Amazon, Eni want to purchase forest carbon credits from Vietnam: Ministry

Many international partners and foreign corporations have expressed interest in purchasing large volumes of forest carbon credits from Vietnam, according to Vietnam’s Ministry of Agriculture and Environment.

The ministry cited potential buyers like the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition, Amazon, and Italy’s energy giant Eni.

It revealed the information in its interpretation of a draft decree regulating forest carbon sequestration and storage services, which is currently open for public feedback.

In the document, the ministry has proposed expanding eligibility to purchase forest carbon credits to include foreign organizations and individuals - a notable departure from the current regulation under the 2017 Forestry Law, which restricts purchases to domestic companies with high emissions.

The ministry argued that retaining the previous eligibility restrictions would undermine the appeal and competitiveness of Vietnam’s forest carbon credit market, particularly when compared to credits from sectors such as energy, transportation, agriculture, and waste management - all of which already operate within well-established, large-scale market ecosystems.

In addition, the draft decree allows domestic companies with low emissions to purchase carbon credits in support of their voluntary emission reduction strategies. The move is expected to serve as a catalyst for developing a voluntary carbon market in Vietnam, helping to scale up climate action across a wider range of sectors.

Addressing bottlenecks

Since 2022, Vietnam has piloted the transfer of forest emission reductions in the north-central region. To date, the program has successfully transferred 10.3 million tons of CO2 to the World Bank, generating $51.5 million in revenue.

The six participating localities are Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, and Hue. Additionally, the northern mountainous provinces of Lao Cai and Son La have been approved for pilot implementation but have yet to proceed due to the lack of a comprehensive legal framework.

To address this bottleneck, the draft sets out detailed provisions on the transfer process, credit valuation, and payment mechanisms for carbon sequestration services.

For forest areas under public ownership, all transactions must ensure full compliance with the emission reduction quota allocated to the forestry sector under Vietnam’s Nationally Determined Contribution (NDC). This sector is responsible for 3.5% of the country’s total 15.8% reduction target for 2030, with efforts centered on forest areas under public ownership.

On pricing mechanisms, the ministry will issue a methodology for valuing carbon credits, while provincial People’s Committees will be responsible for setting specific credit prices within their jurisdictions.

These local price lists will serve as the basis for establishing floor prices on the domestic carbon exchange.

In the absence of a provincial price list, the ministry will conduct direct negotiations and submit pricing proposals to the Prime Minister for approval. This pricing framework is also recommended for application to plantation forests owned by organizations and households.

The draft also outlines two payment mechanisms for carbon sequestration and storage services. The first is direct payment through contracts or the carbon exchange. The second is indirect payment via the ministry’s Forest Protection and Development Fund, authorized by service users.

A carbon market is set to officially operate in Vietnam by 2029 as an important step towards reducing greenhouse gas emissions and achieving the goal of net-zero emissions by 2050, according to a decision issued by the Prime Minister.

The overall goal of the scheme is to develop the carbon market in Vietnam, contributing to the achievement of greenhouse gas emission reduction targets committed under the NDC with low corporate and social costs.

To facilitate trading on the carbon market, the government has tasked the Hanoi Stock Exchange (HNX) with establishing and operating a domestic carbon exchange.

The exchange will provide essential services for organizing and managing trades, ensuring transactions are carried out according to the technical standards and regulations set by the ministry.