Mon, 15th Apr 2024 12:10 (GMT +7)

Revenue from carbon credits distributed to localities: official

Tuesday, 02/04/2024 | 15:30:00 [GMT +7] A  A

Vietnam has received a 51.5 million USD payment from the World Bank for verified emissions reductions - commonly referred to as carbon credits - for reducing 10.3 million tonnes of CO2 in the 2018-2024 period, said Director of the Department of Forestry under the Ministry of Agriculture and Rural Development (MARD) Tran Quang Bao at the ministry’s quarterly press conference on April 1.

Revenue from carbon credits distributed to localities: official hinh anh 1
Illustrative photo (Photo: VNA)

According to the official, 80% of the sum has been distributed to six north central provinces and the remaining 20% will be distributed to the localities in the next 1-2 months.

Regarding benefit sharing which refers to how the value created from the sale of carbon credits is distributed, Bao said that the Government issued a decree on piloting the transfer of emission reduction results and financial management of greenhouse gas emission reduction payment agreements in the north central region.

Accordingly, only 0.5% will be used to coordinate the general agreements and 3% to perform measurement, control, supervision, training, and technical guidance. The remaining 96.5 % is allocated to targeted localities.

Based on the contracted forest area, the localities will allocate the above amount to people and communities that signed contracts to protect and manage the forests.

Currently, the MARD issued a benefit-sharing plan and is organising training to distribute that benefit to localities. The main beneficiaries are communities, ethnic minorities, and forest keepers.

According to the Forestry Department, the Emission Reductions Payment Agreement (ERPA) in the north-central region was signed on October 22, 2020, between the MARD and the International Bank for Reconstruction and Development (IBRD) under the World Bank Group as the Trustee of the Forest Carbon Partnership Facility (FCPF).

The ERPA aims at transferring reduced emissions of 10.3 million tonnes of CO2 in the northern part of the central region in 2018-2024 to the FCPF via the World Bank, with the unit price of 5 USD per tonne of CO2, worth 51.5 million USD in total.

About 95% of the transferred results will be returned to Vietnam to contribute to the national commitment to greenhouse gas emissions to obtain the goals of the Paris Agreement on climate change approved at COP21.

According to the MARD, the World Bank has confirmed emission reductions of 16.21 million tonnes of CO2 (16.21 million carbon credits) in the north central region in the first period (from January 1, 2018, to December 31, 2019), including the 10.3 million tonnes of CO2 transferred under ERPA. The World Bank agreed to buy 1 more million tonnes of the remaining 5.91 million tonnes.

The ministry reported to the Prime Minister about the remaining credits of 4.91 million tonnes of CO2 for consideration and decision. At the same time, it is continuing to coordinate with the World Bank to measure and confirm the amount of credits for Phase 2 (2020-2022) and Phase 3 (2023-2024). It is also looking for partners that have demand for the carbon credits to ensure national interests and mobilise additional resources for forest protection and development in the north central region.

According to the Forestry Department, Vietnam has not had a mandatory market for carbon credits. The transfer of emission reduction results is carried out through bilateral agreements between relevant parties.

Regarding the forest carbon credit market, the Prime Minister has assigned the MARD to implement two agreements to transfer emissions reduction results including the ERPA in the north central region and another ERPA in the south central and Central Highlands regions.

In the ERPA in the south central and Central Highlands regions, Vietnam transfers to LEAF/Emergent 5.15 million tonnes of CO2 to reduce emissions from forests in the regions in the 2022-2026 period.

LEAF/Emergent will pay for this service at a minimum price of 10 USD per tonne of CO2 with a total value of 51.5 million USD. The area of commercial and service forests registered to reduce emissions is 4.26 million ha, including 3.24 million ha of natural forests and 1.02 million ha of planted forests.

The MARD submitted the registration application for credit granting according to TREES standards and organised technical negotiation sessions with Emergent to complete the negotiation plan and soon submit it to the Prime Minister for consideration and decision.

Source: VNA