Vietnam will start trial trading of carbon credits in 2025 and develop a fully operational carbon trading market by 2028 as the Southeast Asian country aims to create a nationwide market mechanism to achieve its energy transition goals, Vietnam News reports.
Vietnam has an untapped potential market of carbon credits from such sectors as energy, forestry and agriculture, said industry experts.
It is estimated that a mature tree over 30 meters tall can absorb about 22 kg of carbon dioxide a year. With almost 15 million hectares of forest, Vietnam can earn hundreds of millions of dollars selling carbon credits from the forestry sector, Tran Quang Bao, deputy head of the General Department of Forestry under the Ministry of Agriculture and Rural Development, told state radio broadcaster VOV.
Vietnam’s forest coverage rate is about 42 percent, higher than the world’s average of 31 percent, said Pham Hong Luong, head of the Office of the Vietnam Administration of Forestry.
The international demand is high but the supply is constrained due to a lack of a clear legal framework in Vietnam, Luong said, calling for regulations on carbon capture and storage to be included in the Law on Forestry.
An exchange-based market for trading carbon credits is expected to help Vietnam monetize reduced emissions while becoming carbon neutral by 2050.
Carbon credits are also gaining traction in the agriculture sector as an instrument to promote sustainable farming practices and improve the income of farmers, Vietnam News reported.
A project to support Vietnam’s shift to sustainable agriculture has recorded a 30-percent growth in farmers’ income over the past seven years through more efficient use of water and pesticides, said Cao Thanh Binh, senior agricultural specialist at the World Bank.
The project has also led to the reduction of 1.5 million tons of carbon dioxide emission, which, the expert believed, could be sold as carbon credits to yield 20 million U.S. dollars annually for local farmers.
“The time is ripe for carbon credit trading generated from the rice paddies under the project,” the World Bank expert said.
Regarding the project of “one million hectares of low-emission high-quality rice paddies” in the Mekong Delta, he said the World Bank would raise 40 million U.S. dollars between 2023 and 2024 and 60 million U.S. dollars during 2025-2026 for the purchase of carbon credits.
“We will proceed with an additional 400 million U.S. dollars to cover all the carbon credits generated by the project,” he said. ■