Vietnam could get nearly VND 1,300 billion from carbon credits

According to a report on Vietnam's forest carbon credit market, the Prime Minister assigned the Ministry of Agriculture and Rural Development to implement two agreements to transfer emissions reduction results.

The Emissions Reduction Purchase Agreement (ERPA) in the South Central and Central Highlands for the 2022-2026 period is being negotiated by the Ministry with the Organisation for Forest Financial Enhancement (Emergent ).

Emergent is a trustee of the Lowering Emissions by Accelerating Forest Finance (LEAF). On October 31, 2021, at COP26, Minister of Agriculture and Rural Development Le Minh Hoan signed a Letter of Intent with Emergent under the witness of Prime Minister Pham Minh Chinh.

Vietnam will transfer to LEAF/Emergent 5.15 million tons of CO2 to reduce emissions from forests in this area at a minimum price of US$ 10 per carbon credit, equivalent to a total value of US$ 51.5 million (VND 1,277 billion).

The Ministry has completed and applied credit granting according to TREES standards. Also, technical negotiation sessions should be urgently organized with Emergent to complete the negotiation project and report to the Prime Minister for consideration and decision.

Last year, the first Emissions Reduction Purchase Agreement in the North Central region (North Central Region ERPA) was successfully transferred by the Ministry to the World Bank (WB) with an output of 10.3 million tons of CO2. The price per ton of CO2 paid is US$ 5 per carbon credit.

After transferring the above 10.3 million tons of CO2, Vietnam has a surplus of 5.91 million tons of CO2 in the 2018-2019 period. The Ministry proposed to transfer an additional 1 million tons of CO2 to the WB. For the remainder, the Ministry wants the Prime Minister to propose that the WB introduce potential partners to buy this emission reduction according to the signed ERPA method or support Vietnam in connecting pilot auctions through international trading floors. Because at this time, it is difficult for Vietnam to find partners for trade exchange when this segment is still relatively new.

According to the Department Of Forestry, the world has a voluntary international and domestic (mandatory) carbon credit market.

The voluntary international carbon credit market addresses the need for voluntary credit trading to serve corporate social responsibility and create additional credit supply for the domestic carbon credit market. Voluntary carbon markets are often based on bilateral or multilateral contracts and cooperation agreements between organizations, companies, or countries.

Currently, the carbon price on the world's voluntary market fluctuates between US$ 2-4 per ton of CO2, of which the carbon price of the forestry and land use sector in 2021 reaches US$ 3.07 per ton. According to the updated carboncredits.com site, the carbon price of natural ecosystems on March 5 reached US$ 1.57 per ton of CO2.