Through the Forest Carbon Partnership Facility (FCPF), the Vietnamese government and the International Bank for Reconstruction and Development (IBRD) signed an Emission Reductions Payment Agreement (ERPA) on October 22nd 2020. Under this agreement, Vietnam committed to transferring 10.3 million tons of CO2 equivalent (tCO2e) of verified emission reductions generated under the North Central Region Emission Reductions Program, covering 06 provinces: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, and Thua Thien Hue, at a fixed price of 5 USD per tCO₂e [1].
In the first report term (2018 – 2019 period), the Program generated 16,2 million tCO₂e emission reductions, independently verified by Aster Global Environmental Solutions, exceeding the originally committed under ERPA [2]. Following the initial payment of 51.5 million USD and an additional payment pursuant to Resolution no 261/NQ-CP, issued on August 29th 2025 [3], Vietnam received a total of approximately 56.5 million USD for the transfer of 11.3 million tCO2e of verified emission reductions. The remaining approximately 4.9 million tCO2e of verified emission reductions may be considered for future use or additional transactions.
Following the official completion of the Program at the end of 2025, the management and utilization of the remaining FCPF emission reductions entered a new context. Recently, the development of carbon credit standards, registry systems, and international market mechanisms has created a broader range of opportunities for the use of emission reductions. Although the use will depend on the specific requirements of each mechanism, the potential applications of emission reductions are expanding significantly.
This also provides valuable experience to support the development of the forest carbon market in Vietnam in the coming years.
FCPF: Results-based Climate Finance (RBCF) for the Reducing Emissions from Deforestration and Forest Degradation (REDD+)
Established in 2008, FCPF, a World Bank (WB)’s initiative, supports developing countries to implement REDD+ through RBCF. The FCPF Carbon Fund, officially operated in 2011 [4], serves as a pilot results-based payment mechanism by purchasing independently verified emission reductions generated from jurisdictional REDD+ programs.
FCPF programs are implemented using a jurisdictional approach, at national or provincial/regional level. Under this approach, participating countries not only establish a Forest Reference Emission Level, implement REDD+ activities, monitor and report greenhouse gas emissions and removals, but also apply a measurement, reporting and verification (MRV) system to quantify emission reductions [5].
The key distinguishing feature of the FCPF and other RBCF mechanisms is that the Carbon Fund makes payments only after emission reductions have been independently verified and issued in the registry system [6]. To support this process, FCPF uses Carbon Assets Tracking System (CATS) [7] – the WB’s registry for carbon programs. CATS tracks the entire lifecycle of emission reduction units, from issuance, transfer to retirement. According to Climate Action Data Trust data, until the end of 2025, CATS has issued and managed around 132 million emission reduction units across 21 WB carbon programs [8].
Thus, although the FCPF operates under an RBCF mechanism, the program’s emission reductions are still independently verified, issued, and managed through fully essential components of a carbon crediting framework, including approved methodologies, an MRV system, independent verification, and a registry. It means that FCPF emission reductions are not only used as the basis for result-based payments under the RBCF mechanism but also managed through a process which is similar to other jurisdictional carbon crediting programs.
Recent developments in the carbon market
Recently, the international market has seen significant changes in carbon crediting standards, market infrastructure, and environmental integrity requirements. For FCPF, three key developments are expanding the potential market opportunities for forest emission reductions: (i) the interconnection among carbon registry systems, (ii) the transition pathway to the ART TREES standard, and (iii) the recognition of FCPF emission reductions under CORSIA.
Connected Registry Systems
In the carbon market, a registry system is used to issue, track, transfer, and retire carbon credits, while preventing the risk of double issuance or double use.
For FCPF, emission reduction units are managed through WB’s CATS. In the past, CATS primarily served as an internal registry for WB’s carbon programs. Recently, this system has been connected with other registry systems.
Specifically, REDD+ participating countries may retire WB’s carbon credits in CATS and have them reissued in the Verra Registry to facilitate subsequent transactions [9]. CATS also supports the reissuance of units to the ART Registry for commercial transactions. In addition, CATS is connected to Climate Action Data Trust (CAD Trust), a public data-sharing platform linked to multiple registries [10], helping to reduce the risk of duplication.
