Vietnam to transfer additional one million carbon credits to World Bank

Vietnam to transfer additional one million carbon credits to World Bank

The Vietnamese government has approved the transfer of one million tonnes of CO₂ emission reductions generated from plantation forests in the north-central region to the International Bank for Reconstruction and Development (IBRD), a member of the World Bank Group.

The credits form part of the 5.9 million tonnes of surplus CO₂ reductions remaining after Vietnam’s initial transfer under the first phase of its Emission Reductions Payment Agreement (ERPA), which generated revenues of $51.5 million.

Under the agreement, about 95 per cent of these credits will be returned to Vietnam to support its Nationally Determined Contributions, the country’s greenhouse gas reduction commitments submitted biennially to the United Nations under the Paris Climate Agreement.

The transfer price is based on the payment terms signed five years ago between Vietnam and IBRD. With the previous average rate of $5 per tonne, the additional one million credits could bring in an estimated $5 million.

Funds raised will be allocated to forest owners, local commune authorities, and organisations tasked with managing natural forests across the five provinces involved in the programme, Thanh Hoa, Nghe An, Ha Tinh, Quang Tri, and Thua Thien Hue. A portion will also support groups engaged in forest protection, sustainable livelihoods, and income improvement for local communities.

In 2020, the Ministry of Agriculture and Rural Development and IBRD signed an ERPA for the north-central region, covering 10.3 million tonnes of CO₂ reductions in its first phase. Actual reductions achieved in 2018-2019 exceeded this volume, leaving a surplus of 5.9 million tonnes. IBRD subsequently proposed purchasing an additional one million tonnes from this balance.

Last year, the ministry submitted a proposal to the prime minister to allow the additional transfer, ensuring further financial resources for forest protection and development.

The remaining 4.9 million tonnes will be reserved for Vietnam’s own NDC implementation, as finding further buyers is challenging and the market value of reductions typically decreases over time.

VIR