Promoting the carbon credit market in Vietnam

In Ho Chi Minh City, the launching ceremony of the "Race to Net Zero" campaign and the forum "Investment, trade opportunities and corporate responsibility in the carbon market" were jointly organized by the Central Committee of the Vietnam Clean Water and Environment Association, the Association of Environmentally Friendly Product Manufacturers, the Center for Environmental Protection and Climate Change Response and WWF - Vietnam.

The Race to Net Zero is a campaign to protect the environment and tackle climate change by 2050. Moving to a net zero world requires a radical transformation of the way we produce, consume and move around. The energy sector is responsible for around three-quarters of current greenhouse gas emissions, so it has a key role to play in mitigating the worst impacts of climate change. Replacing polluting coal, gas and oil with energy from renewable sources, such as wind or solar, would significantly reduce carbon emissions.

Speaking at the event, Dr. Nguyen Linh Ngoc - Former Deputy Minister of Natural Resources and Environment , Chairman of the Vietnam Clean Water and Environment Association affirmed: Race to Net Zero is a campaign until 2050 on environmental protection and climate change response. The energy sector is the source of about 3/4 of current greenhouse gas emissions. Replacing polluting coal, gas and oil thermal power with energy from renewable sources, such as wind or solar, will significantly reduce carbon emissions.

Sharing this view, Mr. Vu Minh Ly, Permanent Vice President of the Association of Environmentally Friendly Product Manufacturers, said: Vietnam lost about 10 billion USD in 2020, equivalent to 3.2% of GDP due to the impacts of climate change. The total economic cost caused by climate change could reach 523 billion USD by 2050.

Notably, Vietnam has increased its greenhouse gas emissions per capita by four times this century and is maintaining the fastest growth rate in the world. This situation urges Vietnam to take strong, responsible and untimely actions to protect the environment. Net zero emissions or “Net Zero” is a strong political commitment of Vietnam at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), Mr. Ly added.

According to Mr. Pham Viet Bien Cuong, Director of the Center for Environmental Protection and Climate Change Response: The carbon market is considered the solution and key to achieving the Net Zero target for Vietnam in the coming time. The market operates on the principle that "polluters" must pay a fee to compensate for the amount of emissions into the environment through the purchase and exchange of carbon credits.

Carbon credits are understood as a type of permit that allows the owner to emit carbon dioxide or other greenhouse gases. Each carbon credit is calculated as 1 ton of CO2 (allowing the emission of 1 ton of carbon dioxide or equivalent conversion from other greenhouse gases such as CH4, NO2).

The subjects of carbon credit trading are factories and manufacturing companies that emit a certain amount of CO2 into the air; if they exceed the prescribed level, they must buy more carbon credits. Conversely, businesses that actually emit less than the limit can sell the unused carbon credits to other businesses that emit more than the limit.

Participating in the carbon market is both a responsibility and an opportunity for organizations and businesses. The market follows the rule of "willing buyer - willing seller", the State collects budget resources when applying fees from the exchange of quotas, carbon credits or carbon taxes in the future. These fees will be regenerated for projects and research on emission reduction, carbon absorption, carbon storage, etc. Meanwhile, the carbon seller benefits from units that implement environmental solutions well, the buyer will also compensate for the amount of emissions exceeding the allowed quota. Thereby, efforts on emission reduction solutions, carbon absorption, green solutions are applied in production, business and service activities.

In the context of developed regions in the world such as the EU, the US or soon China, Japan... applying carbon tax barriers to imported and exported goods, Vietnam is facing many challenges in the process of building and developing the carbon market. This is a challenge but also an opportunity for management agencies, organizations and businesses to transform, research, and immediately apply green solutions, reduce emissions, and implement measures to create and accumulate carbon credits for the coming time.

From 2028, the organization will operate an official carbon credit trading floor, regulating activities of connecting and exchanging domestic carbon credits with regional and global carbon markets.

To implement the above regulations, more than 1,900 enterprises (in the fields of industry and trade, construction, transportation, natural resources and environment) will have to provide operational data and related information to serve the greenhouse gas inventory of the facility in the year before the reporting period according to the instructions of the sector management ministry in 2023./.

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