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| Typical forest scenery in Ha Tinh province__Photo: VNA |
The Government is in the process of finalizing a draft decree on forest carbon sequestration and storage services, which includes provisions on the transfer of forest carbon credits. Designed based on the principles of transparency, accountability and balance of interests among the State, forest owners and relevant stakeholders, the draft, now under public consultation, is expected to establish the necessary legal foundation for the trading, payment, and management of forest carbon credits in both domestic and international markets.
Key provisions of the draft decree
Under the draft decree, a forest carbon credit is defined as the volume of CO₂ absorbed through sustainable forestry practices, which is measured, verified, and certified by domestic or international authorities and may be traded in both national and global markets.
Notably, the draft decree clearly specifies parties to the carbon market. Specifically, service providers include forest owners; commune-level People’s Committees and other organizations assigned forest management responsibilities in accordance with law; foreign organizations and individuals meeting certain conditions (as specified in Decree 06/2022/ND-CP and Decree 119/2025/ND-CP); and domestic organizations and individuals not regulated but wishing to use the results of emission reductions or forest carbon credits to voluntarily offset greenhouse gas emissions.
Under the draft, transactions would be conducted in two forms: bilateral contract between relevant parties or via the domestic carbon exchange. In either case, transactions may only be conducted after the volume of emission reductions and carbon credits has been verified and approved by competent state authorities.
Payment methods include direct and indirect forms. In direct payment, the service user pays the service provider directly under a contract or according to the operational mechanism of the domestic carbon exchange. In indirect payment, the service user makes payment to the service provider via entrustment through the Forest Protection and Development Fund, based on a contract with a state agency acting as the representative of the service provider.
The draft decree also stipulates the payment rate. The payment rate is the price for the exchange or transfer of one ton of CO₂ or one forest carbon credit, calculated in Vietnamese dong or another foreign currency.
Specifically, the determination of the price for the exchange and transfer of forest carbon sequestration and storage services with respect to forests under all-people ownership would go through a three-step process:
First, the Ministry of Agriculture and Environment would prescribe the method of pricing forest carbon sequestration and storage services.
Second, provincial-level People’s Committees would, based on the guidance of the Ministry of Agriculture and Environment, issue a price list for forest carbon sequestration and storage services applicable to forests under local management.
Third, relevant parties would determine the starting price or reserve price of forest carbon sequestration and storage services on the domestic carbon exchange or in auctions based on the price stated in the above-mentioned price list.
For the exchange or transfer of emission reductions or carbon credits involving two or more provinces/cities, the starting price/reserve price would be the highest among the price lists issued by the relevant provincial-level People’s Committees. In case neither the pricing method nor the price list has been issued, the Ministry of Agriculture and Environment will conduct negotiations and report the case to the Prime Minister for the latter to decide on a specific price.
A supplement to Vietnam’s carbon market framework
The draft decree is expected to serve as a supplement to Vietnam’s current legal framework governing the carbon market.
On December 28, 2022, the Government promulgated Decree 107/2022/ND-CP, on the pilot transfer of emission reductions and financial management under the Emission Reductions Payment Agreement (ERPA) for the North Central region. The pilot program, which has been implemented since the issuance of the Decree, will remain in effect until the end of 2026.
Since the effective date of Decree 107, Vietnam has successfully transferred over 10 million tons of CO₂ to the World Bank’s Forest Carbon Partnership Facility at a price of USD 5 per ton, yielding over USD 50 million. Vietnam is the first among 15 ERPA signatory nations to deliver all contracted carbon credits in the initial reporting period.- (VLLF)