Those connections do not alter the fundamental nature of the FCPF. They provide the technical infrastructure that, under certain circumstances, enables emission reductions generated under the FCPF to retire in CATS and be reissued in another registry recognized by buyers in either the voluntary or compliance carbon markets.
The REDD+ Environmental Excellence Standard (TREES) version 3.0 establishes a transitional pathway for FCPF participating countries
Another significant development is that TREES version 3.0 formally establishes a transitional pathway for countries participating in the FCPF Carbon Fund [11]. Under this framework, eligible countries may transition from the FCPF framework to the Architecture for REDD+ Transitions (ART) TREES, without having to rebuild their entire system from scratch. Countries are allowed to retain their existing FCPF accounting area for the first ART crediting period. After that, they are required to modify it to fully comply with the TREES standard.
This is significant because ART TREES is now one of the most widely recognized jurisdictional REDD+ standards in international carbon markets. This standard has been assessed by the Integrity Council for the Voluntary Carbon Market (ICVCM) as meeting the Core Carbon Principles and has also been approved by the International Civil Aviation Organization (ICAO) to participate in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) with specific eligibility conditions.
For countries that have already invested in MRV systems, data infrastructure and REDD+ program management through FCPF, the transition mechanism enables them to build on these existing foundations rather than developing a new system from scratch, while also expanding their access to international carbon markets. However, the issuance of carbon credits must fully comply with the standard’s requirements – including its provisions on retroactive crediting. As a result, not all emission reductions generated under the FCPF in the past are eligible to be converted into ART TREES credits.
FCPF recognized under CORSIA: Opening the door to the compliance carbon market
In addition to enhanced connection among registry systems and a transitional pathway to ART TREES, the FCPF has been recognized under CORSIA. According to the CORSIA eligible emissions units published by the ICAO in April 2026, emission reduction units issued under FCPF are eligible for use during CORSIA Phase 1 (2024–2026), with specific requirements relating to the vintage of the units, host country authorization, emissions accounting, registry system and risk management mechanism [12].
However, there is no directly automic transition for emission units from FCPF’s system to CORSIA’s system. According to the FCPF’s Process Guidelines [13], a country wishing to generate CORSIA-eligible emission units must commit to transitioning its entire program to the ART TREES standard and notify the FCPF Carbon Fund of this intention at least a year before the expiry of ERPA. Following the transition, CORSIA-eligible units are issued and labelled in the ART Registry, rather than in CATS or any other registry.
This demonstrates that emission reductions generated under the FCPF are not only used for results-based payments, in certain circumstances, but also provide carbon credits for international aviation to meet compliance targets.
More opportunities, but different pathways for emission reductions
These developments have significantly expanded the range of opportunities available for emission reductions generated under the FCPF. However, this does not mean that all emission reductions are eligible to participate in carbon market mechanisms. Each mechanism has its own requirements regarding credit vintage, emission accounting, the role of the host country, and registry system.
Credit vintage
For many international market mechanisms, especially CORSIA and transactions under Article 6 of the Paris Agreement, vintage of emission reduction is one of the most significant indicators. The remaining emission reductions of the North Central Region Program generated in the 2018 – 2019 period may not be eligible to participate in all carbon market mechanisms, as some mechanisms only accept emission reductions generated from the year 2021 or have specific requirements for credit vintage.
In addition to the verified emission reductions for the 2018-2019 reporting period, the North Central Region Program includes two subsequent monitoring periods (2020-2022 and 2023-2024). Although the Program has officially closed, these monitoring periods could still serve as a basis for determining more recent emission reductions, therefore potentially better meeting the vintage requirements of certain market mechanisms. However, this depends on appropriate standards for measurement, reporting and verification.
The role of host country and Nationally Determined Contribution (NDC) accounting
For transactions serving international compliance purposes, the country plays a vital role. Depending on the requirements of each mechanism, the transfer of emission reductions may require a Letter of Authorisation from the host country and a corresponding adjustment to avoid double counting between the transferring country and the user. Therefore, the transfer of emission reduction is not only a market transaction but also needs to be considered in relation to the implementation of Vietnam’s NDC.
Post-program governance
The completion of ERPA does not equate to the termination of all management obligations related to emission reductions. If a country wants to continue utilizing FCPF’s emission reductions for certain international market mechanisms, it must maintain a tracking system, manage emission reversal risks, update the registry system and fulfil monitoring obligations for many years after the program’s closure. This demonstrates that participating in the carbon market not only relies on the quality of emission reductions but also demands institutional and governance capacity maintained throughout the program’s lifecycle, even after the ERPA has ended.
