Vietnam/ Carbon credit, a source of green and sustainable financing for Vietnam
With a global market value estimated at several hundred billion dollars by 2050, carbon credit is no longer just an environmental indicator, but is becoming a driver of sustainable economic development.
Against a backdrop of severe global climate change, carbon credits are emerging as a major financial instrument for accelerating the reduction of greenhouse gas emissions. With a global market value estimated at several hundred billion dollars by 2050, carbon credit is no longer just an environmental indicator, but is becoming a driver of sustainable economic development.
Carbon credit, on the way to becoming a "currency
Carbon credit, or carbon certificate, is an essential instrument for measuring and managing the greenhouse gases (GHGs) avoided, reduced or eliminated, equivalent to one tonne of CO₂ removed from the atmosphere.
Considered a kind of "permit" for the right to emit GHGs, however, it is only awarded to projects capable of deshow a reduction in emissions exceeding the reference situation, known as "additionality".
According to the Institute of Corporate Finance, this security can be bought or sold: its holder can offset his or her emissions by financing CO₂ reduction projects, thus helping to curb global warming.
This concept emerged as early as the 1997 Kyoto Protocol and was strengthened with the 2015 Paris Agreement, both of which encouraged the use of carbon credits as a market-based offsetting instrument, supporting reforestation, renewable energy or clean technology programs.
According to Betty Pallard, Vision Director at ESGs & Climate Consulting: "Carbon credits are tending to become a currency, a derivative financial product at the crossroads of fields rarely associated: nature, finance, land assets, right through to knowledge and data".
The credits come in three categories: white (CO₂ capture technologies), green (forests, vegetation) and blue (water), each targeting a specific objective.
"These are not simply conventional credit transactions, but a collective investment in carbon credit-generating projects - it's analogous to a bond," she points out.
Nevertheless, the market must overcome major challenges, notably the lack of transparency and the risk of greenwashing, imposing rigorous international criteria.
The global dynamics of the carbon credit market
In the face of the climate emergency, the carbon market is becoming a key instrument for reducing GHG emissions.
According to some estimates (by Refinitiv), the market will reach 1,500 billion dollars in 2024 (i.e. around 15.7 billion per year), with expansion expected in 2025 driven by the COP29 commitments and European mechanisms such as CBAM.
According to the Institute for Carbon Markets, some 73 voluntary and mandatory emissions trading schemes cover almost 23% of global emissions, generating nearly $100 billion in 2022, 98% of which through mandatory programs.
In Europe, the Emissions Trading Scheme (ETS) is exemplary: its credits are traded at between $80 and $100 per tonne, thanks to strict regulation and transparent data. In China, the CCER program is due to be relaunched in 2025. In the Republic of Korea, voluntary participation by companies is encouraged. However, natural disasters, such as fires and floods in Canada, can lead to the sudden disappearance of credits, highlighting the risks of volatility and inequalities depending on data reliability.
Outlook for Vietnam
Vietnam is actively involved in global efforts to limit global warming to 2°C under the Paris Agreement, with a 28% reduction in emissions by 2030.
With nearly 14.7 million hectares of forest, the country could absorb up to 70 million tonnes of carbon per year. In partnership with the World Bank, it has generated 10.3 million tonnes of carbon credits in the North-Central region, receiving $51.5 million in funding.
Negotiations with the LEAF initiative aim to extend these projects into the Central Highlands and South Central, mobilizing forest resources to create economic value while protecting the environment.
The dual market - mandatory and voluntary - opens up substantial financial opportunities, provided that a legislative framework stimulating forestry projects is rapidly adopted.
Ms. Pallard concludes: "Vietnam has a considerable advantage on the global carbon scene. The Vietnamese excel in mathematics, an essential asset when it comes to measuring and certifying carbon credits. What's more, our historical proximity to nature provides us with know-how that others have yet to acquire.
With an agricultural economy 92% dominated by SMEs, Vietnam can establish a suitable market model, integrating soil restoration into its ambition for carbon neutrality.
She insists: "The game of carbon credits is one in which Vietnam can play a major role", especially as per capita emissions are low (3.6 tonnes/year, compared with 17-18 tonnes in the USA or 9 tonnes in Europe), reinforcing its strategic position in the agroforestry sector.
Source: lecourrier.vn/
