After the COP26 conference held in Glasgow at the end of 2021, Vietnam is currently devising a project to develop a domestic carbon market, focusing on the mandatory trading of greenhouse gas (GHG) emission quotas for industries and businesses in the domestic market, while also considering international market integration. In January 2022, the Vietnamese government issued three new legal documents regarding the reduction of GHG emissions and protection of the ozone layer, paving the way to implement Vietnam’s commitment to achieve net-zero carbon emissions by 2050 as pledged in COP26. These legislations include:
- Decree 6 of the Government dated and effective from 7 January 2022 (Decree 6/2022);
- Circular 1 of the Ministry of Natural Resources and Environment (MONRE) dated and effective from 7 January 2022 regarding response to climate change (Circular 1/2022); and
- Decision 1 of Prime Minister regarding issuance of list of GHG emitting sectors and establishments subject to GHG inventory dated and effective from 18 January 2022 (Decision 1/2022).
According to Decision 1/2022, there are 21 sectors and 1,912 businesses across Vietnam have to conduct GHG inventories and meet specific emissions quotas. These businesses come from different industries that are subject to release significant amounts of GHG emissions in their production & operation, including Energy, Transportation, Construction, Manufacture, Agriculture and Waste. Starting from 2023 and every two years, private sectors must conduct GHG inventory, prepare a report on GHG inventory and send such reports to the provincial people’s committee for the appraisal. Businesses also need to provide the relevant authority with data on the operation and relevant information in the previous year for purpose of GHG inventory in their value chain before 31 March. This means that in 2024 and 2025, private sectors who are called in the list must submit their GHG accounting reports.
The so-called list seems to soon be added up, with more and more businesses from different industries will need to comply with the legislation. They must reduce the GHG emissions in the following schedule:
- Providing information and data for GHG inventory, establishing and conducting methods to reduce GHG emissions which are suitable with conditions of such establishment; and
- For the period from 2026 to 2030, conducting GHG inventory, establishing and conducting plans for reductions of GHG emissions according to quotas provided by the Ministry of Natural Resource and Environment (MONRE); being allowed to exchange, sell and purchase GHG emission quotas and carbon credits on carbon credit exchange.
Moreover, such businesses must, among other:
- Starting from 2025 and every two years, complete the report on the result of GHGinventory and send such report to MONRE before 1 December of the reporting period.
- Starting from 2027, send the report on the reduction of GHG emission of the previous year to the relevant authority before 31 March every year;
- Comply with regulations on measurement, report, appraisal on reduction of GHG emissions;
The topic of the carbon market has become increasingly important among businesses, particularly the 1,912 listed businesses, due to pressure from legislation and the changing dynamics within their value chains. However, despite understanding the significance of the green transition, many businesses are still hesitant and encounter difficulties in implementing GHG accounting and conducting an inventory of their production and business operations. This difficulty may stem from various factors within the businesses, including the complex and challenging nature of determining and calculating emissions, making it difficult to achieve accuracy in the index. Additionally, many businesses have not demonstrated the integration of ESG (Environmental, Social, and Governance) activities from strategy to specific plans, lacking analysis of ESG activities throughout the business’s supply chain.
Carbon accounting seems to be STEP 1 of the process and become increasingly important for businesses as the world faces the urgent challenge of not only climate change, but also their compliance towards the policy. Furthermore, as for Vietnamese businesses, complying with the GHG reporting mandate is not merely a legal obligation, but an opportunity to embrace a more sustainable future. On the one hand, it requires significant investment in data gathering, reporting systems, and qualified personnel. On the other hand, it offers a chance to improve operational efficiency, reduce environmental impact, and gain a competitive edge in the increasingly sustainability-conscious market.
With the mandatory GHG reporting regulation coming into effect in 2024, Nuoa.io stands ready to be a trusted partner for Vietnam’s enterprises. By providing a comprehensive and user-friendly platform, Nuoa.io empowers businesses to navigate the reporting process with ease, while unlocking the potential of sustainability for long-term success.