It is expected that in the coming time, Vietnam will issue around 10.8 million carbon credits per year, along with the demand for trading and transactions. Therefore, a fully operational domestic carbon market by 2028 will be an essential tool for more centralized, transparent, and efficient carbon credit trading activities.
Decree 06/2022/ND-CP dated 07/01/2022 on Stipulating mitigation of greenhouse gas (GHG) emissions and protection of the ozone layer details the organization and development of the domestic carbon market. Accordingly, from now until the end of 2027, Vietnam is formulating regulations related to carbon credit management and trading activities, GHG emission allowances as well as operation of a carbon trade exchange and is expected to establish and operate a pilot carbon trade exchange from 2025. The carbon trade exchange will be fully operated in 2028.
On July 12, the Department of Climate Change, Ministry of Natural Resources and Environment (MONRE) cooperated with Standard Charter Bank to organize a consultation workshop on Building and operating a voluntary carbon credit transaction in Hanoi, Vietnam. At the workshop, Dr. Tang The Cuong, the Director of the Department of Climate Change, said that Vietnam is formulating a Scheme "Developing a carbon market in Vietnam" based on Decree 06/2022/ND-CP. The scheme focuses on the mandatory transaction of GHG emission allowances by enterprises and trading in the domestic carbon market, oriented to connect with the international market. It is necessary to prepare carefully in terms of infrastructure, technology, enterprises’ inventory, and reporting capacity to implement this roadmap.
According to the Prime Minister's Decision 01/2022/QD-TTg issued on January 18, 2022, there are 1912 facilities in the country that must carry out an inventory of greenhouse gases. In the coming time, MONRE will advise the Prime Minister to approve Vietnam's total allowances, and allocate it to facilities in the period 2026 - 2030 and annually. Enterprises that are subject to conducting GHG inventory are also obliged to meet allowances requirements, so these will be important participants in the domestic carbon market when it is officially in operation. According to experts, the establishment of a carbon credit market is an important orientation for Vietnam to achieve net zero emissions by 2050.
Ms. Nguyen Hong Loan, Head of the Advisory Department of GreenCIC and also Head of the Advisory Committee for MONRE to establish and operate a voluntary carbon trade exchange, gave a speech at the workshop regarding active carbon credit mechanisms in Vietnam. According to Loan, there are now 04 active carbon credit mechanisms in Vietnam (with carbon credits already issued), including the Clean Development Mechanism (CDM), the Joint Credit Mechanism (JCM), the Verified Carbon Standard (VCS), and the Gold Standard (GS). As of December 2022, the total number of credits issued in Vietnam is more than 40 million. In addition, Vietnam also has more than 50 carbon credit projects being submitted under the carbon credit mechanism of the Global Carbon Council (GCC).
CDM and JCM are compulsory mechanisms and are managed by state agencies. The remaining mechanisms are voluntary mechanisms, currently monitored by the competent state agencies to aggregate for reporting purposes related to climate change to be submitted to the United Nations Framework Convention United Nations (UNFCCC) such as the National Communication, the Biennial Update Report, the Biennial Transparency Report, etc.
According to Mr. Nguyen Van Minh, Head of the Economic and Information Division of the Department of Climate Change, the Government has requested MONRE to study and promulgate mechanisms to manage all carbon credits. In the near future, MONRE will establish a national registry system. Accordingly, all enterprises and organizations with credits generated within the territory of Vietnam will have to register with this system. When there is a trading activity abroad, it is necessary to report to the management agency MONRE, because this activity also affects the implementation of the national emission reduction target.
In addition, according to the Scheme "Developing a carbon market in Vietnam”, the Ministry of Natural Resources and Environment will lead and coordinate with relevant ministries to pilot and operate the carbon trade exchange, manage and monitor this market; regulate activities to connect the domestic carbon trade exchange with regional and global markets; regulate the implementation of carbon credit’s exchange and offset; develop training and awareness raising materials, capacity building for carbon market participants.
Phuong Linh (According to tietkiemnangluong.com.vn and monre.gov.vn)
