According to experts, building a carbon market in Vietnam will open up a new financial sector, investment industry, and opportunity, which is the buying and selling of emission rights - carbon credits.
Towards net zero emissions
Vietnam is one of nearly 150 countries that have made a commitment to net zero emissions at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26). Immediately after COP 26, the Prime Minister approved a project on tasks and solutions to implement the results of the Conference, and at the same time, proposed a comprehensive roadmap and necessary legal framework to realize the committed climate goals.
Race to Net Zero – as the name suggests – is a race to reduce greenhouse gas emissions by the whole society, from management agencies, organizations, businesses to each individual. This campaign until 2050 includes many activities, from technology to community communication, international cooperation for equitable energy transfer; conducting greenhouse gas inventories, developing support solutions for the MRV system on national greenhouse gas inventories...
According to Dr. Nguyen Linh Ngoc, Chairman of the Vietnam Clean Water and Environment Association, the Race to Net Zero Campaign will develop and implement competitions on innovative ideas, emission reduction solutions, green models, and circular economy; research, search, and promote start-ups to implement breakthrough solutions on carbon capture and storage technology, green technology (hydrogen, green ammonia, etc.); implement carbon-neutral tree planting activities in vacant land, barren hills, drought, and saline intrusion areas. Outstanding organizations and individuals in the Campaign will be honored at the regular Net Zero Vietnam Awards.
In addition to the implementation requirements for large emission organizations and facilities nationwide, Race to Net Zero will also focus on activities to guide and provide technical support for energy inventory and audit, greenhouse gas emissions for organizations and enterprises with emissions that are not yet subject to mandatory government regulations and publicly listed entities (according to regulations on securities information disclosure). At the same time, support, advise and implement carbon market development activities in Vietnam towards integration, proactiveness, quality and connectivity with markets around the world.
Carbon market full of potential
According to experts, the carbon market is currently considered the key to achieving the Net Zero target and operates on the principle that polluters must pay a fee to compensate for the amount of greenhouse gases emitted into the environment. According to data from the World Bank (WB), in 2022, the highest price of carbon credits (1 credit equals 1 ton of CO2 equivalent) traded in the European market was 87 USD/credit. In some national carbon markets, New Zealand is 50 USD/credit; Canada is currently priced at 40 USD/credit, while in Korea it is recorded at nearly 19 USD/credit. This is the price that organizations and businesses will have to pay for their greenhouse gas emissions if there is no solution to reduce emissions.
According to WB experts, to achieve the goal of net zero emissions by 2050, carbon prices in markets will fluctuate between 50 and 250 USD/credit. Following the trend of global countries increasing their efforts to reduce emissions, carbon prices are forecast to increase in the coming time and in some markets may reach 150 USD/credit by 2035.
Through emissions reduction efforts and carbon credit trading, businesses can demonstrate social responsibility by moving closer to achieving “net zero or carbon neutrality.”
When participating in the market, all parties involved harmonize their interests. The market follows the rule of "Willing buyer - willing seller". The State will collect budget resources when applying fees from future activities of exchanging quotas, carbon credits or carbon taxes. These fees will be regenerated for projects and research works on emission reduction, carbon absorption, carbon storage, etc. Meanwhile, the carbon seller will also benefit because they are the 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 will be applied in production, business and service activities.
According to Mr. Pham Cuong - Director of the Center for Environmental Protection and Climate Change Response, investing in projects to create carbon credits, or investing to hold, exchange and sell carbon credits are all safe investment channels, anticipating the current general deflation trend. Participating enterprises not only meet Vietnam's legal requirements but also break down trade barriers related to carbon taxes when exporting to demanding markets such as the EU, the US or soon China, Japan... High profit opportunities in the context of carbon credit prices in Vietnam being low compared to the world and tending to increase rapidly in the coming time.
In Vietnam, Decree 06/2022/ND-CP dated January 7, 2022 of the Government regulating the reduction of greenhouse gas emissions and protection of the ozone layer is the latest legal basis regulating the organization and development of the carbon market.
To deploy the market, 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 guidance of the sector management ministry in 2023.
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