Conclusion
Recent developments in carbon credit standards, registry systems, and international market mechanisms indicate that forest emission reductions are no longer viewed through the lens of a RBCF program. They are progressively transitioning into a class of carbon assets which can be traded under various financial and market mechanisms if they meet requirements regarding environmental integrity, emission accounting, and governance.
For Vietnam, this presents not only an opportunity to optimize the value of emission reduction generated but also a crucial foundation for designing future REDD+ programs and carbon sequestration projects. These initiatives can be tailored to align with Article 6 of Paris Agreement, the voluntary carbon market, and international compliance mechanisms.
This also demands institutional and technical capacity across multiple areas, including the development and operation of MRV systems, the design of registry systems, the management of ownership and transfer of emission reductions, NDC accounting, and the formulation of tailored market access strategies for each carbon asset class.
Based on experience advising the Vietnamese government, development partners, and the private sector on REDD+, Article 6 of the Paris Agreement, carbon market, MRV system, VNEEC believes that the transition phase from the RBCF mechanism to the carbon market will require an integrated approach spanning policy, technology, and market. This will crucial factor determining the ability to mobilize climate finance resources, and enhancing the value of coming emission reductions.
Thuy An and Loan Nguyen
References
[1] MARD & IBRD. (2020). Emission Reductions Payment Agreement: North Central Region, Viet Nam
[2] World Bank. (2024). Viet Nam Leads in Forest Protection through Innovative Carbon Program. Accessed online at https://www.worldbank.org/en/news/feature/2024/08/23/viet-nam-leads-in-forest-protection-through-innovative-carbon-program on July 15th 2026.
[3] Vietnamese government. (2025). Resolution No. 261/NQ-CP issued on August 20th 2025 on transferring the surplus of GHG reductions from the North Central Region for the 2018-2019 period
[4] FCPF. (n.d.). The Carbon Fund. Forest Carbon Partnership Facility. Accessed online at https://www.forestcarbonpartnership.org/carbon-fund-0 on July 15th 2026.
[5] World Bank (2025), Carbon Crediting: A Results-Based Approach to Mobilizing Additional Climate Financing: Accessed online at https://documents1.worldbank.org/curated/en/099041025111025763/pdf/P180769-14cca500-6eae-46e3-9a1e-bab79015651b.pdf on July 15th 2026.
[6] World Bank. (2022). Defining Results-Based Climate Finance, Voluntary Carbon Markets and Compliance Carbon Markets”. Accessed online at https://openknowledge.worldbank.org/entities/publication/27b81ef0-7d1d-5a8f-b7ad-2588de324deb on July 15th 2026.
[7] World Bank, Carbon Assets Tracking System. Accessed online at https://cats.worldbank.org/?tab=AboutCats on July 15th 2026.
[8] CAD Trust (2025), World Bank’s Carbon Assets Tracking System connects to the Climate Action Data Trust. Accessed online at https://climateactiondata.org/world-banks-carbon-assets-tracking-system-connects-to-cad-trust/ on July 15th 2026.
[9] Verra (n.d.), Registry overview. Accessed online at https://verra.org/registry/overview/ on July 15th 2026.
[10] BioCarbon Fund ISFL (2026), Integrity first: Why carbon registries matter for carbon markets. Accessed online at https://www.biocarbonfund-isfl.org/result-stories/integrity-first-why-carbon-registries-matter-carbon-markets on July 15th 2026.
[11] ART, TREES 3.0. Accessed online at https://www.artredd.org/standards/trees-3-0/ on July 15th 2026.
[12] ICAO (2026), CORSIA Eligible Emissions Units. Accessed online at https://www.icao.int/sites/default/files/environmental-protection/CORSIA/Documents/CORSIA%20Eligible%20Emissions%20Units/CORSIA-Eligible-Emissions-Units_April-2026.pdf on July 15th 2026.
[13] FCPF (2026) Process Guidelines. Version 6.5.1. Accessed online at https://forestcarbonpartnership.org/sites/default/files/documents/fcpf_process_guidelines_v6.5.1.pdf on July 15th 2026.
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