Vietnam’s Forests and Sustainability

Vietnam’s Forests and Sustainability

Vietnam is a frontline fighter against the climate change, via forestry. The country is at an inflection point for sustainable and scalable forestry development.
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The analysis below is Ayo’s intellectual property. Please cite our website when you circulate the analysis.

Challenges to sustainable biomass

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 as the best-fit country for sustainable wood pellets

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.

Competitive Advantages

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

According to data in 2012, Vietnam’s forest growth rate is more than twice the rate in the US South and more than 3x the rate in the US Northeast. It’s worth noting that the forestry management in Vietnam was not as advanced. With upcoming forestry management programs (contributed by Ayo), government incentives, and improved seeds, we expect the tree growth rate in Vietnam to improve even more.
According to data in 2012, Vietnam’s forest growth rate is more than twice the rate in the US South and more than 3x the rate in the US Northeast. It’s worth noting that the forestry management in Vietnam was not as advanced. With upcoming forestry management programs (contributed by Ayo), government incentives, and improved seeds, we expect the tree growth rate in Vietnam to improve even more.

👉 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.

Nambiar, EK Sadanandan. "Strengthening Vietnam's forestry sectors and rural development: Higher productivity, value, and access to fairer markets are needed to support small forest growers." Trees, Forests and People (2020)

Vietnam is widely covered by plantation forests that are primary owned and growed by small holders.
Vietnam is widely covered by plantation forests that are primary owned and growed by small holders.
Acacia trees being harvested
Acacia trees being harvested

👉 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

Perceived limitations

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

Wood production is substantially in the hands of hundreds of thousands of small forest growers. Therefore, a national effort for increasing the wood supply can succeed only by enhancing engagement with these growers. They deserve support to apply evidence-based and sustainable practices and less interventions to access fair markets. For small growers, international forest certification systems remain needlessly complex and unaffordable and yet to offer improved pathways to sustainability or reliable benefits.

Recognizing this issue, the government has worked with PEFC to create a new Vietnam Forest Certification System (VFCS) to rectify the problem.

Vietnam’s policy and commitments

05/2019: Vietnam government and PEFC signed partnership agreements. The Vietnamese government is working towards the goal of certifying at least 3 million hectares by 2030.
03/2021: Vietnam government has been taking actions. Vietnam Forestry Certification Office (VFCO), sponsored by PEFC, has recently been established. They targeted 50,000 ha of certified plantations (acacia and rubber) in 2021.
04/2022: growing the forestry area and improving the forestry management is a national priority.
05/2022: Prime Minister Pham Minh Chinh met with US Special Presidential Envoy for Climate John Kerry in Boston on May 14 as part of his working trip to the US.

Ayo’s capacity to realize the opportunities

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

Ayo is working directly with VFCO for sustainable and certified forestry development in the highlands.

References

Nambiar, EK Sadanandan. "Strengthening Vietnam's forestry sectors and rural development: Higher productivity, value, and access to fairer markets are needed to support small forest growers." Trees, Forests and People (2020)
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Microsoft’s investment in forestry in Central America, because trees grow better there.
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Analysis of Acacia hybrid timber value chains: A case study of woodchip and furniture production in central Vietnam3849.8KB
Economic Performance of Forest Plantations in Vietnam: Eucalyptus, Acacia mangium, and Manglietia conifera2317.8KB
Sustainable_Management_of_Acacia_auriculiformis_Pl.pdf4569.5KB

Sustainable Forest Management Plan and Public Policy of group Tin Nhan - Tay Son

Tin Nhan is taking steps to represent afforestation households in Tay Son district to apply for FSC FM sustainable forest certification. The following documents are publicly available to stakeholders

Sustainable forest Management Plan of Nhan - Tay Son Group.pdf2249.4KB
Commitment to implement sustainable forest management.pdf1152.1KB
FSC Group - Binh Thuan Current Map .pdf909.7KB
FSC Group - Thuan Current Map.pdf909.7KB
FSC Group - Tay Thuan Current Map.pdf4575.2KB
HCVF & HLVS Report.pdf371.2KB
SIA & EIA Report6447.3KB