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There is widespread belief that Vietnam is undervaluing its carbon credits, priced at just $5 each, but the Ministry of Agriculture and Rural Development (MARD) has refuted these claims.
In late 2023, MARD reported to the Prime Minister regarding the signing of documents for transferring 10.3 million tons of CO2 in the north-central region to the World Bank. The unit price was $5 per ton of carbon, resulting in revenue of $51.5 million.
Voluntary sale price
This marked Vietnam's first sale of forest carbon credits. The revenue will be distributed among forest owners, communal people's committees, and organizations tasked with managing natural forests. Additionally, payments will be made to individuals engaged in activities aimed at reducing emissions to safeguard forests and prevent forest degradation.
However, many have said the $5 per carbon credit is too low, noting that Europe could sell at $120-150 per credit, while other markets were at $70-100.
In response, Deputy Minister Nguyen Quoc Tri of MARD said that people misunderstand the situation. He clarified that the price of $5 per forest carbon credit is the voluntary sale price, which typically yield lower prices compared to mandatory sales. The average price for voluntary carbon credits stands at $3.8 per credit. While some countries sell at a lower rate of just $2.5 per credit, others are at $7.
“The price level of $5 was set in 2018 based on survey results at that moment. However, the figure is still acceptable at present,” Nguyen Quoc Tri said.
Nguyen Dinh Tho, director of the Institute of Strategy and Policy on Natural Resources and the Environment, said that carbon credits are mostly sold based on REDD+ (reducing emissions from deforestation and forest degradation).
According to the program, carbon credits are traded at $1.6-8.9 per credit globally. Therefore, the $5 per credit is a medium level, not low.
Improve the quality for higher price
With a forest area of 14.79 million hectares and a coverage level exceeding 42%, Vietnam ranks among the 60 countries globally eligible to sell forest carbon credits.
According to Nguyen Quoc Tri, the Forestry Department has estimated that with the current forest area, Vietnam can sell 40 million carbon credits every year. With the average price of $5 per credit, the country could collect $200 million.
Deputy Director of the Vietnam Fund for Forest Protection and Development, Le Van Thanh, predicted that in the 2021-2030 period, Vietnam would own 40-70 million carbon credits each year which could be sold to the global carbon market.
According to the Director, Vietnam plans to transfer 5.15 million forest carbon credits in the Central Highlands and the south-central region in 2022-2026 with the unit price of $10 per ton of CO2.
To sell carbon credits at high prices, Vietnam needs to enhance the quality of forest carbon credits, which includes improving the lives of ethnic minorities, living standards of forest guards, and meeting criteria for the economy, environment, culture, and society.
