Vietnam leaps on carbon credit craze

Monday  19/07/2021
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Once a policy to apply forest environmental and CO2 indicators is officially approved, Vietnam may participate more actively in the sale and purchase of carbon credits for both enterprises and localities.

Assoc. Prof. Dr. Huynh Thi Lan Huong, Deputy Director of the Institute of Meteorology, Hydrology and Climate Change, said that in September 2020, Vietnam was one of the first 20 countries in the world to submit the NDC (Contributions decided by the State) updated to the Secretariat of the Convention. Vietnam's updated NDC has shown its highest efforts and identified its contribution to greenhouse gas emission reduction and climate change adaptation committed by the country. These contributions are consistent with the current state and forecast of the country's socio-economic development up to 2030.

In this update, Vietnam commits to reducing its total greenhouse gas emissions by 9% compared to the development-as-usual scenario (BAU) and increasing its contribution by up to 27% with international support through bilateral and multilateral cooperation and implementation of a new mechanism under the Paris Agreement.

1529 p22 vietnam leaps on carbon credit craze

NDC Vietnam also determined that the period from 2021 - 2030 will focus on implementing methods to reduce greenhouse gas emissions; activities of reviewing and completing the national inventory system on greenhouse gases; promoting the formation of a domestic carbon market; develop incentive mechanisms, support organizations participating in activities to reduce greenhouse gas emissions...

Along with that, in the Law on Environmental Protection 2020, for the first time, NDC was legalized. To implement the NDC and the Law on Environmental Protection in 2020, the Ministry of Natural Resources and Environment (MONRE) is developing a draft Government Decree on mitigation of greenhouse gas emissions and protection of the ozone layer.

Currently, the Ministry of Natural Resources and Environment is developing a Draft Decree regulating greenhouse gas emission reduction and ozone layer protection under the Law on Environmental Protection, including regulations on the roadmap for the development of the domestic carbon dioxide market and implementing credit exchange projects at home country and abroad.

Accordingly, from now to 2025, it will be a period of preparation and implementation of activities such as studying regulations on building carbon markets, implementing regulations allowing project participants to exchange Carbon Credits, strengthen the capacity of the parties involved; investigate, evaluate and determine the total greenhouse gas emission quota that will be allocated to the establishments participating in the market…

Quang Nam is the first locality in the country to propose the Prime Minister to pilot the business of forest carbon credits from reducing greenhouse gas emissions through a project to combat deforestation, forest degradation, and forest resources sustainable management (REDD+). Mr. Le Minh Hung - former Deputy Director of the Department of Agriculture and Rural Development said that forest owners (including management boards of protection forests, special-use forests, nature reserves, organizations and individuals planting forests ...) will benefit as participating in the forest carbon market. Because these forest owners can convert the forest area under management into the amount of CO2 absorption (carbon dioxide, greenhouse gas). The normal trading price of the international market at the moment is 5 USD/ton of CO2. According to calculations, each year Quang Nam can earn about 5 million USD from selling forest carbon credits. Currently, there are 5 foreign companies registered to buy back forest carbon licenses/credits.

According to the Nationally Determined Contribution (NDC), Vietnam has committed with its own domestic resources to reduce its total greenhouse gas emissions by 9% by 2030 compared to the national normal development scenario. This level of commitment can be increased to 27% if it receives international support through bilateral, multilateral cooperation and market mechanisms under the Paris Agreement.

It is expected that after 2025 to 2027, the domestic carbon market will be piloted and issued regulations on emission trading and financial responsibility of the participating parties. From 2028 will officially operate the market.

According to Mr. Tang The Cuong, Director of the Climate Change Agency - the organization that developed the Draft Decree, it is expected that pilot industries with large emissions such as steel industry, thermal power, solid waste management, cement production. Participants are large greenhouse gas-emitting facilities, which must inventory their emissions according to the list promulgated by the Prime Minister; organizations participating in the Carbon Credit exchange mechanism under the United Nations Framework Convention on Climate Change and relating parties. From now until the market is formed, it is necessary to promote raising awareness so that establishments, businesses, technology developers, service parties ... prepare conditions for participation.

Set a target to increase revenue from forest environmental services

The General Department of Forestry (Ministry of Agriculture and Rural Development) has set a target of reaching VND 2,800 billion in revenue by 2021 from forest environmental services, when there is more money from selling carbon credits to the world market. Mr. Pham Van Dien, Deputy Director of the General Department of Forestry, stated that this goal is completely feasible because in 2020, the whole country has collected 2,566 billion VND in forest environmental services. Meanwhile, the forestry sector has additional revenue from carbon sequestration and forest emission reduction services. Each year, revenue from forest environmental services can increase by 300-500 billion VND.

                                                                                  By Xuan Hoa,