Following the European Union’s lead, the United States is poised to join the global fight against climate change with the introduction of the Clean Competition Act. If this legislation is approved, it will entail the imposition of border-adjusted carbon tariffs on carbon-intensive imports.
Nguyen Vo Truong An, Deputy Director of the Carbon Credit Trading Platform JSC (CCTPA), has highlighted that a majority of Vietnamese companies are ill-prepared for this new mechanism. Carbon credit trading is a novel concept in Vietnam and hasn’t yet been prioritized by many businesses. He has proposed the establishment of a consulting agency responsible for educating companies on carbon credit registration and verification. An agency of this nature, he believes, would better equip businesses to navigate the forthcoming carbon tariff regulations.
It is important to note that CCTPA was inaugurated as Vietnam’s inaugural carbon trading platform in late September, courtesy of the CT Group.
Nguyen Linh Ngoc, former Deputy Minister of Natural Resources and Environment, emphasized that the carbon credit market in Vietnam began to take shape in 2005 when the country joined the United Nations’ Clean Development Mechanism (CDM). Subsequently, Vietnam furthered its carbon-neutral aspirations by participating in the Gold Standard (GS) and the Verified Carbon Standard (VCS). As of late 2022, Vietnam had generated approximately 29.4 million carbon credits under CDM and 10 million under GS and VCS.
To foster this market, Ngoc called for the development of robust technical infrastructure to facilitate its integration with global markets. He stressed the need for Vietnam to move swiftly in launching the platform to secure the advantages of being an early entrant, even though the platform’s scheduled launch is set for 2025.
To Xuan Phuc, from Humboldt University of Berlin, delineated over 170 different types of carbon credits available on today’s global markets, each with its distinct pricing. He posed several questions that Vietnam needs to address before operationalizing the platform, including identifying sellers and buyers, credit creation mechanisms on the platform, and global recognition of the credits.
Deputy Director An pointed out that in Vietnam, sectors supporting the construction of renewable energy facilities, such as solar and wind farms, hold substantial potential for generating carbon credits to offset emissions from heavy industries. He also noted that Vietnamese companies might face undervaluation from foreign buyers when trading carbon credits in voluntary markets, but this isn’t the case in regulated markets. The value of carbon credits on the platform is determined by supply and demand, ensuring they reflect their true worth.
CCTPA’s primary objectives presently include serving as a consultant for individuals and businesses on carbon credits. It will also handle verification and monitoring of carbon-offset projects and provide solutions for individuals and businesses aiming to reduce their environmental impact. CCTPA aspires to become the largest platform in the ASEAN region in the foreseeable future.
Carbon markets are broadly categorized into regulatory markets and voluntary markets, with the former being government-regulated and the latter operating on a voluntary basis. Market participants can acquire carbon credits directly from developers, through brokers, or on digital trading platforms. According to MarketsandMarkets, the total value of carbon credits traded on digital platforms is projected to reach $317 million globally by 2027, compared to $106 million in 2022. — Source: Viet Nam News/ANN
