Practical application of carbon credits to the economy. Part V: Carbon credits encourage businesses to invest in green initiatives
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- Socially Responsible Enterprise
- 10:26 28/06/2024
DNHN - As climate change becomes increasingly severe, reducing carbon emissions is an urgent task for both governments and businesses. Encouraging businesses to engage in green activities and reduce their carbon emissions is beneficial.
Carbon credits create a competitive advantage for green investors
Carbon credits are units that represent the right to emit a certain amount of carbon dioxide. Each carbon credit is equivalent to one ton of carbon dioxide emissions reduced compared to a baseline level. Carbon credits can be generated through carbon reduction projects such as using renewable energy, sustainable forest management, or energy-saving technologies. Businesses can purchase carbon credits to offset their carbon emissions and achieve their environmental impact reduction goals.
One of the biggest benefits of carbon credits is the potential to generate passive income for businesses. By reducing carbon emissions and creating carbon credits, businesses can sell or trade these credits on the carbon market. Participating in the carbon market not only brings income but also motivates investment in greener technologies and processes. Businesses will seek to reduce their carbon emissions to create carbon credits and increase the value of their green stock.
Additionally, carbon credits create a competitive advantage for businesses that invest in green initiatives. In an increasingly environmentally-conscious market, businesses with carbon credits that demonstrate their commitment to reducing carbon emissions will attract interest and support from customers, investors, and the community. Engaging in green activities and owning carbon credits enhances company image, builds trust, and gains credibility with partners and consumers.
Beyond business benefits, carbon credits also have a positive impact on environmental protection and mitigating climate change. By emitting less carbon and purchasing carbon credits from emission reduction projects, businesses contribute to reducing carbon emissions and other pollutants. This helps protect not only the natural environment but also human health.
To encourage businesses to invest in green initiatives and utilize carbon credits, governments and related organizations can implement incentive measures. This could include providing tax incentives and financial support for businesses participating in carbon reduction projects and using renewable energy. Additionally, building and promoting the carbon market is a crucial factor to enhance the value of carbon credits and encourage business participation.
Carbon credit reserve fund for Vietnamese businesses
Currently, Ho Chi Minh City has been chosen as the first locality to implement a carbon credit exchange and offset mechanism. From 2025, Vietnam will pilot the carbon credit market. This means that around 1,912 large enterprises emitting up to 3,000 tons of carbon annually in Vietnam can purchase carbon credits if other measures do not meet emission reduction standards. This provides opportunities for sellers at better prices and buyers to access cheaper credits.
Assoc. Prof. Dr. Nguyen Dinh Tho, Director of the Institute of Strategy and Policy on Natural Resources and Environment (Ministry of Natural Resources and Environment), emphasized: "Implementing a voluntary carbon market offers more opportunities for people, ethnic groups, and communities involved in carbon absorption such as forests or rice emissions."
Mr. Tho stated that in 2024, Ho Chi Minh City set two main goals: promoting green growth and implementing digital transformation. These are crucial steps towards the city's development, aiming for a sustainable economy, reducing carbon emissions, and achieving a 10% emission reduction target by 2030.
Currently, the city is attracting investment in 28 projects in various fields such as transportation, high technology, renewable energy, electronics, semiconductors, and data centers. Through carbon credit trading, Ho Chi Minh City not only attracts investors but also contributes to promoting a green economy not just within the city but nationwide.
Regarding this issue, Mr. Nguyen Toan Thang, Director of the Department of Natural Resources and Environment of Ho Chi Minh City, shared information at the seminar "Carbon Credit Market - Driving Force for Building a Green Vietnam". Mr. Thang emphasized that Ho Chi Minh City has been selected as the first locality to pilot the carbon credit exchange and offset mechanism, according to Resolution 98. Currently, the city is focusing on two main projects to conduct carbon credit transactions, including replacing street lights with LED lights and installing rooftop solar systems at office buildings.
Meanwhile, Mr. Nguyen Van Minh, Head of the Economic and Climate Change Information at the Department of Climate Change (Ministry of Natural Resources and Environment), shared that the price of carbon credits fluctuates significantly in different countries, ranging from $1 to $140 per ton of carbon. Mr. Minh explained that in some cases, the EU uses the unit of tons of CO2 quotas instead of carbon credits. "Carbon credits are mainly traded in the voluntary market, and recent prices range from $1 to $2 depending on the type of credit," Mr. Minh added.
Dr. Pham Van Dai, Senior Lecturer at the Fulbright School of Public Policy and Management, stated that determining the selling price of carbon credits is quite complex because it is a market. The selling price of carbon credits also depends on their quality, with some types selling for high prices of $200-300 per credit after calculating project implementation costs.
According to Dr. Dai, given the current context, Vietnam needs to plan carbon credits as a resource that needs to be protected. He also proposed the establishment of a Carbon Credit Reserve Fund for Vietnamese businesses to help alleviate the cost burden when participating in global carbon credit markets.
Nghe Nhan
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