What does the Carbon Credit Market contribute to Climate Change Mitigation and Emission Reduction in Vietnam?

Could you please share more about the current status of climate change?

Currently, the use of fossil fuels, livestock farming, and deforestation are all exceeding thresholds, leading to increasingly severe impacts on climate and global temperatures. This is driving the greenhouse effect and global warming. The primary cause of climate change is the greenhouse effect. Gases in the atmosphere act like the glass of a greenhouse, trapping the Sun's heat and preventing it from escaping back into space, which causes global warming.

Many greenhouse gases naturally occur, but human activities are increasing the concentration of these gases in the atmosphere, such as carbon dioxide (CO2), methane, nitrous oxide, and fluorinated gases.

CO2 generated by human activities is the largest contributor to global warming. By 2020, its concentration in the atmosphere had increased by 48% compared to pre-industrial levels (before 1750). Unlike CO2, other greenhouse gases are released by human activities in smaller quantities. For example, methane is a more potent greenhouse gas than CO2 but has a shorter lifespan in the atmosphere. Nitrous oxide is a long-lasting greenhouse gas that accumulates in the atmosphere over decades to centuries. Air pollutants causing the greenhouse effect have different warming and cooling effects and are also linked to other problems, such as air quality degradation.

Natural causes, such as changes in solar radiation or volcanic activity, are estimated to have contributed less than plus or minus 0.1°C to overall warming from 1890 to 2010.

What are the consequences and potential impacts of climate change?

Climate change is a very serious threat, and its consequences affect many different aspects of our lives.

Natural consequences: Increased temperatures, droughts, and wildfires; decline in the quality and volume of freshwater sources; flooding and rising sea levels; threats to biodiversity; impacts on land and water environments in rivers, lakes, and oceans.

Social consequences: Decline in human health; increased vulnerability of populations; direct impact on the livelihoods of many workers.

Threats to businesses: Energy shortages affecting production operations; decline in raw material sources and the development environment for industries related to agriculture and forestry; and increased costs related to business insurance and other issues. Additionally, the potential consequences of climate change also lead to territorial boundary issues between nations.

So what are the causes of increased emissions?

In my opinion, the main causes include a series of actions that have been prolonged and poorly controlled, such as the consumption of coal, oil, and natural gas, which produce carbon dioxide and nitrogen oxides, especially deforestation. It is important to understand that trees help regulate the climate by absorbing CO2 from the atmosphere. Therefore, when the density of trees/forest area decreases, the amount of CO2 absorbed also decreases, contributing to the greenhouse effect.

In addition, large-scale livestock farming, as it is currently practiced, also generates significant amounts of methane emissions. Furthermore, there are emissions from fluorinated gases released from equipment and products that use these gases. These emissions have a very strong warming effect, up to 23,000 times greater than CO2.

What actions have we taken to combat climate change and reduce emissions?

Since every ton of CO2 emitted contributes to global warming, all measures to reduce emissions, to some extent, help slow this process. To completely stop global warming, CO2 emissions worldwide would need to reach "zero." Additionally, reducing emissions of other greenhouse gases, such as methane, can also have a strong impact, especially in the short term.

Climate change affects all regions of the world. Ice at the poles is melting, and sea levels are rising. In some areas, extreme weather events and rainfall are becoming more frequent, while other regions are experiencing harsher heat waves and droughts.

We need to act for the climate now; otherwise, these impacts will only increase. Adapting to climate change means taking action to address its current and future impacts. Emission trading systems, a "cap-and-trade" system, aim to reduce emissions through the carbon credit market.

As you mentioned, emissions can be reduced through the carbon credit market. What is the carbon credit market?

Recently, I have explored questions related to this topic at several forums with experts from Asia and Europe. Here are some insights that we discussed:

There are two types of carbon credit markets: Mandatory Compliance Programs and Voluntary Programs.

Mandatory carbon credit markets represent a market-based approach to reducing carbon emissions, such as the European Carbon Border Mechanism, the carbon credit markets in Japan, China, South Korea, North America, and Africa.

The voluntary carbon credit market is a voluntary carbon credit trade, also known as carbon offsetting. Businesses drive the voluntary carbon credit market by voluntarily purchasing carbon offset credits, not for compliance purposes but motivated by goals to balance emissions.

So, what contribution does the carbon credit market make to combating climate change and reducing emissions?

To better understand this issue, we need to know that the recovery, use, and storage of carbon credits and the reduction of emissions are not enough on their own. We also need to capture the carbon that already exists in the atmosphere.

