Statistics from the Center for People and Nature (under the Vietnam Union of Science and Technology Associations (VUSTA)) show that Vietnam had issued about 29.4 million carbon credits from 276 projects under the Clean Development Strategy as of the end of November 2022. Mechanism (CDM) for the mandatory carbon market, mainly in the areas of hydropower, renewable energy, biomass energy and energy efficiency. The voluntary carbon market has been formed with 32 projects, releasing 5.75 million carbon credits in the fields of hydro, solar and wind energy.
According to Director To Xuan Phuc of the Forestry Policy, Trade and Finance Program (under Forest Trends – a non-profit organization that encourages the maintenance of sustainable ecosystems and the connection of economic instruments to achieve this goal), Vietnam has great potential when participate in the carbon market. Vietnamese forests can generate huge revenues from carbon credits thanks to their vast area of 14.7 million hectares, which absorb around 70 million tons of carbon annually.
The government is now developing a plan to operate the carbon market under the mandatory mechanism in the future. Accordingly, during 2021-2027, Vietnam will focus on preparing regulations to manage carbon credits, identify exchange quotas, control greenhouse gas emissions and build an operational mechanism for a carbon credit trading floor.
This will be followed by instructions for measuring and reporting carbon credits, setting up a carbon credit trading floor, and developing a national greenhouse gas inventory system. The pilot time comes afterwards.
Quang Binh Province earns VND80 billion (USD3.16 million) from the sale of carbon credits and has been chosen as a place for testing the transmission of emission reduction results and the financial management of emission reduction payments in the North-Central Region, in accordance with Decree No . 107/2022 /ND-CP, issued on December 28, 2022 by the government.
The province received 80 percent (equivalent to VND235 billion or US$9.27 million) from the agreement to pay for emissions reductions from natural forests. In 2023, it also received VND82.48 trillion ($3.25 billion) to supply more than 10,700 households and communities, as well as 16 forest owner organizations, along with 71 departments and 9 organizations responsible for forest management.
The Vietnam Forest Protection and Development Fund has paid more than VND72 billion ($2.84 million) to those working in this field, accounting for 88 percent of the plan.
The rest will be used for the 2024 financial plan. These revenues have greatly contributed to increasing the income of local people who rely on forests for their livelihood in Quang Binh Province.
Other provinces that also receive money from the sale of carbon credits are Thanh Hoa (VND162.6 billion – $6.41 million), Nghe An (VND285 billion – $11.24 million), Ha Tinh (VND123 billion – $4.85 million), Quang Tri (VND51 billion – $4.85 million). $2 million) and Thua Thien-Hue (VND107 billion – $4.22 million).
To achieve such an impressive result, Quang Binh Province actively participated in the project ‘Supporting to Carry out REDD+ in Vietnam’ during the period 2013-2016, which was organized by the Forestry Carbon Partnership Fund through the sponsor of the World Bank.
The province also cooperated with consultation units to form a forest reference for the emission pathway in the North-Central Region, which becomes a basis for calculating the emission, carbon absorption and storage in Vietnamese forests.
The results show that Quang Binh Province is able to reduce 4.5 million tons of carbon compared to the reference, while promoting forest services and biodiversity conservation, in addition to developing ecotourism for sustainable forestry growth.
The province also aims to plant large timber forests and prepare appropriate measures for sustainable forest development or the issuance of forest credits.
Head Nguyen Van Minh of the Office for Economy and Climate Change Information (under the Department of Climate Change of the Ministry of Natural Resources and Environment) emphasized that the carbon credit market will help Vietnam increase its competitiveness in attracting foreign capital and export activities , especially to markets with high environmental protection requirements.
To obtain a carbon credit, an organization must follow seven mandatory steps: developing project design documents, writing a project approval letter, conducting a project review, registering for the project, verifying the amount of greenhouse gas emissions reduced by project, having an independent unit to recheck this figure and issue a corresponding number of carbon credits. Since this is a rather complicated process, interested organizations should actively research the related legal requirements.
Dr. Pham Van Dai of the Fullbright School of Public Policy and Management said that in order for the carbon credit market to function sustainably and effectively, the government must urgently perfect the corresponding legal regulations and technical standards regarding transaction mechanisms.
Vietnam should classify carbon credits as a resource in need of protection. It is also necessary to save domestic carbon credits for Vietnamese companies so that they do not have to buy from others at high prices when participating in the global carbon credit market.
Director Nguyen Toan Thang of the HCMC Department of Natural Resources and Environment shared that in adopting Resolution 98/2023/QH15, HCMC selected the two projects: ‘Replacing normal street lamp lamps with LED lamps’ and ‘Installing solar panels on roofs of state lanterns’. ownership of buildings’ to participate in the carbon market.
The project “Testing a Financial Mechanism to Implement Measures to Reduce Greenhouse Gas Emissions Under the Carbon Credit Exchange Mechanism” is a joint effort between HCMC’s Finance Department and HCMC’s Natural Resources and Environment Department.
The latter will also work with the four ministries of Industry and Trade, Transport, Agriculture and Rural Development, and Natural Resources and Environment to identify the contribution of HCMC’s emissions reduction to national before carbon credits are traded.
This department will also work with HCMC’s finance department and the Ministry of Natural Resources and Environment in calculating carbon credit prices and selecting appropriate pilot project credits to sell.
The carbon credit trade is expected to attract both domestic and foreign investors to green projects, provide employment to locals and facilitate the city’s economy.
This also aims to implement HCMC’s commitment to tackle climate change, and to transform HCMC into a hub for carbon credit trading of the region and the world.
Assoc. Prof. Dr. Nguyen Dinh Tho, head of the Institute for Strategy and Policy for Natural Resources and Environment (under the Ministry of Natural Resources and Environment) said that Vietnam’s green economy earned $6.7 billion in 2020 (accounting for 2 percent of the total income). national GDP) and provided jobs for 400,000 workers.
However, green growth in Vietnam still faces several obstacles, such as inexperienced green financing system, loose implementation of environmental regulations by companies, low community awareness of green growth and sustainable development.
Vietnam should take appropriate measures to ensure consistency of legal compliance while promoting new financial mechanisms for green growth.
SGGP
