After the approval of Vietnam’s carbon market in late January, the Ministry of Natural Resources and Environment (MoNRE), in collaboration with the Ministry of Finance (MoF) and relevant agencies, organised several meetings to finalise responsibilities for a carbon trading pilot.
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| The goal is to boost development of a low-carbon economy Photo: Shutterstock |
The MoF leads coordination with relevant ministries to build a decree on domestic carbon trading platform based on the Law on Environmental Protection and the Law on Promulgation of Legal Documents.
The MoNRE is responsible for collaborating with other parties to study the establishment of a national registration system for greenhouse gas (GHG) emission quotas and carbon credits. Besides this, one of the important missions is to build plans to manage and operate the national registration system for GHG emission quotas and carbon credits.
Ministries are working together to review and propose amendments and supplements to regulations on the functions and tasks of the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation to create a complete legal basis for the provision of carbon trading platform services.
“The MoNRE and MoF want to finalise and complete the legal framework for the exchange of GHG emission quotas and carbon credits by June, simultaneously ensure controlled development, prevent resource loss, and maintain national security and social order. Being a consultant firm participating in these projects, we are also busy with work to contribute to completing these deadlines,” said Dang Hong Hanh, CEO of energy auditors VNEEC.
The scheme aims to accelerate the development of a low-carbon economy and address climate change, working towards the goal of achieving net-zero emissions by 2050. Its primary goal is to develop a carbon market in Vietnam to help meet GHG emission reduction targets in line with its international commitments, while minimising costs for businesses and society.
The undertaking also aims to create new financial flows for GHG reduction efforts, support the transition to green technologies, and enhance the competitiveness of Vietnamese businesses domestically and globally. It also outlines a detailed roadmap for the carbon market, which will experience a pilot phase from now to 2028, and then will be launched nationwide in 2029.
“The project introduces two primary market commodities, GHG emission quotas and certified carbon credits, which will be tradable. At the GHG emission quotas, firms operating in the highly energy-intensive industries of cement, iron production, and coal-fuel power plants will participate in the pilot carbon trading platform first,” Hanh said.
To avoid confusion when joining, firms have to accelerate internal carbon pricing strategies to guide development of a long-term decarbonisation and investment strategy, and continuous monitoring of developments in industry and policy.
“It is necessary to have plans for emissions trading system (ETS) allowance management, including spot price tracking and market analysis, in collaboration with carbon credits offsets plan. They must also quickly register account operations in collaboration with complete mandatory external verification of GHG emissions reporting,” Hanh added.
To operate the pilot ETS in 2025, there are substantial needs for training and capacity building to provide relevant stakeholders with the knowledge to develop and implement emissions trading as a cost-effective policy instrument to reduce GHG emissions to enable the establishment of emission trading systems.
“There are various forms of training and capacity building to provide comprehensive, in-depth training on the design and implementation of ETS for participants. Among these forms, the simulation is a useful tool to assist policymakers and businesses in preparing for emissions trading in countries newly considering an ETS like Vietnam,” said Josh Margolis, a lecturer and operator of the CarbonSim tool.
Carbon market simulations are programmes, models, virtual environments, and games that allow stakeholders to participate in a simulated process of designing or participating in an ETS. Importantly, simulations can allow different stakeholders to build relationships, mutual understanding and trust, which are key prerequisites for working together on policy design and implementation.
Finally, these tools provide stakeholders with a safe and risk-free opportunity to try out new ideas, make mistakes, and learn lessons which can speed the adoption of effective ETS.
“The simulation will increase carbon pricing literacy and build support for the policy among stakeholders, helping to pave the way for an ETS pilot in 2025 and roll out in 2028. Furthermore, this can help test certain design options, engage stakeholders and deepen knowledge,” Margolis said.
“Over the last dozen years, thousands of people have participated in CarbonSim exercises in China, South Korea, Japan, Thailand, South America, Europe, and more. The version that we’re running now is one that’s been tailored for those fortunate to be in a position to make a difference in how Vietnam implements the emissions trading scheme,” he added.
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