Forest carbon credits - great potential

Besides generating significant revenue, carbon credits also contribute to better forest protection and development. However, this potential remains largely untapped.

Following the government's decision to close the forests, localities in the Central Highlands have implemented numerous solutions to restore and protect them over the years. As a result, the forest cover has expanded and developed significantly, creating great potential for economic development under the forest canopy, particularly through carbon credits. However, many forest management units are still struggling with implementation, as this is a relatively new issue lacking specific guidelines.

Potential for developing the forest economy.

Located on National Highway 28, Ta Dung National Park, in Ta Dung commune, Lam Dong province (formerly Dak Nong), is a vast expanse of pristine forest with a diverse ecosystem and many rare and endangered plant and animal species listed in the Red Book. With a natural area of ​​approximately 21,000 hectares, nearly half of which is primary forest, and the remainder being secondary forest of various types, achieving a forest cover rate of over 85%, it is one of the characteristic multi-layered tropical evergreen rainforests of the Central Highlands region and possesses significant potential for carbon sequestration and storage. Furthermore, Ta Dung National Park has about 5,000 hectares of regenerating forest, currently in a rapid growth phase, which is another advantage in terms of carbon absorption and storage. In particular, bamboo and mixed bamboo-wood forests are considered to have a higher carbon absorption and storage capacity than other forests.

According to Mr. Khuong Thanh Long, Director of Ta Dung National Park, with its large area of ​​natural forest, Ta Dung forest is considered a major carbon sink. Implementing carbon credits would contribute to increasing the unit's revenue, better serving the care, protection, and development of the forest.

Southern Central Highlands forest, Tuy Duc district, Lam Dong province. Photo: Hong Thuy.

Similarly, Thac Mo Protective Forest (Tuy Duc commune, Lam Dong province) has a total area of ​​over 6,500 hectares of evergreen forest. Mr. Nguyen Xuan Khuong, Director of the Thac Mo Protective Forest Management Board, said that Thac Mo forest is classified as one of the forests of importance in the conservation of rare plant and animal species, listed in the Red Book. Thanks to its relatively intact primary forest ecosystem, this forest also has the potential to develop a carbon credit market.

“Developing forest carbon credits means implementing tasks and solutions to improve forest quality. This includes focusing on effectively managing existing forest areas, strengthening forest development, and developing the forest economy… Developing carbon credits is an opportunity to supplement financial resources to increase income and improve livelihoods for forest owners and people, thereby supporting forest management and protection,” Mr. Khuong said.

Mr. Nguyen Ngoc Binh, Chairman of Nam Tay Nguyen Forestry Company Limited, the unit managing the Nam Tay Nguyen forest, said that forest carbon credits are determined from the amount of CO2 generated from greenhouse gas emission reduction activities through activities to combat deforestation and forest degradation; sustainable forest resource management, conservation, and enhancement of forest carbon stocks. Forest owners can convert the area of ​​forest they manage and protect into CO2 absorption, which translates into carbon credits, and can sell these credits. That's the theory, but earning money from carbon credits is not simple; it involves many stages and complex procedures.

The 430-year-old sandalwood tree in Thac Mo forest. Photo: Hong Thuy.

“Participating in the carbon market is not only about reducing environmental compliance costs, but also about accessing green finance, improving brand image, and meeting increasingly stringent ESG standards (the triad of sustainable development criteria: Environment, Society, and Governance) in the global supply chain,” said Mr. Khuong Thanh Long.

There are still quite a few obstacles.

According to experts, Vietnam's forest cover currently stands at over 42%, equivalent to nearly 15 million hectares of forest. This represents a significant potential for developing a carbon credit market, facilitating the implementation of projects such as REDD+ (reducing emissions from deforestation and forest degradation) or reforestation. In 2023, Vietnam successfully sold 10.3 million forest carbon credits to the World Bank, generating over $51 million, demonstrating the enormous financial potential of this resource.

Forest carbon trading refers to the sale of carbon absorbed by forests as a marketable commodity. Vietnam is one of the countries with significant forest potential and projects related to forest carbon credits. It is estimated that between 2021 and 2030, Vietnam will possess approximately 40-70 million forest carbon credits that can be sold on the global carbon credit market, worth tens of trillions of Vietnamese dong.

Over the years, the forests in Tuy Duc, Lam Dong have been strictly protected, leading to their continued growth. This presents a significant potential for the forest carbon credit market. Photo: Hong Thuy.

Regarding carbon credits, in June, the Government issued Decree 119/2025/ND-CP amending and supplementing several articles of Decree 06/2022/ND-CP regulating emission reduction. The Decree takes effect from August 1st. Specifically, by the end of 2028, the Government will develop and pilot a domestic carbon exchange; implement a mechanism for exchanging and offsetting domestic carbon credits; and from 2029, develop and implement a mechanism for auctioning greenhouse gas emission quotas.

From 2029 onwards, the Government will develop and implement a mechanism for auctioning greenhouse gas emission quotas; finalize regulations on carbon credit management, the trading of greenhouse gas emission quotas and carbon credits; and establish legal regulations on the organization, management, and operation of the domestic carbon market and participation in the global carbon market.

Thanks to remote monitoring technology, forest protection is more effective. The photo shows Mr. Nguyen Ngoc Binh, Chairman of the Southern Central Highlands Forestry Company (far right), inspecting forest monitoring using the software. Photo: Hong Thuy.

Vietnam is currently one of the few countries in the Asian region with a legal framework that recognizes the role of forest carbon in climate change adaptation and mitigation, and guides the trading of forest carbon credits.

However, for the carbon market to become a strategic tool, helping Vietnam achieve both the Net Zero target and create momentum for green growth for the entire economy, the government needs to implement several solutions such as: perfecting the legal framework, especially regulations related to measurement, reporting and verification (MRV), carbon credit ownership, quota allocation and auction mechanisms, as well as handling disputes and violations.

Establishing a national carbon credit exchange should be done soon, creating a transparent and accessible market for businesses. Simultaneously, policies are needed to support small and medium-sized enterprises (SMEs), including: green credit, technical training, access to climate investment funds such as the Green Climate Fund (GCF), JETP, or capital from international organizations such as the World Bank and the Asian Development Bank.  

Source: https://nongnghiepmoitruong.vn/tin-chi-carbon-rung--tiem-nang-lon-d783370.html