In light of the ambitious commitments made at COP26 and the dynamic shifts in the carbon credit market, Vietnam finds itself in a century where participation in the carbon market presents a precious and enticing opportunity for domestic enterprises.
On September 27th, at the Ho Chi Minh City Stock Exchange, Mr. Le Anh Hoang, Director of Giant Barb Science & Environment Joint Stock Company, participated in a seminar titled "Market Recovery and New Opportunities for Vietnamese Enterprises." During his presentation, Mr. Le Anh Hoang elucidated the concept of the carbon market and the opportunities it brings to businesses in Vietnam.
The Carbon Market and Vietnam's Potential
Mr. Le Anh Hoang underscored the origin of the carbon market from the Kyoto Protocol of the United Nations (1997). Founded on the "emission rights" principle, this market allows nations to buy or sell carbon credits based on their commitments. This has led to the emergence of greenhouse gas emission reduction certificates, a valuable asset in the international market.
Mr. Le Anh Hoang, Director of Giant Barb Science & Environment Joint Stock Company, delivered a speech
Currently, the carbon market operates worldwide and is divided into two categories: mandatory and voluntary. The mandatory carbon market is established to enforce regulations and laws on emissions reduction within countries. Notably, the largest markets in this category are the European Union Emissions Trading System (EU ETS) and the American Carbon Registry. The voluntary carbon market is built based on businesses' individual needs for emissions reduction. There are three major markets in this category, with Gold Standard (GS) and Verified Carbon Standard (VCS) being the largest. Currently, there are 62 Vietnamese projects participating in trading on these two markets.
Delegates exchanged ideas at the seminar "Market Recovery and New Opportunities for Vietnamese Enterprises"
Vietnam's Preparations for the Carbon Market
Vietnam has committed to reducing its greenhouse gas emissions by 9% compared to the standard development scenario by 2030. With international financial support, this reduction target can increase to 27%. This commitment reflects Vietnam's dedication to emissions reduction and climate change adaptation.
Vietnam has been continuously refining its legal framework related to the carbon market, most notably through Decree 06/2022/ND-CP, which regulates greenhouse gas emissions reduction and ozone protection. This decree marks the beginning of the establishment of the carbon credit exchange platform. Accordingly, the carbon credit exchange is expected to initiate trial operations in 2025 and officially commence in 2028. In 2028, Vietnam will also connect its carbon credit exchange to the global market. To ensure international compliance and effectiveness, from 2024, over 1,700 enterprises, more than half of which are listed on the stock market, will undergo greenhouse gas emission audits.
Vietnam's carbon credit exchange platform is planned to begin with large greenhouse gas emitters before extending to smaller emitters.
Benefits for Businesses in the Carbon Market
Participation in the carbon market yields several significant advantages for Vietnamese enterprises. It enhances their capacity to attract foreign direct investment (FDI) and compete in international exports, especially in demanding markets concerned about environmental protection, such as the European Union.
The "Carbon Border Adjustment Mechanism" (CBAM) will directly affect numerous sectors, including agriculture, forestry, aluminum, steel, electricity, fertilizers, and chemicals. Enterprises that adapt their technologies to reduce emissions will attract financing at lower costs and enhance their value on the global market.
Ms. Hoang Hai Anh, Secretary-General of the Vietnam Securities Business Association, emphasized the close connection between the carbon market and the stock market. Enterprises that transition to emission-reducing technologies to generate carbon credits will increase their value in the stock market and improve their image compared to other competitors.
Vietnam has shown remarkable enthusiasm in international integration and has actively participated in vital international activities, such as the United Nations Security Council. With the early and effective design and operation of the carbon market, Vietnam can continue to demonstrate its positive commitment and serve as a model for developing nations. Its international standing will be further enhanced.
Conclusion
Participation in the carbon market has become a crucial opportunity for Vietnamese businesses. Preparing for this market not only fulfills environmental protection commitments but also improves Vietnam's competitiveness in the global market and attracts foreign investment. Through its proactive stance, Vietnam can serve as a model for developing countries, participating in the fight against climate change and building a sustainable future.