DIRECTIVE

On enhancing the management of carbon credits to implement the Nationally Determined Contributions

To implement the commitment to achieve net-zero emissions by 2050 at the 26^th UN Climate Change Conference (COP 26), Vietnam has updated the Nationally Determined Contributions (NDC), concretizing international commitments to reduce emissions. Implementing the NDC is the responsibility of nations to fulfill the United Nations’ Framework Convention and the Paris Agreement on climate change, including the goal of reducing greenhouse gas emissions in sectors such as energy, agriculture, land use and forestry, waste management, and industrial processes. To ensure the commitment to reduce greenhouse gas emissions by 2030 according to the NDC and achieve net-zero emissions by 2050, the development and implementation of plans to reduce greenhouse gas emissions in all sectors mentioned above, along with the development of the carbon market and carbon credit management mechanisms, are very urgent.

The development of the carbon market and the mechanisms for managing, exchanging, and offsetting carbon credits are key solutions for achieving the goal of reducing greenhouse gas emissions at a reasonable cost, stimulating the development and application of low-emission technologies, contributing to enhancing the competitiveness of businesses and the income of people involved in emission reductions projects, as well as protecting and developing forests. In Vietnam, since the mid-2000s, many companies have implemented programs and projects to create and trade carbon credits on the voluntary market, especially carbon credits from Clean Development Mechanism (CDM) projects. However, in recent times, there has been a lot of information and public opinion that is not fully comprehensive or accurate about the carbon market and carbon credit management mechanisms, particularly regarding the creation and management of carbon credits from forests and other sectors. Many organizations, businesses, and individuals have misconceptions about the carbon market and the methods of creating carbon credits for trading in the market.

Carbon credit management includes the establishment and implementation of regulations regarding the management mechanisms for creating carbon credits and exchanging, trading carbon credits voluntarily or offsetting greenhouse gas emissions quotas. It serves as the foundation for the development of the domestic carbon market and participation in the global market. The exchange, trade of carbon credits and the outcomes of emission reductions must ensure the achievement of national targets of emission reductions, balance the interests of the state, individuals, businesses, and participating partners.

To strengthen the management of carbon credits in order to promote the development of the carbon market, ensure the fulfillment of NDC, balance the interests of the state, businesses, individuals, and participating partners, and simultaneously provide accurate and comprehensive information about the carbon market and methods of creating carbon credits for market transactions, the Prime Minister requires:

1. The Ministries of Industry and Trade, Transport, Construction, Agriculture and Rural Development, Natural Resources and Environment:

a) To urgently issue sectoral plans for mitigating greenhouse gas emissions as stipulated in Decree No. 06/2022/ND-CP of the Government (Appendix IV) and organize the implementation to ensure the achievement of NDC-committed goals, to be completed by the third Quarter of 2024;

b) To assume the prime responsibility for, and coordinate with relevant agencies to advise authorities on organizing negotiations, signing, and implementing agreements or contracts with international partners regarding the transfer of carbon credits and the results of emission reductions within their management scope, ensuring the achievement of NDC emission reduction targets; assess the readiness to participate in the carbon market of certain sectors;

c) To assume the prime responsibility for, and coordinate with the Ministry of Information and Communications, press agencies, and media to conduct extensive publicity about the goals of emission reductions, implementation of NDC, methods of creating carbon credits, participation in the voluntary market, and the organization and development of a compliance market.

2. The Ministry of Natural Resources and Environment:

a) To urgently research and establish a national registration system for carbon credits, manage programs, projects, and activities that reduce greenhouse gas emissions and generate carbon credits to facilitate pilot implementation and develop the domestic carbon market, and engage in international exchanges;

b) To assume the prime responsibility for, and coordinate with other Ministries and relevant agencies to urgently develop a Decree amending and supplementing certain provisions of Decree No. 06/2022/ND-CP, including regulations on carbon credit management and domestic and international carbon credit trading activities, and present it to the Government before July 30, 2024.

3. The Ministry of Agriculture and Rural Development:

a) To assume the prime responsibility for, and coordinate with the Ministry of Natural Resources and Environment, relevant agencies, and local authorities with forests to urgently develop a database on the current status and assess the potential for emission reductions and carbon absorption from forests at national, regional, and local levels up to 2030 and with projections to 2050;

b) To assume the prime responsibility for, and coordinate with the Ministry of Natural Resources and Environment, relevant agencies, and localities with forests to identify the potential for emission reductions and carbon absorption from forests contributing to the achievement of NDC goals, to serve as a basis for forest carbon credit trading activities with international partners; complete this before October 31, 2024; develop national standards for forest carbon credits and detailed regulations for measuring, reporting, and verifying forest carbon absorption; develop pilot policies and mechanisms for carbon credit payments based on results for specialized high-quality rice cultivation areas with low emission.

4. The Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with relevant agencies in, reviewing the legal basis, domestic practices, and international experiences related to the management, trade, and exchange of renewable energy certificates (RECs) linked to the achievement of national goals of emission reductions, propose management regulations (if any), and reporting to the Prime Minister before September 30, 2024.

5. The Ministry of Finance shall assume the prime responsibility for, and closely coordinate with the Ministry of Natural Resources and Environment and other relevant ministries and agencies in, finalizing the project for developing the carbon market in Vietnam, submitting to the competent authority for approval, ensuring the goals for organizing and operating both pilot and official phases as set out; conducting research and evaluating the experiences of countries in the region and internationally in the development, management, operation, and growth of the carbon market.

6. The Ministry of Information and Communications shall, in coordination with related Ministries, direct news agencies, press, radio, and television stations at both national and local levels to develop and implement communication programs about achieving national goals of emission reductions, Nationally Determined Contributions (NDC), methods of creating carbon credits, participation in the voluntary market, and the organization and development of a compliance market.

7. People's Committees of provinces and centrally-run cities:

a) To coordinate with relevant ministries and agencies to implement the national goals of emission reductions according to the NDC; review and assess the current state of activities and measures to reduce greenhouse gas emissions in their areas to evaluate the potential for creating and exchanging carbon credits.

b) To coordinate with the Ministry of Natural Resources and Environment and other relevant ministries and agencies to review and require organizations and businesses to implement programs and projects according to the mechanisms for trading and offsetting carbon credits in their areas, take responsibility for providing information about the programs, projects, the amount of carbon credits created, and exchanged, then report to the Ministry of Natural Resources and Environment for compilation as prescribed.

c) To coordinate with the Ministry of Information and Communications and related agencies to implement communication programs about the responsibilities in achieving the national goals of emission reductions according to the NDC, methods of creating carbon credits, participation in the voluntary market, and the organization and development of a compliance market.

8. Ministers, Heads of ministerial-level agencies, Heads of government-attached agencies, Chairpersons of People’s Committees of centrally-run cities and provinces shall organize the implementation and direct all agencies, organizations, and units within their jurisdiction to strictly follow this Directive.

The Government Office shall monitor and urge according to assigned functions and duties.

The Prime Minister

PHAM MINH CHINH