Vietnam Prepares to Launch Domestic Carbon Credit Exchange

With Vietnam projected to generate approximately 10.8 million voluntary carbon credits annually, there is a growing demand in the country for the establishment of a domestic carbon credit exchange.

In line with Vietnam’s goal of reaching Net Zero by 2050, the Ministry of Natural Resources and Environment said it is actively developing a roadmap for the development of a domestic carbon market.

This scheme places emphasis on the mandatory trading of greenhouse gas (GHG) emission quotas for industries and businesses within the domestic carbon market, while also considering international market integration, according to a report from The Vietnam News Agency

This initiative aims to boost centralisation, transparency, and overall efficiency in managing related transactions, according to Tang The Cuong, Head of the Department of Climate Change under the Ministry of Natural Resources and Environment.

The roadmap for this project outlines the commencement of a pilot by 2025, with the official operation of a carbon credit exchange by 2028, with Cuong stressing the need for thorough preparation in terms of infrastructure, technique, inventory capacity, and corporate reporting to be successfully employed during the pilot period.

According to Nguyen Hong Loan, Head of the Advisory Board for the construction and operation of the voluntary carbon credit exchange, Vietnam has four existing carbon credit mechanisms, including the Clean Development Mechanism (CDM), Joint Credit Mechanism (JCM), Gold Standard (GS), and Verified Carbon Mechanism (GCS).

The total number of carbon-related credits issued in Vietnam as of December 2022 is about 40 million, with approximately 50 projects seeking the issuance of carbon credits under the Global Carbon Council (GCC) mechanism. Notably, CDM and JCM are managed by state agencies.

“With the remaining mechanisms, the credit holder bears the responsibility of reporting to the appropriate management agency for synthesis. The establishment of a domestic carbon market with an exchange will significantly enhance the centralisation, transparency, and efficiency of transactions involving carbon credits,” Loan said.

Regarding the roadmap for managing all carbon credits, Nguyen Van Minh, Head of the Economic and Information Unit of the Department of Climate Change, said that the Ministry of Natural Resources and Environment will soon create a national registration system. Under this system, all businesses and organisations generating carbon credits in Vietnam will be required to register their credits.

Furthermore, any transactions with foreign exchanges must be reported to the management agency, the Ministry of Natural Resources and Environment, as these activities impact the national emission reduction targets, Nguyen added.