The carbon market is entering an international game with many challenges and pressures, but also brings countless opportunities and benefits.
The carbon market is an important driving force for the process of moving towards Net Zero by 2050, building a green economy following the global trend. Participating in this market means entering an international game with many challenges and pressures, but also bringing countless opportunities and benefits that Vietnamese businesses can hardly refuse.
Carbon market officially operates from 2029
Commenting on the potential of the carbon market, experts said that Vietnam has opportunities because it is a new and young carbon credit market on the world carbon credit market map, with a large current space in terms of nature, forest area, forest cover density as well as agricultural sectors.
Vietnam has recorded initial success in participating in the global carbon credit market by successfully transferring more than 10 million carbon credits in 2023, earning more than 50 million USD.
Sharing about the Government’s roadmap for implementing the carbon market, Mr. Hoang Van Tam – Head of the Climate Change and Green Growth Group, Department of Energy Saving and Sustainable Development (Ministry of Industry and Trade) said that the pilot phase from 2025 to 2028 will be implemented nationwide. From 2029, the carbon market will be officially operated nationwide and prepare for connecting the domestic carbon market with the region and the world. “Starting from 2025, more than 1,900 large enterprises, emitting 3,000 tons of carbon per year in Vietnam, can buy domestic carbon credits, if proactive solutions are not enough to meet emission reduction standards,” Mr. Tam emphasized.
Providing more information on this issue, Mr. Nguyen Vo Truong An, Deputy General Director of ASEAN Carbon Credit Exchange Joint Stock Company, said that the carbon credit market in Vietnam was actually launched in 2018, when the first voluntary carbon credit projects were registered with some of the world’s leading appraisal organizations such as Verified Carbon Standard (VCS), or Gold Standard (GS). In the past 2 years, especially when Vietnam successfully transferred more than 10 million carbon credits in 2023, this topic has really “heated up” and some Vietnamese enterprises have begun to focus on learning to implement. Currently, there are about 150 programs and projects that have been granted 40.2 million carbon credits and are implemented according to international carbon credit exchange and offset mechanisms for exchange on the world carbon market.
Many challenges but great benefits
According to economic experts, the implementation of a pilot carbon market in Vietnam will open up great opportunities for businesses to reduce greenhouse gas emissions through carbon credit trading and participate in the green economy. This is an international game that Vietnamese businesses can hardly refuse, although there are many challenges, the opportunities and benefits are also enormous.
According to experts, the implementation of the carbon market faces many difficulties due to issues related to finance, human resources; methods; machinery, equipment, etc. In reality, many businesses are struggling, not knowing how the market will operate between the mandatory market and the voluntary market. Moreover, businesses are also worried because financial investment in green conversion technology and emission reduction is often very large, while business resources are limited.
Discussing solutions, experts said that international cooperation is the key to opening up Vietnam’s carbon market. Vietnam can refer to and learn from international experiences from countries that have successfully operated carbon markets such as the EU, China, the US, etc. At the same time, it can attract and take advantage of investment capital and technology from international partners. In addition, to promote the carbon market in Vietnam, close coordination between the Government, businesses and consulting organizations is needed.
According to Dr. Can Van Luc, Chief Economist of the Bank for Investment and Development of Vietnam (BIDV), Vietnam has clear policies and guidelines on the carbon market, but the bottleneck is in the implementation and guidance stages. Vietnam needs to remove these barriers to accelerate the process of forming a carbon credit trading floor as soon as possible. This is an urgent issue and should not wait until 2028.
Unlocking finance for the carbon marketAccording to the Ministry of Natural Resources and Environment, as of July 2024, 48 countries have implemented mandatory carbon markets. In addition, there are voluntary carbon markets established by businesses and international organizations. Although there is no global consensus on the exchange of emission quotas and cross-border carbon credits, 82 countries and territories have signed agreements on the exchange of carbon quotas and credits.
“With great potential for renewable energy and carbon markets, Vietnam will be very attractive to investors. Therefore, we need flexible, creative and innovative solutions in implementing the Project, quickly approaching and keeping up with world trends. This is a game where the fastest wins, the smartest can grasp and take advantage of opportunities so that those who are behind and underdeveloped can rise up, join in and surpass us,” said the Deputy Prime Minister.
At the same time, the Deputy Prime Minister requested the Ministry of Finance, the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment and relevant ministries and branches to coordinate and determine the supply and demand of the domestic and international carbon market; build a legal framework for calculating, measuring and determining products traded on the carbon market, such as greenhouse gas emission quotas, types of carbon credits… as a basis for developing a comprehensive operation plan for the domestic trading floor as well as conditions for connecting with the international market to ensure transparency and publicity./.