Consideration of Carbon Pricing and CO2 Credits in Vietnam

Introduction

Vietnam is known as a country with a large forest area, with 75% of its land area covered by mountains. Vietnam, with its abundant forest resources, is expected to have high potential not only in forest-related economic potential, but also in emissions trading in carbon pricing in the future. The development of renewable energy is another factor that will support the promotion of carbon pricing in Vietnam.

ONE-VALUE, a research firm specializing in Vietnam, is actively conducting research on carbon pricing and carbon credit trading in Vietnam, focusing on the current status and trends.

In this report, ONE-VALUE discusses the potential of the carbon credit trading market (emissions trading) in Vietnam and the latest carbon pricing trends based on an interview with the Vietnam Forestry General Corporation (VINAFOR), the largest forestry company in Vietnam.

Vietnam’s Carbon Pricing Potential

Vietnam is a country with abundant forests: according to the latest statistical data as of December 31, 2020, the total forest area in Vietnam was 14,677,215 hectares, with a forest cover ratio (forest coverage) of about 42.01%. Of this, natural forests cover 10,279,185 hectares, or 70%, while planted forests cover 4,398,030 hectares, or the remaining 30%.

Natural forests were banned by the Prime Minister’s directive in 2016, which regulates the harvesting of natural forests for the purpose of wood raw material procurement. Therefore, it is estimated that natural forests will generate the most CO2 credits in the future.

Some observers believe that the potential for carbon credits generated from planted forests is also high in the long run, since natural forests are a limited resource. Thus, forestry has the potential to generate a large number of carbon credits in the long run.

According to the “Vietnam Forestry Development Strategy for 2021-2030 (Vision to 2050)” published by the Vietnamese government, the Vietnamese government aims to expand forest cover to 43% by 2030 while maintaining natural forest area, and to expand forest cultivated area at an average of 340,000 hectares/year by 2030. The government also aims to expand the area under forest cultivation at an average of 340,000 hectares/year by 2030. Thus, it is expected that the forest area in Vietnam will be expanded in the future, bringing more benefits from carbon credits.

ONE-VALUE conducted an interview with VINAFOR, a company that owns the largest plantation in Vietnam that focuses on the biomass energy sector and promotes carbon pricing in the Vietnamese market. We determined that carbon credits for both natural and planted forests are very likely to be sold.

Currently, not only Vietnamese companies but also companies from all over the world are monitoring the price valuation of carbon credits. The Vietnamese government is also actively promoting the establishment of standards for valuing carbon credits and trading mechanisms. Leading Vietnamese companies are actively cooperating with various government agencies on standards and experiments for trading carbon credits in the Vietnamese market. Within the next 1-2 years, the Vietnamese government is expected to announce standards and mechanisms for trading carbon credits among domestic enterprises.

According to Vietnamese experts, the valuation and trading of carbon credits is very important for the forestry industry as a whole and for future afforestation projects. In particular, trading of carbon credits is expected to make companies and plantation foresters rethink their long-term policies for plantation forestry projects, improve the quality and value of wood, and increase the productivity of the forestry industry.

Currently, ONE-VALUE is leading research and survey activities on carbon pricing in the Vietnamese market and already has a network of companies in the forestry sector with extensive plantations. These companies are actively promoting the trading of carbon credits.If this company is interested in trading carbon credits in Vietnam, please contact ONE-VALUE.（contact@onevalue.jp ）



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