Prime Minister Pham Minh Chinh has issued a directive to further develop the carbon market and ensure that Vietnam meets its Nationally Determined Contributions (NDCs).

Planting of new trees. Photo courtesy of Gaia Nature Conservation

Accordingly, the Prime Minister instructs the ministries of Industry and Trade, Transport, Construction, Agriculture and Rural Development, and Natural Resources and Environment to develop and issue a plan on reducing greenhouse gas (GHG) emissions in Q3/2024.

They are also asked to advise the government on signing agreements with international partners on the carbon market and carbon credit trading mechanism to ensure Vietnam's compliance with the NDCs.

Prime Minister Chinh instructs the ministries to develop a communication program to raise public awareness about the development of the carbon market and carbon trading, and to build a national database for the registration of carbon credits.

The Ministry of Natural Resources and Environment is asked to oversee the projects and activities to reduce greenhouse gas emissions and develop Vietnam's carbon market. It is also required to submit the rules on carbon market management to the government by July 30, 2024.

The Ministry of Agriculture and Rural Development is in charge of developing a national database containing information on the forest areas and their capacity to absorb carbon emissions until 2050.

By October 31, the ministry and other ministries and government agencies must complete the identification of the carbon sequestration capacity of all forests in the country as the core data for the development of an international trading mechanism. The ministry is also tasked with developing a set of national standards for carbon credit trading and settlement.

In terms of international cooperation, the Ministry of Industry and Trade is responsible for working with international partners to learn practices in the management and trading of Renewable Energy Credits (RECs). The task must be completed and reported to the Prime Minister by September 30.

Carbon credit trading and carbon market are the keys that will facilitate Vietnam to meet its commitments to achieve net-zero emissions in 2050 according to the resolution of the United Nations Climate Change Conference in 2021 (COP26). In 2022, Vietnam updated its NDCs as a step towards achieving the target.

A well-managed carbon market could help Vietnam achieve greenhouse gas emission reductions at a low cost, create a favorable environment for the development of low-carbon production technology, make local companies more competitive, and increase the incomes of the people and families involved.

Since the mid-2000s, many enterprises in Vietnam have implemented programs and projects to generate and trade carbon credits, especially under the Clean Development Mechanism (CDM). However, there are still misunderstandings among people, enterprises, and organizations about the operation of the carbon market, resulting in conflicts among the three parties.