Vietnam is ready to step confidently
onto the global carbon market stage, not just with its natural resources but with
a commitment to professionalism, fairness, and sustainability. Across
sectors like forestry, agriculture, and energy, businesses are embracing the Joint
Crediting Mechanism (JCM) and actively preparing for the rollout of a domestic carbon
credit market.
In line with the global shift towards green growth, Vietnam has been steadily
transforming its forests into powerful “natural carbon sinks” in pursuit of its
net-zero emissions by 2050 target. In the central highlands’ Gia Lai province, at
the planted forests of the Quy Nhon Forestry Co., Ltd. and the Song Kon Forestry
Co., Ltd., unmanned aerial vehicles (UAVs, or drones) are being deployed to monitor
forest biomass, providing critical data to measure the amount of carbon absorbed
and stored.
Turning forests into carbon assets
Efforts to apply advanced forestry techniques, such as converting short-rotation
plantations into long-rotation timber forests, increasing forest biomass, and measuring
carbon storage, are among the key outcomes of the “Upscaling of Sustainable Forest
Management and Certification in Vietnam (SFM)” project. Funded by the German Government
through GIZ (the German Corporation for International Cooperation) in collaboration
with Vietnam’s Ministry of Agriculture and Environment, the SFM project is being
implemented from 2022 to 2025 in three provinces: Binh Dinh (now part of Gia Lai),
central Quang Tri, and Phu Yen (now part of the central highlands’ Dak Lak
province).
At Quy Nhon Forestry, the use of drones has significantly improved forest monitoring
and inventory efforts. Drone deployment has expanded monitoring coverage from 40
to 450 ha per flight and reduced inspection times from seven days to just two. It
also cuts logistical costs, enhances accuracy and safety, and enables the early
detection of forest encroachment and fire risks.
According to Mr. Nguyen Hoai Nam, Head of the company’s Technical Department,
drones offer more precise, efficient, and cost-effective forest biomass assessments
compared to traditional manual methods. He added that the company is piloting digital
platforms such as INATrace and DIASCA to trace the origin of timber from smallholder
plantations to processing and export companies. These digital tools act as a “green
passport” that will help Vietnamese wood meet high sustainability standards in markets
like the EU.
Mr. Ngo Van Tinh, Director of Quy Nhon Forestry, noted that combining drone
technology with long-rotation timber plantation models opens new opportunities for
carbon credit development. Instead of harvesting for woodchips every five years,
shifting to an eleven-year cycle allows forests to accumulate more biomass, absorb
more carbon, and store it more effectively.
Echoing this perspective, Mr. Ho Van He, Director of Song Kon Forestry, said
large timber plantations not only offer environmental benefits but also unlock economic
potential from forest carbon credits. For every ton of CO2 absorbed,
a forest owner can generate one carbon credit and sell it to organizations looking
to offset their emissions. On the voluntary market, carbon credits currently range
from $5 to $50 and are trending upwards.
With support from the SFM project, Quy Nhon Forestry and Song Kon Forestry
have started assessing the carbon sequestration potential of transitioning from
biomass forests to long-rotation timber plantations. Using the internationally-recognized
Improved Forest Management (IFM) approach under VERRA’s VM0003 standard, the companies
have measured carbon stocks across acacia plantation plots of different ages.
Initial findings show that an eleven-year rotation results in an average carbon
stock of 221 tons of CO2 per hectare, compared to just 78 tons with a
five-year cycle. After adjusting for uncertainty, the average increase in carbon
sequestration is around 4.2 tons of CO2 equivalent per hectare per year.
Extending the rotation cycle and developing large timber forests not only boosts
the commercial value of wood but also enhances long-term carbon absorption and storage.
This strategy is in line with global trends in carbon credit market development,
according to Mr. Nguyen Danh Dan, Deputy Director of the SFM Project Management
Board.
Sustainable forest management, supported by technology and strengthened community
engagement, not only makes forests more resilient but also creates new opportunities
in Vietnam’s carbon and timber markets. Ms. Carina van Weelden, Implementation Manager
at GIZ Vietnam, emphasized that large timber plantations could unlock significant
potential in both carbon credit sales and timber sourcing.