A sustainable carbon cycle is vital—carbon is the atom of life, society, and our economy. It is a part of our DNA, the food we eat, the products we use every day, the fuel that powers our homes, cars, and factories, and the materials we use to build our cities.

Forests and agriculture, forests and farms, are the foundation in the fight against the climate crisis.

Protecting the ozone layer—why is the ozone layer important, and what are we doing to protect it?

The European Climate Change Program, established in 2000, helps identify the best policies to reduce greenhouse gas emissions, and in the U.S., it was set up in 1990.

At the Earth Summit in 1992, held in Rio de Janeiro, Brazil, delegates from Japan first introduced the idea of an independent non-governmental organization/consulting experts to research and advocate for environmental policies. This led to the establishment of the Japan Center for Sustainable Environment and Society in June 1993. Achieving net-zero emissions by 2050 is a realistic goal, but for Vietnam, it is a challenge. Building this low-carbon future will require many things, including boldness, new solutions, investment, and cooperation.

To make this future a reality, we need to collaborate with organizations in various low-carbon energy projects. Some projects in Vietnam include strategies on environmental, social, and governance issues, institutional building, carbon market development, energy storage system deployment, green technology applications, green industrial parks, green fuels such as electric vehicles, wind energy, solar energy, and more.

Why is a Carbon Market necessary, Sir?

The terms of the Paris Agreement highlight the importance of the Carbon Market. After six years of negotiations, countries at COP26 agreed on new rules to establish an international governance framework for the implementation of the Carbon Market. This initiative aims to clarify some of the complex issues surrounding the new Carbon Market structure and consider how new mechanisms can encourage investment in clean energy projects and reduce emissions. While these rules affect mandatory markets, they may also indirectly impact voluntary markets where private entities trade carbon credits to meet their balancing goals and reduce their emissions. Globally, this has sparked questions and debates, including "What does this mean for businesses?" and "Can the Carbon Market help us achieve the commitments in the Paris Agreement?"

For Vietnam, the Carbon Market can help us maintain resilience and create new sources of economic growth to accelerate the energy transition.

How should Vietnam build and develop the Carbon Market? And how can we leverage the voluntary Carbon market? To accelerate the energy transition, we need to leverage and invest in building the necessary infrastructure and expertise to scale up the provision of additional high-quality carbon-neutral projects. If used responsibly, the voluntary Carbon market can help provide this investment. By offering voluntary Carbon markets, we can create a marketplace for organizations, especially those in high-emission sectors such as steel manufacturing, waste, solid waste, petroleum, natural gas, chemicals, transportation, livestock, and aquaculture, to exchange their carbon offsets for investments in low-carbon, high-quality energy projects. Tapping into this market has the potential to become a powerful tool to accelerate the energy transition as we aim for a net-zero emissions future by 2050. It can empower organizations in their transformation and help them meet their sustainable development goals.

To make this successful long-term, we must design the market to accelerate the energy transition, trading Carbon as a commodity beneficial for high emitters to manage their investment projects instead of paying carbon taxes. In Vietnam, the voluntary Carbon market is still in its infancy. One challenge is the lack of governance, institutions, and available standards in this field, requiring State organizations and businesses to prepare the necessary conditions for their investments. Another challenge is carbon accounting. When organizations quantify their greenhouse gas emissions, how do they quantify their impact, and whether organizations consider the same carbon offset or not, data on emissions? This raises the question, "Can the Carbon market create a significant loophole for the largest emitters?".

These challenges highlight the need for transparency and integrity as this market develops. Voluntary markets play an important role in our carbon-neutral toolkit, benefiting the state, businesses, and the environment. They can accelerate renewable energy projects, generate additional emissions reduction revenue, and enhance the commercial viability of projects. This market could play a key role in unlocking carbon-neutral processes through appropriate investments, enabling both domestic and foreign organizations to support low-carbon projects and build a sustainable future for Vietnam.

What has Vietnam done to realize the Carbon Market?

Vietnam has initially supported efforts to establish a pilot Carbon market in 2025, with full operation expected in 2027, ensuring effectiveness and transparency. An important initiative related to this is the establishment of a platform for organizations to trade high-quality Carbon credits. This platform is designed to align with global standards and guide investors in navigating this new market.

The focus of Vietnam's energy transition must be environmental integrity. In the race to achieve net-zero emissions, we must consider new ways to accelerate this change and ensure that the transition is fair to both people and the environment.

Thank you very much, Sir!