IETA and VCCI Lead Private Sector Drive for Enhanced Capacity Building in Vietnam’s Emissions Trading System

16th September 2024 – The private sector brought together over 80 organisations in Hanoi for a two-day workshop to discuss the progression of carbon markets in Vietnam. The event [12-13 September], jointly organised by IETA’s Business Partnership for Market Implementation (B-PMI) and the Vietnam Chamber of Commerce and Industry (VCCI), explored the opportunities linked to a new emissions trading scheme in Vietnam and called for further capacity building to support effective implementation of the country’s carbon market framework.

IETA’s B-PMI, launched in 2022 to complement the World Bank’s Partnership for Market Implementation programme, builds on the decade-long experience of the Business Partnership for Market Readiness (B-PMR) and seeks to bridge the gap between governments and carbon market participants. At this latest event, IETA, along with VCCI, convened key international experts, local industries and government representatives to enhance understanding and actively leverage the effectiveness of emissions trading systems and carbon markets.

“The B-PMI is an excellent way for IETA member companies to share their experience and know-how in carbon markets with companies in Vietnam who are preparing to participate in the carbon market here. Vietnam is at an exciting moment to introduce a carbon market in the coming years, and IETA is the ideal partner to support business readiness here,” said Jeff Swartz, co-chair of the B-PMI and Vice President Low Carbon Strategy, Regulatory Affairs & Partnerships, bp.

The event examined key developments in Vietnam, including the new compliance market (ETS) being established by the Ministry of Environment and Natural Resources (MONRE). The ETS will introduce a price and reducing cap on greenhouse gas emissions, incentivising industries to invest in decarbonisation efforts.

“The Government is making efforts to improve regulations to strengthen greenhouse gas inventories for the allocation of GHG allowances in preparation for the carbon market through amendments and supplements to Decree 06/2022/ND-CP. The subjects of GHG emission allowance allocation are establishments with high emissions as listed in Decision 13/2024/QĐ-TTg of the Prime Minister. In the near future (2025 or 2026), a pilot might be conducted for enterprises in the thermal power, steel, and cement sectors (about 200 enterprises).

According to a recently drafted plan, Vietnam intends to develop, pilot, and operate a trading platform for GHG allowances and carbon credits in 2026. The amendment of Decree 06 will clarify the entities participating in the carbon market, including establishments, allocated GHG allowances, organisations with programs and projects under the carbon credit exchange and offset mechanism, and organisations engaged in carbon credit business activities. Thus, the revised Decree 06 shall provide more detailed regulations on the entities participating in the carbon market to facilitate the operation of the carbon market in accordance with the national plan and international commitments,” said Pham Nam Hung, Specialist, Department of Climate Change, MONRE.

At the same time, Vietnam is moving forward with its linkage to international carbon markets under Article 6 of the Paris Agreement, as well as with voluntary carbon markets. During the workshop, leading project developers, buyer countries and international experts presented the requirements for participating in Article 6 and success factors for developing high-quality carbon projects.

Dirk Forrister, CEO of IETA, said: “International Article 6 carbon markets can help channel much-needed finance from developed to developing nations, fostering sustainable development and green growth. As an international industry association, IETA plays a pivotal role in facilitating these cooperative approaches, helping bridge the gap between policy and practice.”

Contributors from the international business community, including ACT Commodities, ALLCOT, bp, Ecosecurities, Rabobank Acorn, S&P Global, Shell, South Pole and STX Commodities highlighted the importance of regulatory predictability, to provide the necessary trust and stability for large-scale low-carbon investments to materialise. Local industry participants emphasised the continued need for capacity building and collaboration in the country, as GHG emissions accounting, emissions trading and carbon markets are still nascent concepts to many companies in Vietnam.

Hoang Quang Phong, Vice President of VCCI, said: “The partnership with IETA’s B-PMI has helped us and many local industry stakeholders better understand the role of carbon markets in Vietnam. There is vast potential in the country to achieve low-carbon development, but further capacity building will be needed. VCCI serves as a key connector between Vietnamese businesses and international partner organisations, facilitating access to global carbon markets, exploring opportunities for emissions quota trading, and engaging in international carbon exchange mechanisms. These efforts not only assist businesses in meeting their international commitments but also create new opportunities for trade and investment. VCCI is proud to support our members in this endeavour.”

Pham Van Tien, Manager of Xuan Thanh Cement Joint Stock Company, said: “Xuan Thanh Cement JSC is one of the 200 key emitting companies, and we are very interested in participating in the greenhouse gas emission quota trading and the carbon credit market. The training course has been extremely effective for us, as we were updated on the current regulations and given insights into the development direction of the carbon market in Vietnam. I also highly appreciate the shared lessons from the compliance market and the discussions with international trading organisations, which helped me better understand how companies can prepare and grow with the ETS. I sincerely hope that once the legal framework regulating the carbon credit trading market is finalised, IETA and VCCI can provide more in-depth training programs to help us engage more effectively in this field.”

Nguyen Vu Anh Minh, Environmental & Social Manager of Bitexco Power Corporation, said: “Bitexco Corporation is an enterprise that is implementing many projects on Carbon credits under the mechanism of CDM, VCS, GS, … Renewable energy credits IREC, … Therefore, the enterprise hopes that in similar programs in the future, the Organizing Committee can increase the duration for specific solutions to remove existing obstacles of enterprises that have implemented projects, especially obstacles to trade credits on the voluntary carbon market while waiting for a common policy mechanism between the Vietnamese government and the international community, without having to re-register, or listen to other solutions other than buying, selling, exchanging carbon credits or offsetting emissions for the existing number of credits to avoid wasting opportunities from the enterprise’s available carbon credits.”

IETA intends to strengthen its collaboration with VCCI and the government of Vietnam through the B-PMI initiative, as well as with the IETA Asia Climate Summit, one of IETA’s flagship events. The summit will be held in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI), the International Carbon Action Partnership (ICAP) and the World Bank in New Delhi, 22-24 October, 2024.