The need for operating emission trading scheme pilot
As an emission trading system (ETS) will be piloted next year and officially operated in 2028, a training course has been held starting on February 26 in Hanoi to promote understanding of the carbon market and ETS for Vietnamese public and private stakeholders.
The two-day conference, which is the first capacity-training in Vietnam and is organised by the Southeast Asia Energy Transition Partnership (ETP) in cooperation with the Department of Climate Change (DCC), Ministry of Natural Resources and Environment (MONRE), targets representatives from ministries, development donors, and financial institutions; with a comprehensive and systematic training curriculum on ETS and carbon markets using a market simulation tool.
The initiative comes at a crucial time as Vietnam is pushing to reduce carbon emissions and making efforts to fulfil its obligations under the Paris Agreement.
“The training programme will contribute to enhancing the understanding of stakeholders regarding their respective positions and roles in the development of Vietnam’s carbon market. In addition, these activities will facilitate closer collaboration among participants, aiming to establish and effectively operate the market,” said Fritzie Vergel, a representative of ETP.
Mai Kim Lien, deputy director of the Department of Climate Change under the MONRE, emphasised the supportive activities of international organisations in the development of the Vietnamese carbon market.
"Within the framework of the Memorandum of Understanding between the Department of Climate Change and the United Nations Office for Project Services (UNOPS), the ETP programme encompasses various supportive initiatives,” Lien said.
“One such activity involves the selection and guidance on utilising a system simulation tool for greenhouse gas emission allowance trading. This tool aims to facilitate a deeper understanding among relevant parties regarding the functionalities, operational processes, management, and trading of emission allowances and carbon credits on the trading platform.
“It serves as highly valuable support for stakeholders involved in the establishment and successful operation of the greenhouse gas emission allowance trading and carbon credit markets in Vietnam.”
The establishment of a robust ETS plays a pivotal role as stated in the updated nationally determined contribution (NDC) in 2022. By placing a cap on total emissions and allowing companies to buy and sell credits, ETS introduces economic incentives for businesses to reduce their emissions efficiently.
Even though Vietnam is going to pilot an ETS next year, there are many challenges that remain, said Dang Hong Hanh, co-founder of Energy and Environment Consultancy JSC (VNEEC).
“In some countries, they have three to five years of preparation before piloting, but we only have one year.”
“There are many new technical and managerial requirements that require significant resources, and numerous legal documents and implementation guidelines need to be issued in 2024.
"This undertaking necessitates strong political commitment and active engagement from diverse stakeholders. Simultaneous execution of multiple tasks is imperative, alongside the selection of an appropriate scale for the pilot phase."
Moreover, the carbon market is characterised by volatility, necessitating adaptable policies and ongoing adjustments. However, the policy-making process in Vietnam is time-consuming and involves multiple steps, Hanh added.
The second training course is specifically designed for representatives from energy-intensive enterprises, business associations, and media, and will be held from February 29 to March 1.