Vietnam is currently working on establishing a domestic carbon credit market
and completing the associated legal framework. While the official market is still
under development, pilot initiatives like the SFM project offer forest owners valuable
hands-on experience with standards, procedures, and transaction models.
From its forests in Gia Lai, if scaled up and integrated into national policy,
Vietnam can confidently participate in the global carbon market, not only by leveraging
its natural assets but also through professional, fair, and sustainable forest management
practices, Ms. van Weelden said.
Pioneering carbon projects
At a recent forum entitled “Promoting Business Engagement in the Joint Crediting
Mechanism (JCM) in Vietnam towards Readiness for Vietnam’s Carbon Market”, a representative
from the Erex Co., Ltd. said the company is implementing several biomass power projects
around Vietnam, actively supported by the Japanese Government through the JCM and
related programs in collaboration with the Vietnamese Government.
Carbon credits issued under the JCM can be utilized within the emissions trading
systems (ETS) of both Vietnam and Japan, contributing to the development of the
carbon market and accelerating decarbonization in both countries.
Aiming to reduce greenhouse gas emissions while increasing farmer incomes,
Green Carbon, one of the pioneers in agricultural carbon projects, is currently
running multiple initiatives in Vietnam, from the Mekong Delta to north-central
provinces.
According to a representative from Japan’s JFE Engineering Corporation, the
T&J Green Energy waste-to-energy plant in northern Bac Ninh province is also
receiving support under the JCM. With a power generation capacity of 11.6 MW and
a waste treatment capacity of 500 tons per day, including both household and industrial
waste, the project is expected to reduce emissions by 41,805 tCO₂ annually. JFE
Engineering is also building a pilot plant to convert waste into syngas for producing
chemicals like methanol, integrated with carbon capture, utilization, and storage
(CCUS) technology.
This project is considered Vietnam’s first waste-to-energy plant co-invested
by a domestic and a Japanese enterprise. However, JFE Engineering has identified
a number of investment risks, such as high construction costs, low-quality waste
(with a high moisture content and low calorific value), unstable waste supply, unclear
power purchase agreements (PPAs), and challenges in assessing the creditworthiness
of local authorities.
Key solutions in mitigating such risks include identifying reliable local partners,
with support from the JCM, securing financing, with the International Finance
Corporation (IFC) agreeing to participate after engagement with the JCM, developing
emissions reduction methodologies, and incorporating the project into Vietnam’s
National Power Development Plan VIII (PDP8) and National Waste Management Plan.
Regarding green transportation, Mr. Tran Ky Anh, Carbon Credit Transaction
Manager at Vingroup, has explained its approach to entering the carbon market. Between
2021 and 2024, Vingroup delivered over 140,000 electric cars and 243,000 electric
motorbikes to the Vietnamese market. It is estimated that the electric vehicles
VinFast deployed in 2024 will help reduce approximately 5.9 million tons of CO₂
over their operational lifespans.
In public transportation, 302 VinBus electric buses are now operating along
31 routes in Hanoi, Ho Chi Minh City, northern Hai Phong city, the beach city
of Nha Trang in south-central Khanh Hoa province, and Phu Quoc Island, off the
coast of the Mekong Delta, contributing to a projected reduction of 48,000 tons
of CO₂ in 2024. Meanwhile, the Xanh SM electric taxi service is estimated to have
cut emissions by around 150,000 tons of CO₂ last year.
Vingroup is also actively developing and registering multiple carbon credit
projects under international standards. These include the V-Green charging station
project under the Verified Carbon Standard (VCS), the VinFast electric motorbike
project under the Gold Standard for the Global Goals (GS4GG), and a solar power
project in northern Son La province expected to adopt the GCC standard. Vingroup
has also expressed its interest in partnering with Japanese stakeholders to jointly
develop carbon credit projects and participate in the JCM between Vietnam and Japan.
