Vietnam Positioned for Growth as a Significant Carbon Credit Market
Emergent, an organization focused on forest financing, along with members of the LEAF Coalition, recently visited Vietnam from September 26 to 29 for negotiations on Emission Reduction Purchase Agreements (ERPAs). The south central and Central Highlands regions, which encompass approximately 4.29 million hectares of forest area (3.16 million ha of natural forests and 1.13 million ha of planted forests), hold significant importance, accounting for over 29 percent of the country’s total forest area. These regions were selected for the LEAF initiative due to their rich biodiversity.
Nguyen Thi Bich Ngoc, a representative of Emergent, explained that the LEAF Coalition was established in April 2021 with the goal of combatting deforestation and forest degradation by providing financing for tropical forest protection on a large scale, covering more than 2.5 million hectares. All forest carbon credit transactions facilitated by the LEAF Coalition are registered and issued through the independent Architecture for REDD+ Transactions (ART) program, following the REDD+ Environmental Excellence Standard (TREES). The LEAF Coalition is backed by four governments (the United Kingdom, the United States, Norway, and South Korea) and over 25 major companies (including Amazon, PwC, and Unilever) committed to addressing deforestation. LEAF strictly purchases credits that meet ART’s TREES standards, ensuring consultation and benefit-sharing with local communities and ethnic minority groups, as well as strict control over the use of proceeds. These stringent buyer criteria also ensure integrity from private sector clients.
Ngoc further mentioned that up to $1 billion is available for distribution to countries engaged in forest protection initiatives, such as Vietnam. This funding serves as a testament to Vietnam’s commitment to fulfilling its COP26 and Paris Agreement goals. Mette Moglestue, the Norwegian deputy head of mission in Vietnam, expressed support for Vietnam’s forest protection and development efforts while emphasizing the importance of maintaining the livelihoods of local communities.
During COP26, the Vietnamese Ministry of Agriculture and Rural Development signed a Letter of Intent with Emergent, the administrative management agency for LEAF, regarding emissions reductions. This lays the foundation for negotiations, signing, and implementation of ERPAs for forests in 11 provinces within the south central and Central Highlands regions. As per the letter, Vietnam aims to transfer 5.15 million tonnes of CO2 emissions reductions to LEAF and Emergent between 2022 and 2026, at a minimum price of $10 per tonne. The credits transferred to LEAF will contribute to Vietnam’s National Determined Contributions (NDC) commitment. Vietnam aims to utilize its national resources to reduce emissions by 15.8 percent, equivalent to 146 million tonnes of CO2, to achieve its NDC, with the potential to increase these figures to 43.5 percent and 403 million tonnes with international support.