The draft plan says the domestic carbon credit market would run on a trial basis in 2025-2028, during which carbon credits would not be sold abroad and there would be no regulations on connecting and exchanging carbon credits with regional and international markets.
All quotas would be allocated for free, not through auctions. The quota allocation would be applied to certain fields which have high emissions.
From 2029, the carbon credit market would become officially operational nationwide. The regulations on market management and infrastructure development would continue to be built to serve the connection of the domestic and international markets.
The Ministry of Agriculture and Rural Development (MARD), while basically agreeing with the plan, has proposed adding exceptions. Vietnam would not sell and exchange carbon credits in 2025-2028, except for some cases of exchanging and transferring carbon credits according to international treaties and international agreements at the Government level to ensure national emission reduction targets and commitments to the NDC (nationally determined contributions).
MARD noted that the agreements on carbon credit transfer offer significant financial resources.
The ministry said it proposed the additional provision because the PM on May 2, 2024 released the Direction on strengthening carbon credit management to implement NDC.
The direction clearly stipulates that the Ministries of Industry and Trade (MOIT), Transport (MOT), MARD, and the Ministry of Natural Resources and the Environment (MONRE) take the responsibility of working with agencies to give advice to make decisions on organizing negotiations, signing and deploying agreements or contracts with international partners on transferring carbon credits, and results of greenhouse gas emission reductions in the fields under their management, ensuring the NDC.
MARD and MONRE have been asked to work with localities where there are forests to define the emission reduction and carbon absorption from forests, which can contribute to NDC implementation.
This will serve as a basis for forest carbon credit exchange and carbon credit payment based on the results of high-quality low-emissions from specialized rice growing areas.
Currently, MARD is taking the lead in implementing the Emission Reductions Payment Agreements (ERPA) with the World Bank and the Lowering Emissions by Accelerating Forest finance (LEAF/Emergent) for the forestry sector; and the Transition Carbon Asset Fund (TCAF) that supports sustainable development of 1 million hectares of high-quality and low-emission rice cultivation associated with green growth in Mekong Delta.
Also, MARD will continue to research and run programs and international agreements to mobilize financial resources for the field. According to the ministry, these programs and agreements will help mobilize sustainable financial sources and reinvestment to protect and develop forests, and improve the livelihoods for local communities and rice farmers.
The ERPA implementation in the north central region has brought revenue of $51.5 million, and helped manage and protect 2.2 million hectares of natural forests, while the LEAF/Emergent implementation in the Central Highlands and the south central region is expected to bring revenue of at least $51.5 million, and protect 3.2 million hectares of forests.
Regarding TCAF, Vietnam expects revenue of $18 million in the first phase and will retain all the emission reductions for Vietnam’s contribution to NDC. The figure for the second phase under the Mitigation Outcome Purchase Agreement (MOPA) is $22 million.
The support source will facilitate the training of sustainable low-emission rice cultivation. The 1 million hectare high-quality low-emission rice project helps to reduce 20 percent of rice production costs and increase household incomes.
The ministry has agreed with TCAF to focus on project documents with ERPA and will only consider MOPA with the government’s permission.
In terms of the environment, these programs and agreements in the forestry sector will contribute to protecting, maintaining and improving forest quality and mitigating the impact of climate change; and contributing to fulfilling Vietnam’s commitments in the Paris Agreement and NDC.
Rice production will contribute to reducing greenhouse gas emissions by changing production practices, reducing input costs, and enhancing straw management.
Tam An
