Businesses to improve capacity for carbon credit market

Managing Director of Energy and Environment Consulting Joint Stock Company Dang Hong Hanh

From 2025, a carbon credit exchange pilot scheme will be established. How can businesses get used to the trading floor?

As you know, the Department of Climate Change under the MoNRE is implementing the scheme “Training and simulation of Emission Trading System (ETS) in Vietnam.”

The roadmap for implementing the carbon market is specified in Decree No.06/2022/ND-CP, dated January 2022 in order to help businesses achieve greenhouse gas emission reduction goals in a flexible way. However, the successful establishment and effective regulation of an ETS in Vietnam will require extensive capacity-building initiatives and activities aimed at increasing ETS literacy among relevant stakeholders, including policymakers in the country.

The main objective of this initiative is to develop and organize training courses on the ETS for stakeholders including policymakers, research institutes, universities, financial institutions, media representatives, and especially for the large-volume emitters that will be covered under Vietnam’s ETS in the future.

The training courses will utilize a carbon market simulation tool tailor-made for Vietnam.

So how will the ETS simulation tool operate and what is its effectiveness on businesses?

We offer an efficient carbon market simulation tool called CarbonSim. This tool is similar to a virtual carbon credit trading floor for traders to make investment decisions. In the virtual model, businesses learn about basic elements so that they will get used to the system when the carbon credit market officially operates.

The training courses will run between now and November 2024. Policy recommendations for the design and implementation of an ETS in Vietnam will be developed based on the analysis of the lessons learned from the ETS used for energy transition.

The scheme will be implemented by a consortium consisting of Energy and Environment Consultancy JSC, South Pole Carbon Asset Management, and Vietnam Technology Solutions JSC from July 2023 to January 2025.

Vietnam plans to set up and pilot a carbon trade exchange from 2025

Has this CarbonSim tool been used in the world market and what is its effectiveness?

The ETS is a very new concept to help businesses reduce CO2 emissions. Accordingly, the state sets targets to reduce greenhouse gas emissions while allowing businesses to exchange flexibly through market tools to reduce greenhouse gas emissions. However, this ETS system is a very new concept in Vietnam that requires a lot of training courses as well as increased awareness and knowledge for relevant parties including policy makers, financial institutions, businesses.

So far, the ETS system has been used only in over 30 countries around the world and Vietnam plans to set up and pilot a carbon trade exchange from 2025.

The training program will help participants have the most basic and general knowledge about the ETS, help businesses understand and make official decisions on the free carbon credit exchange platform so that they will be ready to participate in the piloted exchange in 2025 and then the official carbon trade exchange in 2028.