Approximately 1.4 million smallholder farmers in Vietnam contribute directly to emission reductions in Japan and South Korea. These farmers hold significant potential for reducing domestic emissions as well.
In 2023, Vietnam exported around 5 million tons of wood pellets, most of which were produced from the timber of over one million smallholder farmers. Over 95% of the pellets were exported to Japan and South Korea, where they are co-fired with coal in power plants to generate energy and reduce emissions.
Although 95% of Vietnam’s total wood pellet production is exported (with only 5% consumed domestically), the balance between domestic consumption and export may shift significantly in the future. The Vietnamese government has committed to achieving net-zero emissions. Replacing coal and diesel in power plants and boilers with biomass, including wood pellets, holds substantial potential for reducing current emission levels.
Together with the Vietnam Thermal Power Association and the Vietnam Pellet Association, we—Forest Trends—have discussed reward-and-penalty mechanisms to promote a transition from coal and diesel to woody biomass in Vietnam. These mechanisms include strict government policies on emission reductions, not only for large emitters (e.g., coal-fired power plants) but also for small- and medium-scale boilers (of which at least 9,000 are currently operational), support for smallholder farmers to improve their wood production efficiency, and the establishment of a domestic carbon market. Forest Trends acts as a bridge to convey these messages to the government, the private sector, and other potential investment funds.
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