Green Carbon, KIH launch Vietnam AWD project aimed at JCM credit generation

Japan-based developer Green Carbon and Seoul-based Korea Investment Holdings (KIH) partnered on a rice cultivation project in Vietnam to generate carbon credits under Japan's Joint Crediting Mechanism (JCM), reflecting early-stage efforts to expand agriculture-based projects within the scheme.

The initiative, located in Nghe An province, will focus on reducing methane emissions from rice paddies through alternate wetting and drying (AWD) irrigation practices, with the eventual goal of issuing credits under the JCM framework, the companies said in a statement June 9.

The project reflects broader efforts to extend the JCM beyond its traditional focus on renewable energy and energy efficiency into agriculture and nature-based solutions.

Under the JCM scheme, Japan and partner countries collaborate on emissions-reduction projects, with the resulting credits shared between the parties and potentially used toward Japan's climate targets. Both JCM credits and J-Credits can be used to offset up to 10% of emissions under Japan's compliance carbon scheme, also known as the Green Transformation Emissions Trading Scheme.

Platts, part of S&P Global Energy, assessed J-Credit Energy Efficiency at Yen 4,475/mtCO2e, and J-Credit Renewable Energy (Electricity) at Yen 4,875/mtCO2e, both down Yen 50/mtCO2e day over day on June 10.

Japan's Nationally Determined Contribution (NDC) outlines its commitment to reducing greenhouse gas emissions and achieving net zero emissions by 2050, in addition to ambitious targets to reduce emissions by 60% in FY2035 (April to March) and 73% in FY2040 compared to FY2013 levels.

Agriculture, particularly rice cultivation, is gaining attention as a source of methane abatement in Southeast Asia, where flooded paddies are a major source of methane emissions. Alternate wetting and drying techniques, involving periodic drainage of fields, have been identified as a mitigation pathway, with similar approaches already introduced in other regional JCM initiatives.

Green Carbon said the Vietnam project is intended to serve as a model for initial implementation. "We will begin with a demonstration project in Nghe An Province ... ultimately aiming for deployment across more than 62,000 hectares," said Jun Okita, representative director of Green Carbon.

Vietnam policy backdrop supports project pipeline

Vietnam has identified emissions reductions in agriculture as a national priority, with its "Low‑Emission Crop Production Program" targeting the sector over 2025-2035. Recent agreements between Japan and Vietnam have also signaled stronger cooperation under the JCM, particularly in agricultural and irrigation projects.

The Nghe An initiative is expected to begin as a pilot, with the potential to scale based on early results. Plans outlined by the companies include expanding coverage and developing a model for the deployment of agriculture-based JCMs.

For KIH, the project reflects increasing financial sector participation in carbon project development in Asia. "We understand this project to be a deeply meaningful step toward establishing a model case for sustainable agriculture in Vietnam," said Dong-woo Han, managing director at KIH, adding that the group is exploring further carbon-related investments in the region.

Pipeline builds, but timelines remain uncertain

The partnership comes amid growing interest in agricultural-based carbon credits, particularly in methane reduction, but the segment remains at an earlier stage than established project types.

While JCM project development has been picking up in recent months, J-Credit procurement is sidelined amid the GX-ETS "transitional" phase. However, market participants have repeatedly raised concerns about a lack of clarity around the timeline for adding new methodologies under the scheme, as well as the timing of credit issuance.

Due to Japan's complex regulatory landscape and ongoing geopolitical conflicts, many JCM projects remain in the pipeline, with commercialization dependent on regulatory approvals, methodology finalization and demand for credits.