the living standards of forest-dependent households have improved significantly, while public awareness of forest protection has strengthened.

According to Mr. Nguyen Van Tuan, Head of the Forest Protection and Development Fund Management Division (under the Thanh Hoa Fund for Forest Protection, Development, Environment, and Disaster Prevention and Control), revenue from carbon credits has created strong motivation for communities to participate in forest protection. When people see direct benefits from forests, they will proactively protect and restore natural forests, newly plant trees, and apply sustainable management measures. This marks an important step forward in developing a green economy in Thanh Hoa.

Despite these achievements, Thanh Hoa still faces several challenges. The ERPA policy is currently in a pilot phase, and the short implementation period (ending in 2025) makes it difficult for some forest owners to plan and apply long-term silvicultural measures.

Some provisions of Decree 107/2022/ND-CP are not really synchronous and do not fully fit local realities. Following the restructuring of commune-level administrative units, some localities lack experience in ERPA financial management, leading to slow disbursement. The payment level of VND 130,000–158,000/ha/year has not created strong motivation, resulting in limited participation among some households. In addition, many families have not received payments due to lack of information or difficulties in accessing the process.

Another key challenge is the lack of data on measurement, reporting, and verification (MRV) of emissions, which prevents the province from determining its carbon quota or participating more deeply in domestic carbon credit trading mechanisms. In addition, many forest areas are already protected under existing state programs and therefore cannot simultaneously receive ERPA payments, creating difficulties for  forest owners that are organizations.

A sustainable direction

To unlock the potential of forest carbon, Thanh Hoa needs to implement a set of synchronous solutions. Of which, the top priority is developing standards, procedures, and an operational framework for the national carbon exchange. Ministries and sectors need to unify regulations and issue guidelines so that localities can easily participate in the market.

The province should apply remote sensing, GIS, modern measurement, and independent verification technologies to accurately determine carbon stocks and emission reduction potential. Forest rangers, forest owners, and enterprises need to firmly grasp carbon credit generation, project development, monitoring, and trading procedures. Establishing a consistent inspection and monitoring mechanism, from project formulation to payment distribution, is essential to ensure that benefits reach the right stakeholders.

In particular, it is necessary to strengthen international cooperation and technology transfer, as well as draw on experience from the WB, JICA, FAO, and countries with developed carbon markets, to strengthen capacity and expand access to international markets. At the same time, the province should develop model frameworks to support enterprises and forest owners in understanding how to generate carbon credits, register them, and bring them to market, thereby encouraging participation in the carbon value chain for agriculture and forestry.

With its initial results, Thanh Hoa has demonstrated that carbon credits are not merely theoretical but can generate tangible value from forests. However, the legal framework remains incomplete, measurement data is still lacking, payment levels for local communities are not yet attractive enough, and management and monitoring continue to require substantial resources.

"We already have the foundation to develop a carbon market, but patience, coherent policies, and proactive community participation are essential," emphasized Mr. Nguyen Duc Vu, Deputy Head of the Forest Management and Biodiversity Conservation Division under the Thanh Hoa Forest Protection Department.

However, Thanh Hoa province has drawn several important lessons. Strong direction from the Provincial People's Committee and close coordination between departments and the Forest Protection and Development Fund played a decisive role in the program’s success. Forest area reviews and beneficiary identification must be conducted accurately, publicly, and transparently. Communication, training, and awareness-raising for village-level officials and local communities are crucial, helping them clearly understand the benefits of carbon credits and their responsibilities in forest protection. Regular inspection and monitoring also help minimize errors and ensure timely resolution of emerging issues.

Mr. Nguyen Duc Vu, Deputy Head of the Forest Management and Biodiversity Conservation Division under the Thanh Hoa Forest Protection Department, emphasized, "Carbon credits not only generate financial income but also serve as an important tool for sustainable forest management. When people see direct benefits from forest protection, they will take a more proactive role in monitoring and safeguarding forests, reducing the risks of deforestation and forest degradation. This is the key to ensuring the sustainable development of the carbon market in Thanh Hoa."

According to Mr. Vu, the application of remote sensing, GIS, and modern measurement technologies is a key step in accurately determining carbon stocks and emission reduction potential. Once Thanh Hoa masters these datasets, the province will be able to participate in the carbon market proactively, effectively, and with international credibility.”

In practice, every hectare of protected forest and every carbon credit generated is tied directly to community benefits and emission reduction goals. This forms a solid foundation for Thanh Hoa to gradually scale up its efforts, enhance economic and environmental outcomes, and move toward becoming a leading province nationwide for developing a sustainable forest carbon market.

* $1 = VND 26,142 (Source: Vietcombank)