The Ministry of Agriculture Intends to Auction 5 Million Tons of Carbon
Source: VnExpress
Source: VnExpress
Of the remaining 5.9 million tons of carbon, the Ministry of Agriculture plans to transfer 1 million tons to the World Bank and auction the rest through international trading platforms.
This information was highlighted in a report submitted by the Ministry of Agriculture and Rural Development (MARD) to the Prime Minister regarding the implementation of the Emission Reductions Payment Agreement (ERPA) for the North Central Region and the proposal to transfer the surplus emission reductions for the 2018-2019 period.
Specifically, in October last year, the World Bank (WB) confirmed in a letter to the Ministry that the first reporting period had achieved 16.21 million tons of carbon (CO2) emission reductions. This result was sufficient to transfer 10.3 million tons of CO2 as per the previously signed agreement. Each ton of CO2 was transferred at a price of $5, bringing in approximately VND 1,250 billion.
After transferring the 10.3 million tons of CO2, Vietnam retained 5.91 million tons of CO2 for the 2018-2019 period. The Ministry proposed transferring an additional 1 million tons of CO2 to the WB.
For the remaining amount, the Ministry requested that the Prime Minister propose to the WB to introduce potential partners to purchase these emission reductions following the methodology used in the signed ERPA or support Vietnam in piloting an auction through international trading platforms.
Currently, Vietnam faces challenges in finding trading partners due to the nascent nature of this sector. If the auction pilot is approved, the Prime Minister would need to assign the Ministry of Finance to lead and coordinate with relevant agencies to develop an implementation plan.
At present, carbon prices on the global voluntary market range from $2 to $4 per ton of CO2. In the forestry and land-use sector, the price reached $3.07 per ton in 2021. According to carboncredits.com, the carbon price for natural ecosystems was $1.57 per ton of CO2 as of March 5.
Regarding carbon credit sales, Vietnam has received $51.5 million from the WB for verified emission reduction results achieved through efforts to reduce deforestation, forest degradation, and enhance carbon sequestration through afforestation and reforestation.
The sale of carbon credits is part of the greenhouse gas emission reduction payment agreement for the North Central Region signed on October 22, 2020, between the International Bank for Reconstruction and Development (IBRD), a branch of the World Bank, and the Ministry of Agriculture and Rural Development.
According to the WB, Vietnam is the first country in the East Asia and Pacific region to receive results-based payments from the WB's Forest Carbon Partnership Facility.
Leaders of the Ministry of Agriculture and Rural Development view the success of the REDD+ mechanism as bringing Vietnam closer to achieving its nationally determined contributions under the Paris Agreement on climate change while also protecting critical areas for biodiversity conservation.
Forest carbon credits are generated through greenhouse gas emission reduction projects such as reducing deforestation and forest degradation; enhancing afforestation, reforestation, and vegetation regeneration; and improving forest management.
Forest owners can quantify the CO2 absorption capacity of the forests they manage and protect, convert this into carbon credits, and sell these credits on the carbon market under greenhouse gas emission reduction mechanisms.
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