Vietnam is considered to have significant potential in supplying carbon credits. According to estimates, the agricultural sector alone could achieve 57 million carbon credits per year, equivalent to absorbing 57 million tons of CO2.

Leading a discussion with experts on carbon credits and emission reduction in the agricultural sector last week, Minister of Agriculture and Rural Development Le Minh Hoan stated, “In the future, the carbon credit trading market will become increasingly dynamic. Therefore, Vietnam’s agriculture needs to proactively embrace this trend to increase profits.”

Trading “Air” for Real Money

Carbon credits are tradable certificates representing the right to emit a certain amount of CO2 or an equivalent amount of other greenhouse gases converted to CO2. One carbon credit is equivalent to 1 ton of CO2 or 1 ton of CO2-equivalent.

According to the Ministry of Agriculture and Rural Development, emissions reduction credit trading on the market is an advanced method increasingly adopted by many countries, creating a carbon trading market or greenhouse gas reduction credit exchange market. This type of market involves buying and selling commodities related to reduced or absorbed greenhouse gases. Participants can be businesses trading with each other or between domestic organizations and international organizations, such as financial institutions or enterprises.

In recent years, Vietnam has successfully executed carbon credit deals, earning approximately $60 million. The Bio-gas Livestock Farming Program in Vietnam, implemented in 53 provinces, has constructed 181,683 bio-gas facilities, benefiting one million people in rural areas.

International organizations have recognized Vietnam’s Bio-gas Program for contributing to greenhouse gas emission reduction. Through this program, Vietnam has sold 3,072,265 carbon credits, generating $8.1 million.

Especially in 2023, Vietnam’s forestry sector successfully sold 10.3 million forest carbon credits (equivalent to 10.3 million tons of CO2) through the World Bank. With a carbon credit selling price of $5 per ton, the total contract value reached $51.5 million. The World Bank paid the first installment of the Emission Reduction Purchase Agreement (ERPA) to the Ministry of Agriculture and Rural Development, amounting to $41.2 million, achieving 80% of the contracted emission reduction. The remaining $10.3 million will be paid upon the completion of transferring the remaining 10.3 million tons of CO2.

Le Hoang The, Director of The VOS Ecological Company, highlighted that Vietnam is among the leading countries in the world with a high carbon emission growth rate. It ranks in the top 20 countries with the highest carbon emissions in 2022, with a growth rate of 57.3% from 2010 to 2022, placing it in the top 10 countries globally. The energy and industrial sectors contribute increasingly to Vietnam’s carbon emissions structure over the past 12 years.

According to Le Hoang The, Vietnam is also one of the countries with significant potential in supplying carbon credits, expecting high economic benefits as global demand is predicted to increase nearly 100 times by 2050. All branches of Vietnamese agriculture, from livestock farming and cultivation to afforestation, have the potential to shift towards low-emission production methods, implementing circular agriculture, ecological agriculture, and organic farming.

“Currently, each carbon credit (equivalent to reducing 1 ton of CO2 emissions) is being purchased by international organizations for $5. In the agricultural sector alone, Vietnam’s estimated potential could reach 57 million carbon credits per year (equivalent to reducing 57 million tons of CO2 emissions), which can be sold to international organizations, bringing in nearly $300 million annually,” noted Le Hoang The – CEO of The VOS

Changing Mindsets to Adapt to Trends

In the context of Vietnam implementing a green economy program, circular economy, and its commitment to UN climate change mitigation, aiming for a net-zero carbon footprint by 2050, Le Hoang The emphasized the need for a large, professional workforce to implement the central solution of establishing a mandatory carbon credit market. This workforce must have in-depth knowledge of relevant accreditation mechanisms, documentation preparation, and assessment of various types of carbon credits.

“Nowadays, people don’t just buy products; they also buy how those products are made. Our story is about changing mindsets to adapt to the changing trends of the world, which is crucial. Scientific thinking needs to change, business thinking needs to change, and our thinking needs to change. Open-mindedness, swift action, and tangible results are essential,” stressed the Minister, emphasizing that in the future, rice farmers won’t just sell rice, fruit growers won’t just sell fruits, and rice cultivation will include selling straw, bran, and tourism experiences. Particularly, agricultural production will involve selling carbon credits. It’s not just about “selling air” — in reality, we’ve already sold fresh money. The carbon credit trading market will become lively in the future, so Vietnamese agriculture needs to proactively embrace this trend to increase profits.

Source: Vietnam Economic Journal