Vietnam pilots carbon credit exchange from 2025, enterprises may struggle to comply


Vietnam Carbon Credit Exchange is expected to trial from 2025, but the details of the trial phase are still under development, especially regarding policies, legal framework, and human resources for the development are seriously insufficient. It will be difficult to convince companies to comply.

In terms of carbon footprint verification, Vietnam companies must submit operational data to their respective management units for carbon emission calculation by 2025. After 2025, companies must conduct themself. However, the government still needs to establish related policies and provide technical guidance on processes, reporting procedures, and the following audit.

HCMC aims to attract green energy strategy investors and utilize carbon credit trading revenue to address climate change. (Photo: Unsplash)

The Vietnamese government released the list of needed to reduce carbon emissions units in 2022, including more than 1,900 enterprises that emit more than 3,000 tons of carbon per year, mainly from energy, agriculture, transportation, and construction sectors.  Nguyen Thanh Cong, representing the Department of Climate Change of the Ministry of Natural Resources and Environment (MONRE), mentioned that many companies are interested in the carbon credit market. Currently, some companies seek carbon credit sources to fulfill carbon reduction commitments. However, once carbon emission reduction shifts to mandatory, large contributors must await national carbon allowance, and to secure quotas, these enterprises must conduct carbon footprint verification in advance.

Besides lacking a carbon inventory mechanism, Vu Chi Cong, head of the ESG department at Vinacapital, a Vietnamese investment company, stated that based on the experiences of other countries, Vietnam faces a significant challenge due to a shortage of skilled personnel either in quantity or quality in establishing the carbon credit exchange.

There is a similar situation on the carbon credits supply side, the lack of expertise in carbon credit verifications and auditing. The operating fees are higher since hiring foreign professionals at a high cost which offsets the value of selling carbon credit. 

Additionally, according to Decree 06/2022/NĐ-CP planes to establish a carbon credit exchange from 2025. However, Vietnamese authorities still considering its location. One option might be North Vietnam since the Hanoi Stock Exchange expresses an interest in it. Ho Chi Minh City (HCMC) also stands as a considered option, due to the numerous major stock exchanges located there. HCMC also is the national financial center, and aspirations to become an international financial hub. 

Moreover, HCMC has initiated “Pilot several specific Mechanism and Policies for Development” under Decision 98/2023/QH15, prioritizing the attraction of green energy strategy investors, and spending the revenue from carbon credit trading to cope with climate change, developing digital economy, green and circular economy. Many international organizations are also optimistic about Ho Chi Minh City.

According to Le Xuan Nghia, a member of the National Financial, Monetary Policy Advisory Council, Vietnam has over 40 million carbon credits, mainly derived from forests, oceans, renewable energy, and energy conservation. However, MONRE estimates, Vietnam's annual carbon emissions reach up to 300 million tons, equivalent to 3 tons per person per year. The largest emissions source comes from energy, and future energy consumption is expected to continue growing.

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