Building regional strategies for carbon credits in forestry

Nguyen Ba Ngai - General secretary Vietnam Forest Owner Association

As nations around the world are forced to implement their commitments to reduce greenhouse gas (GHG) emissions, the demand for tradable carbon credits is forecast to increase this year. Enterprises within these countries will also be required to reduce their carbon emissions and can complete the mission in two ways. One is to invest in upgrading their facilities, technology, and other relevant parts, and another is to buy carbon credits to offset their facilities’ GHG emissions.

However, in Vietnam, there are no official forest carbon credit trading mechanisms and no specific plans for developing forest regions to create forest carbon credits, raising an urgent requirement for building regional plans.

It is necessary to build a national forestry plan, so that cities and provinces can develop their own plans, which are optimised for each locality and region. There are currently no official regulations, which recognise carbon indicators in forests as a tradable good.

Recently, there is no answer for the question: do the forest owners have the right to trade the credits generated from their forests? And there it is not clear whether Vietnam can acquire tax from trading carbon credits. With regional planning and specific guidelines, we can deal with these problems.

At present, due to lack of regional planning, Vietnam is only trading forest carbon credits via reduced emissions from deforestation and degradation as well as forest sustainable management. International organisations highly appreciate the country’s effort, thus the government should prioritise the regional planning. Besides this, national parks and nature reserves should also be included in this.

Statistics by the Ministry of Agriculture and Rural Development show that Vietnam currently has three regions that are available for trading carbon credits. The region with the largest forest carbon source in the northeast has a storage capacity of 21 million tonnes of carbon per year.

In the northern province of Tuyen Quang, there is a total forestry area of 450,000 hectares, which can store an annual capacity of four million tonnes of carbon, equalling four million carbon credits.

The names of the remaining two regions are yet to be disclosed, however, the World Bank’s Forest Carbon Partnership Facility selected the north-central region as the place to implement the Emission Reductions Payment Agreement, which can help build a track record of generating and selling carbon credits or applying them to Vietnam’s emission reductions targets.

The region was chosen for its critical biodiversity importance and socioeconomic status. The programme area covers 5.1 million hectares of land, of which 3.1 million hectares are currently forested, and includes five internationally recognised conservation corridors. The programme has been implemented in the six provinces Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, and Thua Thien-Hue.

Additionally, Vietnam aims to build regional planning for forest carbon credits. Notably, the country was one of the first countries in Asia to develop a national reducing emissions from deforestation and forest degradation action programme. As of late 2020, 22 provinces have developed provincial action plans.

However, they already have their carbon storages, but converting these into funds is not easy. The biggest barrier is that Vietnam has not yet established a domestic carbon market. Thus, there is no basis for buyers and sellers to negotiate the selling prices and the credit volume.

In October 2018, then-Prime Minister Nguyen Xuan Phuc approved a project on sustainable forest management and forest certification. The project aims to focus on sustainable forest resource management and usage while preserving biodiversity and protecting the environment.

According to the plan, the project would certify 300,000ha of forests by 2020, with up to one million additional hectares certified by 2030. The areas in question are managed by organisations, households, and the protection forest management board.

The Ministry of Natural Resources and Environment is completing a draft decree on GHG mitigation and ozone layer protection, which contains a specific roadmap for research and establishment of a domestic carbon credit market. This will be the basis for building the regional planning.