[Research Report] Results Released on CO2 Absorption Capacity and Economic Effects of Major Reforestation Species in Vietnam

Carbon Zero Global Co., Ltd. (Headquarters: Minato-ku, Tokyo; Representative Director: Daiki Oka; hereinafter "Carbon Zero Global") has released a research report on the CO2 absorption capacity and economic effects of major reforestation species in Vietnam. This report provides a comprehensive analysis of the environmental value and economic profitability of reforestation species, including hybrid acacia, based on research data from Associate Professor and Dr. Ngo Dinh Que and his team at the Center for Forest Ecology and Environment under the Vietnamese Academy of Forest Sciences.

Background of the Report With the global acceleration of decarbonization, the carbon credit market is expanding rapidly. Reducing greenhouse gas emissions is no longer an "option" for companies but a "condition for survival and growth." There is a growing demand for concrete initiatives that transform environmental measures from mere costs or burdens into opportunities for creating new financial resources and economic cycles.

In this context, Vietnam is one of the countries with extremely high potential for forest carbon credit projects, thanks to its abundant forest resources, diversity of tree species, young workforce, and experience in implementing forestry projects. Vietnam has ratified the United Nations Framework Convention on Climate Change (UNFCCC), established a national authority for the Clean Development Mechanism (CDM)*1 in 2003, and launched a CDM advisory group in 2004, demonstrating steady progress in institutional development.

Carbon Zero Global is focusing on this potential in Vietnam and is promoting forest carbon credit projects in the country. This report is being released to demonstrate the scientific basis and economic validity of the Vietnam forest projects we are undertaking.

Overview of the Research Report This report is based on two studies conducted by the Center for Forest Ecology and Environment at the Vietnamese Academy of Forest Sciences.

Part 1: CO2 Absorption Capacity of Major Reforestation Species in Vietnam In a study by Associate Professor and Dr. Ngo Dinh Que and his team, researchers analyzed trees (branches, leaves, trunks, roots, and litter) and soil at various reforestation sites across Vietnam to measure carbon (C) content and calculate CO2 absorption. The target species included hybrid acacia, Acacia mangium, Acacia auriculiformis, Pinus merkusii, and Eucalyptus urophylla.

Part 2: Growth Evaluation and Economic Impact Assessment of Hybrid Acacia in Quang Tri Province In a study by Mr. Tran Duy Luong of the Vietnamese Academy of Forest Sciences, the growth characteristics and economic profitability of hybrid acacia were evaluated based on actual planting data in Cam Lo village, Quang Tri province.

Key Research Findings 1. CO2 Absorption Capacity of Major Reforestation Species Surveys at various reforestation sites in Vietnam confirmed that each species possesses high CO2 absorption capacity. Calculations based on NIRI (Nissho Iwai Research Institute) standards yielded the following results:

[Image: Chart showing CO2 absorption capacity]

In particular, hybrid acacia planted at a density of 1,400 trees per hectare in the Cam Lo district was shown to absorb 330 tons of CO2 per hectare by the eighth year, revealing its ability to create high environmental value in a short period.

Furthermore, a strong correlation was confirmed between the biological production (tree growth) and CO2 absorption of each species. For hybrid acacia, the absorption amount can be estimated with extremely high precision using the correlation formula Y = 1.90Z + 0.18 (coefficient of determination r² = 0.99).

2. Revenue from CO2 Credits (Estimates) Based on estimates in Hong Trung village, A Luoi district, Thua Thien-Hue province, the CO2 credit revenue obtained from each species is as follows:

[Image: Chart showing CO2 credit revenue]

Notably, hybrid acacia generates higher annual revenue (125 USD/ha) in just three years after planting than other species do after more than 10 years. This is the result of its rapid growth rate combined with high CO2 absorption efficiency, indicating it is one of the optimal species for carbon credit projects.

3. Economic Effects of Hybrid Acacia (Including Timber Revenue) The economic impact of a seven-year reforestation project in Cam Lo village, Quang Tri province, was evaluated using three indicators: NPV (Net Present Value)*2, BCR (Benefit-Cost Ratio)*3, and IRR (Internal Rate of Return)*4.

[Image: Chart showing that investing 1 Dong in hybrid acacia planting yields 2.84 Dong in revenue after 7 years from firewood obtained through thinning and harvested timber.]

For hybrid acacia grown from seedlings, the IRR is very high at 28.9–30.6%, and the 7-year NPV (net profit) reaches 33.9–38.8 million Dong per hectare. This demonstrates the comprehensive economic effect, including revenue from thinning and timber sales in addition to revenue from carbon credits.

*1 Clean Development Mechanism (CDM): A mechanism under the Kyoto Protocol adopted at the UNFCCC in 1997, allowing developed countries to count greenhouse gas reductions from climate change projects (such as reforestation) implemented in developing countries toward their own reduction targets. *2 NPV (Net Present Value): An indicator showing the economic effect of an investment project. When NPV is greater than 0, the present value of income exceeds the present value of costs, meaning the project is profitable. *3 BCR (Benefit-Cost Ratio): An indicator showing the ratio of income to one unit of investment capital. When BCR is greater than 1, the discounted total income exceeds the discounted total costs, meaning the project is profitable. *4 IRR (Internal Rate of Return): An indicator showing the discount rate at which the Net Present Value (NPV) becomes zero. When the IRR is higher than the interest rate, it means the project generates higher-than-average profits.

Potential and Challenges of CDM Projects in Vietnam This report also analyzes the potential and challenges of CDM projects in Vietnam.

Vietnam possesses many strengths, including favorable land conditions, diversity and rapid growth rates of tree species, an environment suitable for biodiversity conservation, an abundant workforce, and experience in implementing forestry projects. On the other hand, challenges have been identified, such as a shortage of personnel capable of guiding CDM projects, a lack of knowledge and experience in project management and environmental/economic/social impact assessment, the dispersion of eligible land across Vietnam, and delays in institutional development to meet international standards.

Based on these challenges, Carbon Zero Global is working to build sustainable forest carbon credit projects in collaboration with local research institutions and stakeholders.

Carbon Zero Global's Initiatives Since our founding in 1976, Carbon Zero Global has been committed to creating environmental value and contributing to a decarbonized society. We aim not only to handle carbon credits but also to fulfill our responsibility to protect the future of the global environment while achieving harmony with social activities.

Currently, our Vietnam forest project is in the application stage for credit issuance under international certification standards, and we are proceeding with procedures as planned while coordinating with third-party certification bodies. In Japan, we also support the decarbonization management of companies and local governments through carbon credit creation/issuance support and decarbonization consulting.

We believe that carbon credits are not merely a cost, but an important tool to support the future of companies. By carefully selecting reliable projects and continuing to provide environmental value that ensures transparency and effectiveness, we will contribute to the realization of a decarbonized society.