On the first day of the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29), countries made an important first step by agreeing on the carbon credit generation standard under Article 6.4 of the Paris Agreement.

This promises to boost demand for carbon credits and ensure the international carbon market operates transparently, under UN oversight.

The UN-backed market could reach a total trading value of $250 billion a year by 2030 and cut 5 billion tons of carbon a year, according to the International Emissions Trading Association.

The global carbon credit market is growing rapidly, becoming one of the most actively traded sectors. Carbon credits are not only seen as a commodity but also an essential tool to implement the global emission reduction commitment.

In the voluntary market, organizations, companies, or countries conduct carbon credit transactions through bilateral agreements or exchanges. Credit buyers aim to meet carbon emission reduction targets, moving towards Net Zero - a goal that they self-publish to make their efforts to reduce their carbon footprint transparent.

The mandatory market is where greenhouse gas emission quotas and carbon credits are traded to help businesses comply with emissions reduction laws. Currently, 48 countries have established mandatory carbon markets, typically carbon tax policies - an effective economic measure to encourage organizations and individuals to take financial responsibility for the amount of greenhouse gases they emit.

carbon market 2.jpg
The global carbon credit market will reach $250 billion by 2030. Illustration photo

Carbon credit prices range from $1-2/credit to nearly $200/credit, depending on the type of project generating the carbon credit, the applicable standards or accompanying benefits, and the transaction location.

Vietnam is among the top 5 most promising countries in terms of carbon credits. In particular, in the agricultural sector, each year our country can sell tens of millions of tons of CO2 if it participates in the carbon credit market, ensuring the goal of environmental protection as well as contributing to the NetZero commitment by 2050.

The Ministry of Agriculture and Rural Development is urgently finalizing standards for forest carbon credits. The goal is to build a complete legal framework, create conditions to attract investment and effectively operate the domestic carbon credit market. This will not only contribute to reducing emissions but also open up opportunities for sustainable development for the forestry economy.

The Ministry of Natural Resources and Environment has chaired and submitted to the Government a roadmap, with the goal of operating a national carbon credit trading floor by 2028. Former Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said that there are 5 items and solutions that need to be implemented to participate in the carbon credit market.

Firstly , raise and unify awareness of greenhouse gas emission reduction, moving towards operating carbon credit mechanism in the business community and the community of people living near forests.

Second , the operational role of the State through the policy system. Including the operation of the national carbon credit trading floor, having a policy mechanism to promote domestic enterprises, and the interest of society in reducing greenhouse gas emissions.

Third , we must think of an independent consulting and monitoring mechanism right now, because relying on the State will not be successful. Consulting on measuring and monitoring emissions to each enterprise must be independent and non-State. At the same time, we must apply technology and consider technology as a criterion to create our trust with the international community.

Fourth , there needs to be a national coordinating organization as the focal point, specifically the Ministry of Natural Resources and Environment, connecting with the system of enterprises that emit or absorb a lot of carbon, forming a Working Group to build resources, organize data, monitor and promote implementation.

Fifth , the international market is very important. We cannot do it alone, we must respect international criteria and standards to operate and apply appropriately.

Regarding forest carbon credits, Mr. Ha Cong Tuan suggested that the ministries of Agriculture and Rural Development, Natural Resources and Environment, and Finance should coordinate to submit to the Government and soon make a decision to implement the voluntary carbon credit mechanism, especially in the South Central and Central Highlands regions.

Associate Professor, Dr. Nguyen Dinh Tho - Director of the Institute of Strategy and Policy on Natural Resources and Environment, said that we are being slowed down due to major bottlenecks in policies and the lack of a clear legal framework.

For the carbon credit market to operate effectively and expand internationally, according to Mr. Tho, there needs to be a clear recognition process. In the immediate future, developing the domestic carbon credit market is still a feasible direction. Enterprises can invest in technology to both reduce emissions and create additional financial resources, promoting sustainable agriculture and green development.

Mr. Tho emphasized that Vietnam has experience through two national forestry development programs, and has the capacity and staff to continue implementing issues related to carbon credits. However, monitoring the carbon credit market requires strict management from the State to avoid duplicate transactions. The role of the State is very important in building trust and ensuring the sustainable development of this market.

With a 'gold mine' of 40 million tons, don't be afraid to sell 'green rice' . Forestry is the only industry in our country that has negative net emissions, so every year there is a surplus of 40 million tons of CO2. This is one of the "gold mines" in the forest, so instead of being afraid to sell "green rice", it is necessary to soon introduce a carbon credit mechanism to facilitate transfer transactions.