Vietnam is at the forefront of combating climate change through innovative forestry practices. With its favorable climate, including high solar radiation and year-round humidity, Vietnam boasts one of the fastest tree growth rates globally, significantly surpassing those in traditional forestry regions. This natural advantage is amplified by an established wood-based ecosystem and a forward-looking national strategy on climate change, which prioritizes forestry area expansion and management improvements.

The main thesis for the sustainability and carbon-neutrality of biomass energy is that the carbon that it releases equals or is less than the carbon that trees absorb. There are 3 layers of challenge that the wood pellet industry needs to solve to support the above thesis.

1️⃣ Green Growth challenge. Can we ensure that new trees grow faster than the consumption of wood for making wood pellets?

2️⃣ Ecosystem challenge. Does the supply base have a healthy wood ecosystem (e.g. lumber, furniture, etc.) to ensure that trees are not grown only for making wood pellets?

3️⃣ Certification and Accounting challenge. Are there certification programs to ensure that wood pellets are made from true residues and not from whole trees or illegal harvesting? Is the carbon absorption, sequestration, as well as emission during the supply chain of wood pellets being accounted properly?

Among the 3 challenges, only challenge #3 can be solved with policies. It can be achieved with more funding, better management (more MBAs), and more technology (for better traceability and accounting).

Challenges #1 and #2 can’t be solved with policies. No policy can change the climate and help trees grow faster. No policy can create a new wood ecosystem within 20 years.

Vietnam has the optimal weather conditions for tree growth (1️⃣) and the existing healthy wood-based ecosystem (2️⃣). The central government and select enterprises (including Ayo) are committed to improving 3️⃣.

👉 Climate advantage. Acacia and eucalyptus trees grow rapidly in Vietnam, due to high solar radiation and high humidity year round.

👉 Large and increasing area of plantation forests.

According to national statistics (2019), Vietnam has 4.16 million hectares of plantation forests and that figure will continue to grow. Total wood production from Vietnam's forest plantations has increased substantially over the years, largely due to expansion of planted area.

Therefore, Vietnam's forestry sector has significant green growth opportunities.

👉 Ecosystem advantage. Vietnam has a vibrant market for forest products. It's a (wood) furniture manufacturing hub of the world. It's the world's largest exporter of wood chips. It's one of the world's largest wood pellet exporters.

👉Labor advantage: hard-working, inexpensive workforce

What the country is lacking is the forestry that is recognized by international organizations . However, as [Nambia] describes, Some of certification is too centralized and remains needlessly complex and unaffordable for the small holders of plantation forests in Vietnam.

1️⃣ Our strong market access in all segments of wood products: furniture, wood chips, and wood pellets. We own and operate factories in all of these segments.

2️⃣ Our local networks, including but not limited to government and brokers. This is important because farmland ownership in Vietnam is highly fragmented. Most farm/forestland are owned by smallholders. It requires a guerilla campaign to gather a sizable block.

3️⃣ Our local operational know-hows

4️⃣ Our scientific, data-driven approach toward forest management

Working directly with VFCO