Facing the increasing requirements of environmental protection regulations of the import market, some businesses want to accelerate the establishment of carbon exchanges.
What is a carbon credit?
A carbon credit is a permit that allows the holder to emit a certain amount of carbon dioxide (CO2) or other greenhouse gases. In the marketplace, carbon trading or, more precisely, CO2 emissions trading, is done through credits. One credit allows the emission of one tonne of CO2 or equivalent in other greenhouse gases.
Carbon credits are a new type of commodity created when GHG emission reduction or sequestration activities are carried out in the process, tracked and traded like any other commodity, thus Carbon credit exchange is also known as carbon market.
The ultimate goal of carbon pricing and carbon market establishment is to mitigate greenhouse gas emissions, contribute to climate change response and achieve other sustainable development goals.
The development of Vietnam’s carbon credits market is one of the economic tools that has been included in the Law on Environmental Protection since 2020. However, so far, the recognition and issuance of carbon credits still depends on to third parties are international credit institutions or mechanisms. The image of the seller in Vietnam is still quite blurry. Carbon credits come in a variety of prices, depending on the location and the market in which they are traded.
According to the Ministry of Natural Resources and Environment, up to now, 46 countries and 35 territories have applied carbon pricing with the participation of tens of thousands of corporations and large enterprises, with a revenue of about 95 billion USD in 2022.
Share at the NET ZERO Conference – Green shift: What opportunities for leaders? Recently, Mr. Marc S. Forni – Expert in charge of Disaster Risk Management, World Bank said that the World Bank was present in the market of buying, selling and distributing carbon credits; working with donors, different countries for the past 20 years.
The value of the current carbon market is up to 52 billion USD and Vietnam is one of many countries in the world implementing a carbon credit trading program.
“We see a lot of potential and opportunities in the carbon credits market. The market size is quite large. Now most of the countries in the world are aiming for Net Zero. This gives a huge boost to the carbon market,” said Marc S. Forni.
Mr. Tang The Cuong, Director of the Department of Climate Change (Ministry of Natural Resources and Environment), said: “Through the carbon market, it is possible to enhance the reduction of greenhouse gas emissions at a low cost to businesses and society, promote the development of low emission technologies, and contribute to improving the competitiveness of enterprises.”.
In Vietnam, some businesses have sold carbon credits to the international market for 6 – 10 USD/credit. In the opposite direction, there were also businesses that had to buy for about 7 USD/credit.
However, in the European market, the price of carbon credits is much higher than the above figure and has increased sharply over the past 2 years.
According to data from Investing.com, as of June 29, the price of carbon credits was up to 88 euros/credit, a fourfold increase compared to January 2020. Even the price sometimes goes up to nearly 100 euros / credit.
Data: Investing (Aggregate US)
Enterprises want to accelerate the market for carbon credits
On January 7, 2022, the Government issued Decree 06/2022/ND-CP regulating mitigation of greenhouse gas emissions and protection of the ozone layer. Accordingly, the development roadmap and time to deploy the domestic carbon market have been clearly outlined.
Accordingly, from now until the end of 2027, it will focus on building regulatory systems and policies to create a foundation for the market to operate as well as establishing and organizing a pilot operation of a carbon credit exchange. to officially operate a carbon credit exchange in 2028.
Mr. Hoang Thai Son, Director of the Legal Department (Ministry of Finance) said that the Ministry of Finance is trying to build a carbon market.
“We will move to a very modern carbon market. We will code all carbon credits and emissions quotas. Businesses that have credits from production such as wind power, afforestation, and solar power can put them up for sale. Exporting enterprises but have not yet invested in technology to absorb emissions are forced to buy carbon credits on the floor. Supply will meet demand,” said Mr. Son.
Photo: H.My
Facing the increasing requirements of environmental protection regulations of the import market, some businesses want to accelerate the establishment of carbon exchanges.
Mr. Hoang Duc Vuong, Chairman of the Vietnam Recycled Plastics Association said: “We hope this will be accelerated from 2025 because now foreign businesses when investing in Vietnam do not ask much about it. How much is the labor cost? Where will our green energy come from instead? Where will we exchange carbon?”, Mr. Vuong said.
Mr. Vuong added that currently, some countries such as the US and Europe have applied new environmental protection policies to imported goods.
“We believe that Japan and China will also draft similar laws in the future,” Vuong said.
Photo: H.My
Businesses that take early action to reduce carbon emissions also plan to sell credits.
Talking to us, Mr. Nguyen Quoc Khanh, Executive Director of Research & Development (R&D) Vinamilk said that in the past time, the company has implemented many solutions to achieve the goal of net zero emissions by 2050. .
“In the future, we can consider selling carbon credits if the absorption of greenhouse gas emissions is larger than the emissions,” Mr. Khanh said.
Khanh said that with a project, investment costs and profit margins must be calculated, but Vinamilk’s experience if invested early, the costs will be lower and the benefits will be much larger. “If many years ago we did not carry out the program of 1 million trees, now we cannot neutralize the emissions ourselves”, Mr. Khanh shared and said. “The farm and factory balance about 17,500 tons of CO2/year. This equates to 1.7 million 5-year-old trees. The costs are there, but the benefits are greater.”
Mr. Phan Chien Thang, Director of Communications, Community and External Relations, Masan High-Tech Materials Company: “According to the roadmap of the Vietnamese Government, the carbon market will officially operate in 2028, from before until now. Now we always implement the form of saving energy, planting trees, recycling waste and can say that at this point we are ready technically and financially to be ready to participate in the sale and exchange of goods. exchange for carbon credits in the future, as soon as the market officially comes into operation“.
In the world in general and in Asia in particular, a series of carbon credit exchanges have been established and put into operation in 2023. This is a testament to the huge development potential of this market. Future.
However, for some businesses in the field of environmental protection, they do not expect too much to be able to sell carbon credits.
Mr. Morgan Donovan Carroll, Director of ESG of Vinfast said that the company will focus on green energy, not “confront” with Tesla Regarding future goals and the ability to sell carbon credits.
“We don’t have the advantage to sell carbon credits yet. We have invested heavily in electric vehicles and the carbon market will be a big opportunity. In early 2019, we had an ESG report where carbon was difficult to store. We focus on green energy and being environmentally responsible, reducing the greenhouse effect,” said Donovan Carroll.
Duong Duc Quang, Deputy General Director of the Commodity Exchange of Vietnam (MXV), said: “The Department is studying and will soon start trading carbon credit products connected with major exchanges in the world. in the fourth quarter of 2023. This will be a very important step in the development of the carbon credit trading market in Vietnam in the future.”
The operation of the carbon credit exchange contributes to reducing greenhouse gas emissions in the direction of previous climate commitments, especially the goal of net zero emissions reduction by 2050 under the second climate change agreement. 26th (COP26).
The world’s carbon credit trading market currently has two common types, the compulsory trading market and the voluntary trading market.
According to VietnamBiz.vn
