As the advising agency for the Government on researching models and preparing to operate the carbon credit exchange in Vietnam, the Ministry of Finance has been strengthening cooperation and exchanging knowledge with international partners.
Sharing experiences with the Southeast Asia Energy Transition Partnership program
On the afternoon of April 22, the Ministry of Finance, in collaboration with the Southeast Asia Energy Transition Partnership (ETP, UNOPS), organized a workshop to launch and share experiences on the "Technical Support Project: Strengthening the Ministry of Finance's Capacity in Researching Models and Preparing for the Pilot Operation of the Carbon Credit Exchange in Vietnam."
The project is expected to support Vietnam in accelerating its transition to sustainable energy, aligning with international agreements and the Sustainable Development Goals. It will also lay the groundwork for renewable energy, energy efficiency, and sustainable infrastructure, thereby contributing to economic growth and energy security.
Regarding the governance structure of carbon exchanges worldwide, Mr. Michael Mehling from the Massachusetts Institute of Technology (MIT) explained that governance in the emissions trading system (ETS) involves the responsibilities of both the public and private sectors to ensure market integrity, transparency in operations, regulatory compliance, market effectiveness, and accountability of participants.
Strengthening research capacity and operating the carbon marketThe governance in ETS is carried out by various entities, including the state management authority, the registration system operator, the exchange platform, compliance entities, and market support units. Mr. Michael also introduced the ETS systems in California, the United States, and the United Kingdom, highlighting valuable lessons for Vietnam.
According to the expert, institutional design and multi-level coordination, as seen in the California and UK models, are key factors in the effective operation of the market. Legal certainty regarding market structure, asset types, and compliance obligations increases investor confidence and market transparency. Moreover, the flexible use of auction mechanisms, reserve funds, and market linking supports liquidity, compliance flexibility, and price stability.
International experience also shows the need for a flexible monitoring mechanism. However, Mr. Michael said the design of the ETS system must align with domestic conditions, including economic development levels, institutional capacity, and existing infrastructure.
He emphasized that Vietnam should continue prioritizing strengthening its capacity to manage the system's complexities. Implementing the ETS strategy in phases, starting with a pilot phase and gradually expanding by sector, will help minimize risks in the early stages. Developing a robust emissions registry system and data infrastructure will enhance transparency and compliance, creating the foundation for future market linkage.
Mr. Jonh Robert Cotton, Deputy Director of the Southeast Asia Energy Transition Partnership (ETP), stated that the technical support project “Strengthening the Ministry of Finance's Capacity in Researching Models and Preparing for the Pilot Operation of the Carbon Credit Exchange in Vietnam” will accelerate Vietnam’s sustainable energy transition process in line with international agreements and sustainable development goals. It will also build the foundation for renewable energy, energy efficiency, and sustainable infrastructure, contributing to economic growth and energy security.
Exchanging experiences with French and European partners
Earlier in April, the Ministry of Finance delegation, led by Deputy Minister Hồ Sỹ Hùng, held meetings with the Directorate General for Energy and Climate (DGEC), Ministry of Ecological Transition and Territorial Cohesion, the French Deposit and Consignment Office (CDC), and the French Development Agency (AFD).
The goal was to lay the foundation for Vietnam’s planned pilot operation of the carbon exchange starting in June 2025, to officially operate and connect with the region and the world by 2029.
In discussions with French partners, the Ministry of Finance leadership affirmed that developing the carbon market is a new issue for Vietnam but plays a crucial role in mitigating greenhouse gas emissions and has received high-level leadership attention and guidance. The government has tasked the Ministry of Finance with establishing a domestic carbon exchange, which is expected to start operations in June 2025. Given the tight timeline for establishing the exchange, Vietnam must learn from countries with prior experience to build an effective exchange.
The meetings provided the delegation with insights into France’s carbon market management model, payment systems, participants in the exchange, financial management on the carbon market (EU ETS), and the role of intermediaries in the buying and selling process, as well as emission quotas.
Additionally, the discussions clarified the policies of the Directorate General for Energy and Climate that have helped France achieve its greenhouse gas emission reduction targets under the Paris Agreement, the critical role of the French Deposit and Consignment Office in promoting environmental initiatives in France, and sustainable finance initiatives like green bonds and renewable energy investment projects driving the energy transition and green economy transformation.
A positive development is that Vietnam received support from the French Ministry of Environment and the French Development Agency (AFD) for building a low-carbon society, which is expected to begin in May-June this year. AFD has also committed to supporting Vietnam in reducing greenhouse gas emissions, developing green projects, and establishing the carbon market. Currently, AFD is working with the Ministry of Finance to establish a cooperation agreement for 2025-2026, which includes three technical support components: green tax policies, green bonds, and the carbon market.