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| Nguyễn Phương Nam, expert on climate change assessment of the United Nations Framework Convention on Climate Change, image? |
Nguyễn Phương Nam, expert on climate change assessment of the United Nations Framework Convention on Climate Change, talks to Vietnamese news agency reporter on how to promote the carbon market.
Prime Minister Phạm Minh Chính issued Directive No. 13/CT-TTg to improve the management of carbon credits to implement the Nationally Determined Contributions (NDC) program.
How do you evaluate the potential development of Vietnam’s carbon credit market?
Vietnam’s carbon market will have significant development potential. First, Vietnam, as a developing country, has high production requirements, resulting in increased greenhouse gas emissions due to environmentally unfriendly technologies. So there is significant potential when it comes to reducing greenhouse gas emissions in the country. Moreover, geographical location plays a crucial role as Vietnam, a tropical country, has more potential for diversifying renewable energy sources such as solar and wind energy, compared to other countries.
Moreover, Vietnam has ample opportunities to attract green finance, aimed not only at climate change adaptation and resilience to extreme weather events, but also at reducing greenhouse gas emissions. Therefore, the demand and possibilities for setting up a carbon credit market are closely linked to Prime Minister’s Directive 13/CT-TTg.
However, it is crucial for ministries, sectors, municipalities and relevant agencies to evaluate the current status of greenhouse gas emissions, allocate greenhouse gas emissions quotas and operate the market smoothly and attractively for investors to participate in the trade in carbon credits.
How does the implementation of the carbon market contribute to Vietnam’s goal of achieving net-zero emissions by 2050?
This is an ambitious goal that requires the involvement of various stakeholders, including ministries, sectors, localities, Vietnamese enterprises and support from international organizations, to channel green finance to help domestic enterprises transition to green. Green capital, with many preferential incentives to support businesses, restores profits and contributes to reducing greenhouse gas emissions, achieving Vietnam’s goal of achieving net-zero emissions by 2050.
The biggest challenge for Vietnam right now is to accurately determine the greenhouse gas emissions of major emitting companies, because if we fail to do so, it will pose a significant obstacle for government agencies. The allocation of greenhouse gas emissions quotas to companies should be done in such a way that companies know and can reduce emissions, creating excess quotas for carbon credit trading. Therefore, the most crucial task in Vietnam is to determine the allocation of greenhouse gas emission quotas for domestic companies currently operating and in production.
How will Vietnamese export companies face carbon credit barriers?
Vietnamese export companies face several issues related to trade and export barriers, especially after the European Union introduced the Carbon Border Adjustment Mechanism (CBAM) in 2023. Therefore, goods in some of the sectors regulated by the European Union, such as iron, steel, cement, fertilisers, hydrogen and electricity, which are exported to the EU, if not taxed in the host country, will also remain at Europe’s borders are taxed, which amounts to almost 100 dollars for a ton of CO2. Vietnamese companies within the global supply chain, with customers in Europe, are at risk of this tax.
Apart from the European Union, other countries around the world such as the United States, the United Kingdom and Australia have implemented similar mechanisms. This means that Vietnamese companies must equip themselves with knowledge and calculations of greenhouse gas emissions intensity per product to avoid trade barriers and thus increase competitiveness and brand recognition. Sustainable brands are not only good and affordable, but also have social and ecological significance. Therefore, Vietnamese companies must prepare now so that in the next five to ten years, all trade can flow smoothly and they can build a certain reputation in the global market.
The Ministry of Finance proposes a trading platform for carbon credits. How do you think the platform should be managed?
The Ministry of Finance is the competent authority to lead the construction and management of a carbon credit trading platform. The project is being accelerated and in principle a trading platform should be easily adopted, especially given current trends in information technology it should make exchanges and transactions relatively simple and convenient.
To set up a complete ecosystem, involving stakeholders from deposit units and credit trading entity registration to order matching units or brokers, requires a deep understanding of the specific product. Carbon credits are an intangible asset similar to shares and require many regulatory requirements to clearly define ownership units or asset values for smooth trading.– VNS