(Photo: VNA)
Vietnam’s carbon offset amount is beyond expectation after signing the “North Central Region Emission Reductions Payment Agreement” (ERPA) with the Forest Carbon Partnership Facility (FCPF) of the World Bank. As a result, the Vietnamese government plans to sell the remaining 4.91 million of carbon credits with the help of World Bank in finding potential buyers or piloting auctions on international carbon trading platforms.
The ERPA primarily involves Vietnam reducing carbon emissions through efforts to curb deforestation and degradation (REDD+), as well as increasing carbon storage through afforestation and reforestation. The carbon credits of Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, and Thua Thien Hue from Feb. 1, 2018, to the end of 2019 period, are to be sold to the FCPF.
According to World Bank, the ERPA achieved a reduction of 16.21 million CO2e (carbon dioxide equivalent) in the first phase of 2018 to 2019, significantly exceeding the committed purchase quota. Consequently, after paying US 51.5 million dollars, for the purchase of 10.3 million carbon credits, an additional 1 million carbon credits were purchased at the same price of $5 per unit, totaling 11.3 million carbon credits.
In principle, Vietnam can sell the excess emissions reductions through bilateral agreements or carbon trading markets to third parties. Alternatively, it can retain them as part of its Nationally Determined Contributions (NDC) or other national climate goals.
Regarding excess emission reductions in partnership with the World Bank, The Ministry of Agriculture and Rural Development (MARD) of Vietnam believes that it is hard to find other buyers because the emission reductions are time-sensitive and will depreciate over time; furthermore, potential partners usually choose plans that can reduce emissions immediately or in the future.
The voluntary carbon market prices range between 2 to 4 USD, the forest carbon is priced at around 3.07 USD. Additionally, according to data from carboncredits.com, Nature Based Offsets are priced even lower at only 1.57 USD. These prices are far below the commitments made by the World Bank. Therefore, the Vietnamese government plans to follow the same approach, by seeking potential buyers through World Bank or piloting auctions for excess carbon credits on international carbon trading platforms.
