Prime Minister's Directive on strengthening carbon credit management

The Directive states that, in order to implement the commitment to reduce net emissions to “zero” by 2050 at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), Vietnam has updated its Nationally Determined Contribution (NDC), specifying international commitments on emission reduction. Implementing the NDC is the responsibility of countries to implement the United Nations Framework Convention and the Paris Agreement on Climate Change, including the goal of reducing greenhouse gas emissions in the fields of energy, agriculture, land use and forestry, waste management, and industrial processes. To ensure the implementation of the commitment to reduce greenhouse gas emissions by 2030 according to the NDC and achieve net emissions of “zero” by 2050, it is urgent to develop and implement plans to reduce greenhouse gas emissions in all sectors; develop carbon markets and carbon credit management mechanisms.

Developing carbon markets and mechanisms for managing, exchanging and offsetting carbon credits is an important solution to achieve the goal of reducing greenhouse gas emissions at a reasonable cost, promoting the development and application of low-emission technologies, contributing to improving the competitiveness of enterprises and the income of people participating in projects to reduce greenhouse gas emissions, protect and develop forests. In Vietnam, since the mid-2000s, many enterprises have implemented programs and projects to create carbon credits and exchange carbon credits with the world on the voluntary market, especially carbon credits from programs and projects under the Clean Development Mechanism (CDM). However, in recent times, there has been a lot of information and public opinion that is not really complete, comprehensive and accurate about the carbon market and carbon credit management mechanisms, especially credit creation and management from forests and some other fields. Many organizations, businesses, and people do not have a correct understanding of the carbon market and the method of creating carbon credits to be able to trade on the market.

Carbon credit management includes the development and implementation of regulations on the management mechanism for credit creation and the exchange, purchase and sale of carbon credits on a voluntary basis or in compensation for greenhouse gas emission quotas; which is the basis for developing the domestic carbon market and participating in the world market. The exchange, purchase and sale of carbon credits and the results of greenhouse gas emission reduction must ensure the implementation of the national greenhouse gas emission reduction target, harmonizing the interests of the state and the people, businesses and participating partners.

To strengthen carbon credit management to promote carbon market development, ensure NDC implementation, harmonize the interests of the state, businesses, people and participating partners, and provide accurate and complete information on the carbon market and methods of creating carbon credits for trading on the market, the Prime Minister requested:

The Ministries of Industry and Trade, Transport, Construction, Agriculture and Rural Development, and Natural Resources and Environment shall urgently issue sector-level greenhouse gas emission reduction plans in accordance with Decree No. 06/2022/ND-CP of the Government (Appendix IV) and organize implementation to ensure the achievement of the committed targets under the NDC, to be completed in the third quarter of 2024.

Preside over and coordinate with relevant agencies to advise competent authorities on organizing negotiations, signing and implementing agreements or contracts with international partners on carbon credit transfer and greenhouse gas emission reduction results in areas under management, ensuring the implementation of emission reduction targets according to NDC; assess the readiness level of participation in the carbon market of a number of areas.

At the same time, preside over and coordinate with the Ministry of Information and Communications, news agencies and press to widely disseminate greenhouse gas emission reduction targets, implement NDC, carbon credit creation methods, participate in voluntary carbon markets, and organize and develop compliant carbon markets.

The Ministry of Natural Resources and Environment shall urgently study and establish a national registration system for carbon credits, manage programs, projects, activities to reduce greenhouse gas emissions and create carbon credits to serve the pilot implementation and development of the domestic carbon market, and exchange with international partners. Take the lead and coordinate with relevant ministries and agencies to urgently develop a Decree amending and supplementing a number of articles of Decree No. 06/2022/ND-CP, including regulations on carbon credit management, domestic and international carbon credit exchange activities, and submit it to the Government before July 30, 2024.

The Ministry of Agriculture and Rural Development shall preside over and coordinate with the Ministry of Natural Resources and Environment, relevant agencies and localities with forests to urgently develop a database on the current status and assess the potential for emission reduction and carbon sequestration from forests at the national, regional and local levels by 2030 and take into account the year 2050. Preside over and coordinate with the Ministry of Natural Resources and Environment, relevant agencies and localities with forests to identify the potential for emission reduction and carbon sequestration from forests contributing to the implementation of the NDC target as a basis for forest carbon credit exchange activities with international partners; complete before October 31, 2024; develop national standards on forest carbon credits and detailed regulations on measuring, reporting and appraising forest carbon sequestration; develop pilot policies and a results-based carbon credit payment mechanism for high-quality and low-emission rice cultivation areas.

The Ministry of Industry and Trade shall preside over and coordinate with relevant agencies to review the legal basis, domestic practical situation and international experience in the management, purchase and exchange of renewable energy certificates (RECs) associated with the implementation of national emission reduction targets, propose management regulations (if any) and report to the Prime Minister before September 30, 2024.

The Ministry of Finance shall preside over and closely coordinate with the Ministry of Natural Resources and Environment, relevant ministries and agencies to complete the Project on developing the carbon market in Vietnam, submit it to competent authorities for approval, ensure the objectives of organization, pilot and official operation as set out; study and evaluate the experiences of countries in the region and internationally in the process of building, managing, operating and developing the carbon market.

The Ministry of Information and Communications shall coordinate with relevant ministries to direct central and local news agencies, newspapers, radio and television stations to develop and implement communication programs on the implementation of national greenhouse gas emission reduction targets, Nationally Determined Contributions (NDCs), carbon credit generation methods, participation in voluntary carbon markets, and organization and development of compliant carbon markets.

The People's Committees of provinces and centrally run cities shall coordinate with relevant ministries and branches to organize the implementation of the national greenhouse gas emission reduction target according to the NDC; review and evaluate the current status of activities and measures to reduce greenhouse gas emissions in the area to assess the potential for carbon credit creation and carbon credit exchange. Coordinate with the Ministry of Natural Resources and Environment and relevant ministries and branches to review and request organizations and enterprises implementing programs and projects under the carbon credit exchange and offset mechanism in the area to fulfill the responsibility of providing information on programs and projects, the number of carbon credits created and exchanged to the Ministry of Natural Resources and Environment for synthesis according to regulations.

People's Committees of provinces and cities coordinate with the Ministry of Information and Communications and relevant agencies to implement communication programs on the responsibility for implementing national greenhouse gas emission reduction targets according to the NDC, carbon credit creation methods, participation in the voluntary carbon market, and organization and development of a compliant carbon market.

Ministers, Heads of ministerial-level agencies, Heads of Government agencies, Chairmen of People's Committees of provinces and centrally run cities shall organize the implementation and direct agencies, organizations and units under their management to strictly implement this Directive.

The Government Office monitors and urges according to assigned functions and tasks.