Forest Carbon Experts to facilitate the participatory development of Vietnam’s forest carbon market

Accessing carbon market financing is critical for the low-carbon transition in the forests and agriculture sectors. Viet Nam’s forests are currently a net sink of emissions, yet have enormous potential to sequester more carbon, while the agriculture sector is currently a source of ~15% of Viet Nam’s GHG emissions. The prospect of converting emissions reductions and removals in the forests and agriculture sectors into sellable units should not only create a powerful incentive for emissions reduction but provide an important revenue stream for the government and forest and agricultural communities.

Viet Nam’s carbon market policy framework (Decree Number 06/2022/ND-CP) assigns several important roles and responsibilities to the Ministry of Agriculture and Environment (MAE). Among other things, MAE needs to develop a sector-level GHG mitigation plan, define technical GHG measurement methodologies, develop a GHG inventory for the sector, and undertake sector-level GHG measurement, reporting and verification. In respect to forests, MAE has been assigned the ‘prime responsibility’ for ‘formulating objectives and roadmaps for the implementation of methods to increase greenhouse gas absorption from sustainable forest management…and integrate them into sectoral-level greenhouse gas emissions mitigations plans’.

The carbon market policy framework is being revised and updated as part of a renewed cross-government push on carbon markets and carbon pricing ahead of the pilot operation of Viet Nam’s Emissions Trading Scheme in 2025. In parallel, MAE is in the process of negotiating international transactions for forest carbon Emissions Reductions (ERs – i.e. carbon credits) with the LEAF Coalition. Negotiations for rice sector Emissions Reductions with the World Bank’s Transformative Carbon Asset Facility (TCAF) may also commence soon. Consequently, Emissions Reductions Purchase Agreements are due to be signed over the next 12 months, which will help set precedents for years to come. The UK is a significant financial contributor to both the LEAF Coalition and TCAF.

Despite the policy and market momentum, carbon market expertise in MAE remains limited, and several important sector-specific policies and governance arrangements are missing to support equitable market development. Indeed, MAE does not yet possess strategy and/or roadmap documents to guide a coordinated approach that can make the most of Vietnam’s carbon mitigation potential and market opportunities. The carbon market expertise that does exist in MAE is largely concentrated within the Department of Forestry and Forest Protection (DFFP), but even DFFP do not yet have sufficient capacity and resources to fulfil their responsibilities and drive equitable market development for the forests sector.

This low capacity is a problem because the next 12 months will be important for the development of the forest carbon market in Viet Nam. Building on their experience of leading negotiations with the World Bank’s Forest Carbon Partnership Facility, DFFP are in the process of negotiating the ERPA with the LEAF Coalition. Alongside this, DFFP will need to set the broader technical and social ‘rules of the game’ for the generation, sale and management of forest carbon credits in Viet Nam in line with MAE’s responsibilities under Decree 6. When designed and implemented well, using an inclusive approach that engages public, private, and civil society actors and recognises the multiple benefits of forest resources, such ‘rules’ would not only mobilise critical finance for nature, but also strengthen inclusive forest governance beneficial to local forest users, and help set the template for other sectors under MAE’s responsibility. Developing the inclusive governance processes and policy inputs to design these rules well requires capability and resources that DFFP lack. Without a change in this situation, these ‘rules of the game’ risk being established in ways that are inequitable for communities with a stake in the management of Viet Nam’s forest resources, and/or do not maximise the benefits to Viet Nam.

Forest Trends – a specialist NGO with expertise in forest governance, forest-risk commodities, and forest carbon – have been in consultation with DFFP about their needs and priorities as part of the scoping of the second phase of the UK-funded Forest Governance, Markets and Climate programme (FGMC). Though this engagement, DFFP have expressed their interest in establishing a multi-stakeholder working group to start building the inclusive governance and strategic roadmaps needed for the equitable development of the forest carbon sector. With some initial funding from FGMC, Forest Trends intend to co-chair this working group with DFFP and use their networks and expertise to get it established and operational. Even with this support, DFFP capacity constraints will restrict their ability to meaningfully co-lead this group, lead the drafting of the strategic roadmap and harness the potential of this nascent multi-stakeholder engagement process.

 Outcome

Activities

Deliverable due*

Acceptance criteria/sign-off

Output 1.  Coordination of National Forest Carbon Markets Multi-Stakeholder Working Group

1.1. Supporting the working group’s activities

1.2. Coordinating with working group members

1.3. Engaging with relevant government, civil society and private sector stakeholders.

30 Apr 2026

– Establishment of a multi-stakeholder working group for the forest carbon market, featuring representatives from government, business, and civil society.

Output 2.  Facilitation of Regular Meetings of the Carbon Markets Working Group.

2.1.  Developing meeting agendas

2.2. Providing preparatory support to meeting co-chairs

2.3. Facilitating deliberative discussions within meetings

2.4. Drafting meeting summary notes and relevant materials where necessary.

30 Apr 2026

– At least four meetings of the working group held, featuring contributions from government representatives, business and industry, and civil society representatives.

Output 3.  Development of Forest Carbon Standards and Strategic Roadmap.

3.1. Analysing and appraising available forest carbon standards in consideration of Viet Nam’s policy frameworks, governance frameworks, data availability and local context

3.2. Drafting a strategic roadmap for the Viet Nam forest carbon market, informed by domestic and international legal framework analysis and consultations with working group members

28 Feb 2026

– Technical reports, draft forest carbon standards relevant for the forest carbon market in Viet Nam

– Strategic roadmap document endorsed by the working group, proposing recommendations for long-term market development, market governance arrangements/structures, and enhanced regulatory capacity/institutions.

Output 4.  Enhancement of Organizational Capability and Stakeholder Engagement.

4.1. Supporting DFFP and other agencies under MAE to deliver trainings on topics related to DFFP responsibilities (e.g. carbon markets, forest management, forest/land use mapping, timber legality).

4.2. Identifying transferable policy and governance lessons from the strategic roadmap process and undertaking inter-departmental engagements on lessons applicable to other MAE sub-sectors (e.g. rice sector, livestock sector)

4.3. Coordinating in drafting technical materials for implementing the Highland and South-Central region Emission Reduction Payment Agreement (ERPA)

4.4. Coordinating and ensuring the high quality research to determine credit potentiality and allocate NDC quotas for localities

4.5. Coordinating the development and operation of online databases on greenhouse gas inventories, MRV and other databases on the current status and potential of reducing emissions, increasing carbon sequestration from forests

4.6. Coordinating the development of greenhouse gas inventory reports and reporting mitigation results in the forestry sector,

4.7 Supporting the organization and participation in related carbon market workshops

4.8. Monitoring and providing periodic information on carbon credit prices in the international market (both voluntary and mandatory), etc.,

30 Apr 2026

– Enhanced technical capability in DFFP and related agencies/other departments in MAE on forest carbon market, forest protection

– Technical guidance documents developed, high-quality research reports produced

– Stakeholder communication/engagement plan and/or appropriate communications products (e.g., guidance information to assist businesses, provincial governments, and local communities understand their opportunities, rights, and responsibilities)