Biomass credits to carbon openings

Biomass credits to carbon openings

Agribank is at the forefront of providing green finance for Vietnamese businesses to unlock the potential of carbon credits and tap into international markets.

Vietnam is poised to gain an extra $5 million from the World Bank through the transfer of carbon credits. The payment, scheduled before the end of October, comes from the sale of one million tonnes of CO2 under a government resolution on transferring surplus emission reductions achieved in the north central region during 2018–2019.

Agribank representatives appraised an enterprise afforestation project

The amount is part of the 5.9 million tonnes of surplus carbon emission reductions remaining following Vietnam’s Phase 1 credit transfer, which generated $51.5 million.

Indeed, Vietnam is the first country in the East Asia-Pacific region to receive a results-based payment for verified emissions reductions from the World Bank’s Forest Carbon Partnership Facility. The payment benefits 70,055 forest owners and 1,356 communities near the forest across six localities, distributed according to a robust benefit sharing plan designed through a consultative, participatory, and transparent process.

This demonstrates how carbon credits, as an intangible asset, can be converted into a sustainable source of income for local communities and the country at large.

With 14.7 million hectares of forest, a tropical climate, and rapid tree growth, Vietnam finds itself at a turning point: from a country with ample potential, Vietnam can become a leading supplier of carbon credits in the region. However, to turn the potential into reality, it is vital to access long-term sustainable financing that allows businesses to invest in technology and infrastructure and meet rigorous international certification and data transparency standards.

Against this backdrop, Agribank has pioneered in accompanying businesses. Its loan agreements with Van Lang Yufukuya Co., Ltd. and Lam Thanh Hung Co., Ltd. in Thanh Hoa province not only provide financial resources but also improve confidence for these businesses to actively pursue green initiatives, contributing to the development of a low-carbon economy.

Situated in the Nghi Son Economic Zone, Van Lang Yufukuya specialises in producing woodchips and wood pellets, which are in high demand in Japan, South Korea, and Europe for biomass energy production. Since 2020, Agribank has extended a credit facility of $7.6 million, with $6.1 million disbursed to date. This timely financing has enabled the company to secure raw material supply chains, maintain export schedules, and invest in market expansion as well as biomass processing line upgrades.

Notably, Van Lang sources exclusively from suppliers certified by the Forest Stewardship Council and pays for each shipment directly. This meets international transparency and sustainability requirements and cements the company’s long-term commitment to global standards.

Critical links

Unlike Van Lang, Lam Thanh Hung Co., Ltd., headquartered in Tuong Linh commune, focuses on woodchip and laminated board production. Backed by Agribank with a $3 million credit facility fully disbursed, the company has scaled up operations and raised competitiveness in international markets.

Lam Thanh Hung also manages 700ha of forest across four communes of Cong Liem, Cong Chinh, Tuong Son, and Tuong Linh in Thanh Hoa province. This area was leased from 258 households. The company has fully paid the forest rental fees while making direct payments to local households for raw material purchases. This model ensures a stable supply chain, creates income for local communities, and promotes a fair benefit-sharing mechanism, which is an essential factor of sustainable development.

At first glance, these credit facilities might seem like traditional forestry loans. In fact, these credit facilities serve as critical links in the carbon value chain. From tree planting to biomass processing and export, each activity contributes to measurable, reportable, and verifiable (MRV) emission reductions. Once certified to international standards, these reductions can be transformed into carbon credits, tradable on voluntary and compliance markets.

Agribank’s financing provides leverage, empowering Vietnamese businesses to step onto the multi-billion-dollar global carbon market. This showcases how a commercial bank can serve as a bridge between the traditional agricultural economy and the emerging green economy.

Lang Van In, chairman of the Board of Directors of Van Lang Yufukuya, said, “The loan from Agribank has been key for us to invest in biomass processing and afforestation projects. Despite favourable policies, we face major challenges like high MRV costs, complex certification processes, and strict data transparency demands. Without Agribank’s support, we could not have come this far.”

Agribank’s financing helps businesses maintain production and serves as a launchpad for them to enter the green economy, where value comes not only from wood products but also from quantified emission reductions. Biomass loan facilities nurture the forestry sector and serve as the gateway for Vietnamese enterprises to cash in on carbon credits – an asset once considered intangible, now increasingly recognised as high-value.

“Backed by Agribank’s financing, we can sustain forest-to-processing operations and explore lucrative carbon credit markets in Japan, the EU, and South Korea. We believe carbon credits will become a sustainable revenue source alongside wood products, building a strong financial foundation,” In added.

A vote of confidence

Agribank’s timely financing has empowered companies to meet international standards, maintain production continuity, and build credibility with global partners. With this support, Vietnam’s forestry enterprises are securing a stronger footprint in export markets and stepping into the global carbon credit playground – a market valued at over $900 billion in 2024 and still growing.

As Vietnam’s leading agricultural bank, Agribank fully recognises the immense carbon potential of Vietnamese forests within the global carbon value chain. By financing these enterprises, the bank is promoting clean production and directly supporting Vietnam’s net-zero 2050 commitments.

It is also an opportunity for Agribank to expand its credit portfolio into carbon finance. This high-growth sector offers new revenue streams from service fees, guarantees, and cross-border transactions, while improving Agribank’s image as a sustainable, green bank.

As businesses build stable income streams from carbon credits, banks benefit from strengthened repayment capacity, reducing credit risk. This win-win dynamic enables Agribank to fulfill its social responsibility while enhancing its competitive edge in financial markets.

Beyond financing, carbon credit projects require modern MRV systems, digitised data, and transparency. This is an opportunity for Agribank to accelerate its digital transformation strategy while delivering cross-border payment solutions, cash flow management services, and innovative digital banking offerings. Green finance opens up more modern financial services, cementing relationships between enterprises and banks.

Credit buyers are also expressing growing confidence in transactions in the Vietnamese market. “The credits we purchase from Vietnamese enterprises fully meet legal, technical, and environmental integrity requirements,” said one buyer. “These are high-quality credits that can be retraded or used immediately in emission reduction commitments. More importantly, they enhance the reputations of both sellers and buyers in global markets.”

This demonstrates that businesses and banks benefit, while Vietnam’s efforts are internationally recognised. Each successful transaction is a vote of confidence, reinforcing its position in the global carbon value chain.

The international carbon market is opening up an expressway for the green economy, but only capable players can take off. As Vietnam’s largest state-owned commercial bank with a nationwide network, Agribank serves as a strategic bridge, connecting Vietnamese carbon credits with global opportunities.

This journey requires more than capital – it demands technology, governance, and, above all, strategic vision. With its environmental, social, and governance commitments and mission as a bank for the community, Agribank proves that green finance is concrete action – empowering businesses to improve capabilities, advancing Vietnam’s net-zero 2050 commitments, and securing the country’s place on the global carbon map.

VIR