Hanoi (VNS/VNA) - Promoting the use of carbon pricing instrumentswith a focus on the development of a carbon market was important for Vietnam toachieve its net zero emission goals, experts said.

Greenhouse gas emissions in Vietnam increased rapidly over the past threedecades in direct proportion to the economy’s growth.

According to the most recent report on greenhouse gas emissions by the Ministryof Natural Resources and Environment, total emissions would reach 928 milliontonnes of CO2 equivalent by 2030 and 1.5 billion tonnes by 2050 in a moderatescenario.

Vietnam had quite a high emission intensity per GDP unit compared to othercountries in the Southeast Asian region, at about 0.35 kg CO2 per 1 USD.

To realise the goal of becoming a high-income country in 2045 and achieving netzero emissions by 2050 as committed at COP26, Vietnam was facing challenges increating a low-carbon but rapidly growing economy.

It was necessary for Vietnam to raise all resources and apply innovativesolutions, among which, carbon pricing, including carbon tax and an emissionstrading market, are regarded as an effective and feasible tool.

According to Vietnam Initiative for Energy Transition (VIETSE), currently, Vietnamindirectly imposes a tax on carbon through the environmental protection tax onfossil fuel producers and importers. However, this tax rate did not reallyreflect the nature of carbon pricing.

International experience showed that carbon tax and an emissions trading marketcould be flexibly applied in tandem to optimise emissions reductions. However,the emissions trading market was becoming more and more popular because itallowed businesses to be flexible and proactive in choosing measures to complywith emissions quotas and achieve cost-effectiveness.

The carbon market was first mentioned in the Prime Minister’s Decision1775/QĐ-TTg in 2012, then the Party’s Resolution 24-NQ/TW in 2013 andResolution 50-NQ/CP in 2021.

Accordingly, the Vietnamese Government recognised the development of a carbonmarket as a must-do to respond to climate change and protect the environment.

Wolfgang Mostert, an expert in energy and climate policies, said that carbonpricing was a policy toward efficiency to achieve emissions reduction goals atthe lowest cost.

The carbon market played an important role in the process, however, it wouldtake time and require a large investment to develop and operate this market, hesaid.

In the current context of deepening economic integration, many countries werestriving to reduce greenhouse gas emissions which became a mandatoryrequirement for enterprises.

Emissions reduction was not only to reduce harm to the environment but also tomove towards sustainable development and meet the green standards of importingmarkets.

Vietnam’s major export markets, including the EU and the US, were preparing topilot the implementation of the Carbon Border Adjustment Mechanism (CBAM).Accordingly, technical barriers and regulations related to emissions reductionwould be erected to force enterprises to follow and a carbon tax would beimposed if enterprises did not meet the requirements.

The pilot implementation was set to start in 2023 for sectors including cement,aluminium, power, steel and iron production. CBAM would officially be appliedfrom 2026. The range of industries which must comply with CBAM would continueto expand in the future, posing significant challenges for Vietnamese exportgoods.

However, the operation of a carbon market would also create an advantage for Vietnam'sdomestically produced goods to increase competitiveness.

Truong An Ha, an export from VIETSE, said that the development and operation ofa domestic carbon market would help Vietnam to take opportunities arising fromcarbon emissions efficiently, increase adaptability to international carbonpricing mechanisms and enhance the competitiveness of Vietnamese products.

Moreover, a carbon market was also a mechanism to create resources for thedevelopment and application of low-emission technologies toward acarbon-neutral economy, she said.

Experts said that it was necessary to develop a clear sanction mechanism forentities which did not comply with their given quotas. Emissions quotas shouldbe set in a harmonious way between emission reduction targets and economicdevelopment goals and encourage enterprises to apply emission reductiontechnologies.

Emissions trading should be piloted first in sectors which were easy to measuresuch as electricity, industry and buildings before expanding to others,together with a clear mechanism for using revenue from the carbon market toensure efficiency in promoting low-emission technologies./.