Vietnam aims to achieve net zero emissions by 2050. To achieve this goal, Vietnam is gradually developing its domestic carbon market. According to the Government’s roadmap, Vietnam will operate an official carbon credit exchange in 2028.
In today’s article, we invite everyone to find out information about how carbon credit operations will take place in Vietnam? What are the opportunities? What are the difficulties that will be encountered?
Vietnam plans to operate a carbon credit exchange in 2028: Opportunity or challenge
A carbon credit is a financial unit that represents one ton of greenhouse gases that have been reduced or removed from the atmosphere. Carbon credits can be traded on the carbon market.
The carbon market is an economic mechanism that incentivizes organizations and individuals to reduce greenhouse gas emissions. Organizations and individuals can generate carbon credits through projects that reduce emissions, such as reforestation, using renewable energy, or conserving energy. Organizations and individuals wishing to reduce emissions can purchase carbon credits from organizations and individuals that generate credits.
Operating a carbon credit market brings many opportunities for Vietnam, including:
- Help Vietnam reduce greenhouse gas emissions
As you mentioned, carbon credits are an effective tool for reducing greenhouse gas emissions. Businesses can reduce greenhouse gas emissions by investing in emission reduction projects, such as afforestation projects, solar power projects, etc.
After reducing emissions, businesses can sell carbon credits to other businesses that need to reduce emissions. This will create incentives for businesses to invest in emission reduction projects, thereby helping Vietnam reduce total greenhouse gas emissions.
- Generate revenue for the state budget
Vietnam will collect fees from businesses buying carbon credits. This revenue source can be used to support emission reduction projects, or to invest in sustainable socio-economic development.
- International cooperation
The carbon market helps Vietnam connect with international carbon markets . This will create conditions for Vietnam to trade carbon credits with other countries, as well as participate in international agreements on reducing greenhouse gas emissions.
- Promote sustainable economic activities
Carbon credits create an economic mechanism to encourage organizations and individuals to carry out sustainable economic activities, such as using renewable energy, saving energy, protecting the environment… This will contribute to promoting sustainable socio-economic development.
Create opportunities for Vietnamese businesses to participate in the global carbon market
The global carbon credit market is growing rapidly. According to the World Bank, the value of the global carbon market has increased from 100 billion USD in 2020 to 140 billion USD in 2021. It is expected that this market will continue to grow in the coming years.
Vietnamese businesses can participate in the global carbon market to profit from reducing greenhouse gas emissions. Businesses can reduce greenhouse gas emissions by investing in emission reduction projects, such as afforestation projects, renewable energy projects, etc.
After reducing emissions, businesses can sell carbon credits to other businesses that need to reduce emissions. Businesses that buy carbon credits are usually large businesses with production and business activities that emit a lot of greenhouse gases.
To participate in the global carbon market, Vietnamese businesses need to meet the following requirements:
- Have emission reduction projects certified by reputable organizations.
- Able to provide carbon credits with quantity and quality that meet market demand.
- Able to compete in price and quality with foreign businesses.
Vietnamese businesses can participate in the global carbon market through the following channels:
- Directly participate in the market through carbon credit exchanges.
- Participate in emission reduction projects implemented by international organizations.
- Participate in carbon credit trading contracts with foreign businesses.
To promote Vietnamese businesses to participate in the global carbon market, the Government needs to have supportive policies, including:
- Build a legal framework that is complete, transparent, and consistent with international practices.
- Strengthen international cooperation to learn from the experiences of other countries.
- Provide support resources, such as training, consulting, and loans.
Participating in the global carbon market will create opportunities for Vietnamese businesses:
- Profit from reducing greenhouse gas emissions.
- Enhance the competitiveness of businesses in the international market.
- Contribute to reducing greenhouse gas emissions and protecting the environment.
Promote green economic development
The carbon market is a driving force behind green economic development. Carbon markets create economic mechanisms to incentivize organizations and individuals to undertake sustainable economic activities.
When businesses invest in green economy projects, they can reduce greenhouse gas emissions and profit from selling carbon credits. This will create motivation for businesses to invest in green economic projects, thereby contributing to promoting green economic development.
Difficulties of operating carbon credits
Operating the carbon credit market is a complex process and faces many challenges. Here are some difficulties we may encounter:
Knowledge and information about the carbon market is limited:
Many Vietnamese businesses do not have complete knowledge and information about the carbon market. This makes it difficult for businesses to participate in the carbon market, such as:
- Not knowing how to determine how much greenhouse gas has been reduced or eliminated.
- Not knowing how to certify emission reduction projects.
- Don’t know how to buy and sell carbon credits.
To address this challenge, training and communication programs are needed to raise businesses’ awareness of the carbon market.
The ability of businesses to transform green is still slow:
Many Vietnamese businesses still use outdated technology, causing environmental pollution. This makes it difficult for businesses to reduce greenhouse gas emissions.
To address this challenge, there is a need for policies to support businesses converting to green technology, such as:
- Preferential policies on taxes and loans.
- Policy to support technology transfer.
Risk of fraud and profiteering:
The carbon market is a market with many potential risks of fraud and profiteering. Businesses may cheat in determining how much greenhouse gas has been reduced or eliminated, or create unrealistic emissions reduction projects to turn a profit.
To address this challenge, strict regulations are needed for the identification and certification of emissions reduction projects. Authorities need to strengthen inspection and supervision to detect and handle acts of fraud and profiteering.
In addition, the carbon credit market also faces a number of other challenges, such as:
- Determining the value of carbon credits is still inconsistent.
- The carbon credit market is still small and not yet highly liquid.
- The carbon credit market can be affected by economic and political factors.
The operation of the carbon credit market is an important step in the process of reducing greenhouse gas emissions and developing Vietnam’s green economy. The carbon market creates an economic mechanism to encourage organizations and individuals to reduce greenhouse gas emissions, thereby contributing to responding to climate change.
With the efforts of authorities, businesses and international organizations, Vietnam can overcome challenges and operate the carbon credit market effectively, contributing to reducing greenhouse gas emissions. and green economic development.