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BUSINESS REPORT
C O VER S T OR Y

Growing

profits

Vietnam can rightly expect to secure a
host of carbon credits from the proper
management of its agricultural sector.

By CHU KHOI

n a discussion with carbon credit
experts in January, Minister of Agri-
I culture and Rural Development Le
Minh Hoan said that, in the future, carbon
credit markets will become more vibrant
and the agricultural sector needs to tap
the opportunity to benefit financially.

Credits created
Vietnam has sold carbon credits worth
a total $60 million over the past few
years. Of these, the Biodigesters program,
for a low-carbon livestock sector in Viet-
nam, built 181,683 biogas plants and has
been assessed by international organiza-
tions as having contributed significantly
to reductions in greenhouse gas emissions.
Via the program, Vietnam sold 3,072,265
carbon credits, earning $8.1 million.
Forests have been confirmed as the
largest absorbers of carbon dioxide. In
2023, Vietnam’s forestry sector sold 10.3
million forest carbon credits, equivalent agricultural sector boasts the potential majority of international organizations
to 10.3 million tons of carbon dioxide, of securing 57 million carbon credits a pay $5 per ton. The total value of global
through the World Bank (WB) for $51.5 year, equivalent to reducing 57 million carbon credit trading from forests is esti-
million, at an average price of $5 per ton. tons of carbon dioxide emissions. Vietnam mated at $20 billion by 2030, for a ten-
The sale was part of Emission Reductions therefore has the potential to sell carbon fold increase against 2021.
Payment Agreements (ERPA) in the north- credits worth $300 million annually. The WB has signed agreements with
central region signed on October 22, 2020, At a recent dialogue entitled “Carbon 15 developing countries, including Viet-
between the International Bank for Recon- finance and opportunities for the Viet- nam, on the sale of carbon credits gener-
struction and Development (IBRD) at the namese timber industry”, a representative ated from preserving forests, at an average
WB and the Ministry of Agriculture and from the WB said that several interna- price of $5 a ton. Some 95 per cent of
Rural Development (MARD). tional organizations have signed agree- these credits will count towards each
In early August, 2023, the WB paid ments with local or national governments country’s Nationally Determined Contri-
the first ERPA installment of $41.2 million through the Reducing Emissions from bution (NDC), while the remaining 5 per
to the ministry, or 80 per cent of the con- Deforestation and Forest Degradation cent will be held by the WB.
tract. The remaining $10.3 million will (REDD)+ mechanism to provide financial
be paid after the transfer of 10.3 million support aimed at curbing deforestation Prospects for forestry
tons of carbon dioxide is completed. and restoring forests. The total value of Deputy Chairman of the Handicraft
According to MARD, sub-sectors such the global carbon market from forests and Wood Industry Association of Ho Chi
as livestock, crop cultivation, and afforesta- stood at approximately $2 billion in 2023, Minh City (HAWA), Mr. Phung Quoc
tion all hold solid prospects for transi- all of which was channeled through the Man, told the dialogue that export revenue
tioning towards sustainable farming prac- REDD+ mechanism. for wood and wooden products grew 59
tices that cut greenhouse gas emissions In the three years since 2020, payments per cent year-on-year in the opening two
through circular agricultural production, for forest carbon absorption credits have months of 2024 and is expected to reach
ecological agriculture, and organic agri- grown by 10 per cent each year. Prices $16 billion for 2024 as a whole and $25
culture. It has been estimated that the range from $1.62 to $8.99 a ton, but the billion by 2030.

12 Vietnam Economic Times April 2024 en.vneconomy.vn