Opportunities for businesses in the carbon credit market

Benefits for Businesses and the Government

As the global community strives to reduce greenhouse gas emissions to combat climate change, establishing and operating a carbon credit trading platform in Vietnam has become a key priority. This initiative not only serves as an effective environmental management tool but also creates significant opportunities for both businesses and the government.

According to Dr. Bùi Duy Tùng of RMIT University, a carbon credit trading platform provides a transparent and efficient marketplace that allows firms to buy and sell carbon credits in order to comply with greenhouse gas emission standards. Active engagement in this sector displays a company's dedication to environmental protection, which boosts its reputation and brand image with consumers and partners.

Businesses using this exchange can choose between investing in clean technologies to minimize emissions and purchasing carbon credits from other firms. This provides incentives for businesses to reduce expenses and encourage technological innovation towards sustainability.

Additionally, engaging in the carbon credit market allows businesses to explore new opportunities in renewable energy and green technology. Compliance with international emission standards also facilitates smoother export processes, especially as many countries impose carbon taxes on imported products.

For the government, a carbon credit trading platform is a crucial tool for controlling and reducing greenhouse gas emissions and fulfilling international commitments on climate change and environmental protection. The platform establishes a transparent mechanism for tracking, monitoring, and effectively managing carbon credit transactions, ensuring compliance with legal regulations and preventing fraud.

"Moreover, the carbon credit market encourages businesses to invest in clean technologies and renewable energy, contributing to the transition toward a green and sustainable economy, creating jobs, and driving economic growth," Dr. Tùng emphasized.

Steps to be prepared

Currently, establishing a carbon credit trading platform in Vietnam confronts a number of hurdles, the most significant of which is an insufficient regulatory framework. Specific legislation for managing carbon credits, as well as the exchange's operational framework, are currently being developed.

According to the strategy, from now to the end of 2027, Vietnam will concentrate on building legal frameworks for carbon credit management, emissions quota trading, and carbon credit exchanges. The pilot phase of the carbon credit exchange is scheduled to commence in 2025, with full implementation by 2028.

Experts generally agree that the absence of a clear and thorough legislative framework impedes the development of necessary measurement, reporting, and verification (MRV) requirements for transparent and effective carbon credit administration. This issue has an impact on the creation of financial instruments and processes for auctioning, transferring, borrowing, and repaying greenhouse gas emission allowances. As a result, establishing the legal framework is an important step toward laying a firm foundation for the effective growth and operation of Vietnam's carbon credit market.

To participate effectively in this market, Dr. Bùi Duy Tùng recommends that businesses take the following preparatory steps:

- Understand the Carbon Credit Market Mechanism: Businesses should study the operational mechanisms of the carbon credit market, including relevant regulations, standards, and certification procedures. Understanding emission reduction project types that generate carbon credits will help companies determine their strategic direction.

- Conduct Greenhouse Gas Emission Inventory: Companies should assess their current greenhouse gas emissions and develop appropriate emission reduction strategies. This not only ensures legal compliance but also facilitates proactive participation in the carbon credit market. Industries such as cement, steel, and thermal power should prioritize emissions management strategies to prepare for the Emissions Trading System (ETS).

- Develop Expertise and Leverage Digital Transformation: Businesses should train personnel with specialized knowledge in carbon credit management. Notably, digital transformation can enhance the accuracy and transparency of emissions tracking, reporting, and verification. Integrating green and digital transitions will streamline carbon credit-related processes.

- Implement Emission Reduction Projects: Companies should consider initiating emission reduction projects within their operations to generate carbon credits for trading. This approach not only yields economic benefits but also contributes to environmental protection and strengthens corporate credibility. Several enterprises have already implemented programs to create and trade carbon credits on the voluntary market.

The carbon credit trading platform is not just an emissions management tool but also a driver of technological innovation and green economic development in Vietnam. While challenges remain, proper implementation and governance of this market will yield significant benefits for both businesses and the government, supporting environmental protection and sustainable development efforts.