At our company, through our partnerships, we have registered around 170 carbon credit generation projects globally, spanning 15 countries, including Vietnam.
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| Betty Pallard, CEO, ESG Climate Consulting |
From my perspective, Vietnam has tremendous advantages in this field. Firstly, the Vietnamese are very proficient in mathematics, with its pivotal role in measuring and verifying carbon credits. Secondly, the Vietnamese way of life, long rooted in nature, provides a natural foundation of understanding that many other nations would need significant effort to achieve.
Vietnam is also an agricultural country, with 92 per cent of its economic foundation coming from small and medium-sized enterprises. This means the carbon market development scenario in Vietnam will differ substantially from other nations. Every time we advise internationally, we prioritise identifying economic challenges while preserving economic foundations.
There are three main ways to generate carbon credits, resulting in three distinct types: white, green, and blue. White carbon credits arise from human ingenuity through advanced technologies. Globally, several companies have developed technical tools to directly capture carbon from the atmosphere and store it in furniture or other sustainable forms.
Green carbon credits are quite similar but focus on trees rather than machinery. While trees absorb carbon, the key is ensuring this carbon is stored long-term in the soil. The higher the storage capacity, the greater the value of the carbon credits. In this transition from human-driven technology to the role of nature, trees become a vital agent.
Finally, blue carbon credits come from the powerful carbon absorption capacity of water, which can exceed that of trees. However, accurately measuring the carbon absorbed in aquatic environments remains a challenging task.
The carbon credit market is an expansive playing field where each participant can leverage their unique strengths. Nations with advanced technological capabilities can focus on white carbon credits generated from technical solutions for carbon capture and storage. Organisations and communities experienced in forest conservation and tree planting can focus on green carbon credits. Meanwhile, those with expertise in water management and protection can unlock the potential of blue carbon credits.
Rather than purely looking at this through the lens of economics, I prefer to view carbon credits as a national asset. While we may have joined the games of dollars or gold later than other nations, I firmly believe the carbon credit game is Vietnam’s opportunity. In terms of emissions inventories and absorption capacity, within the next few years, Vietnamese experts will be fully capable of calculating these metrics.
In the future, carbon credits will become a mandatory requirement for Vietnamese businesses exporting goods. Currently, Vietnam has not yet established its own Carbon Border Adjustment Mechanism. This leaves products like cement and steel exported to Europe subject to carbon taxes under their regulations. However, Vietnam could consider similar mechanisms to certain imports, such as automobiles or industrial products, to ensure fair trade.
Vietnam should focus on four types of finance: carbon finance, climate finance, green finance, and transition finance. Of these, transition finance highlights a crucial area – clean energy. Vietnam’s challenge is to reduce and offset carbon emissions while simultaneously restoring degraded land. Focusing solely on net-zero will not be efficient because Vietnam faces a paradox: while reducing emissions, the country simultaneously confronts the severe impacts of climate change.
Why does a pine tree’s carbon credit in France cost $90 while the one in Vietnam is only $5? I believe Vietnam needs to integrate adaptation finance into its broader transition finance strategy. We must demonstrate to the world that our carbon credits also involve efforts in restoration and conservation alongside carbon absorption and emission reduction.
Without this, in the next 5-10 years, Vietnam will face significant challenges, not just because of its actions but due to its extremely climate-sensitive geographical location.
Vietnam can draw valuable lessons from three exemplary markets. From Europe, it can learn about data, transparency, and rigorous monitoring systems. From South Korea, it can learn how to expand the market through community participation and social responsibility. And from China, it can learn to focus policies on high-emission sectors while allowing businesses to innovate independently in other areas.
I believe that combining these three elements offers a safe and effective path to building a transparent and sustainable carbon credit market in Vietnam.
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Businesses at the ready for carbon credit market planning
Thorough preparations will enable businesses to leverage advantages when participating in carbon credits, with Vietnam striving to pilot a carbon credit exchange in a few months. |
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Carbon credit market can make all the difference
In Vietnam, the carbon market will be developed and operated under strict government supervision, emphasising the principles of transparency, publicity, efficiency, national suitability, and alignment with international practices. |
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Ministry of Finance issues plan to develop carbon market
The Ministry of Finance issued a plan in late May to implement the tasks assigned by the prime minister to establish and develop a carbon market in Vietnam. |
