Citi shares experience in developing Vietnam’s carbon offset market

Pham Huu Hai, Citi Vietnam’s Corporate Banking head and Hanoi Branch director, highlighted Citi’s carbon offset initiatives at the Developing a Carbon Market: International Experience and Policy Implication for Vietnam seminar on November 23 in Hanoi.

The seminar was organised by the Ministries of Foreign Affairs and Natural Resources and Environment, along with the Organisation for Economic Cooperation and Development.

During the panel discussions, representatives from the government, finance companies, academia, and the private sector agreed that among the tools to be used for the green transition, developing a carbon offset market is an essential requirement for Vietnam.

Hai emphasised that carbon offset markets have increasingly been seen as part of the solution to climate change.

He stressed the pioneering role of Citi in initiating carbon credit projects in Vietnam and reaffirmed its commitments to supporting clients’ net-zero ambitions.

Citi closed the very first voluntary carbon credit (VCC) transaction in late May 2022 as the offtaker to buy VCCs from a project developer who manufactures and distributes improved cook stoves and water purifiers to low-income rural communities in Vietnam.

This February, Citi also acted as an arranger and structurer on an emissions reduction-linked bond with the World Bank. This Water Purifiers for Schools project will enable access to clean drinking water for two million children in Vietnam.

“These VCC transactions demonstrate Citi’s ability to innovate and put the bank at the forefront of the carbon credit market. They serve as a model for replication to support other carbon credit generating projects and are a testament to the excellent opportunities for carbon credit projects in Vietnam,” said Hai.

Vietnam makes efforts to develop domestic carbon market In the context that about 70 countries and territories have applied carbon pricing instruments, experts held that Vietnam should also apply such tools, especially by developing the domestic carbon market, in order to support the realisation of the country’s greenhouse gas (GHG) emissions reduction target.

Vietnam poised to become large-scale carbon credit market The Emissions Reduction Purchase Agreements (ERPAs) for 11 forests in the south central region and Central Highlands will lay the foundation for Vietnam's large-scale carbon credit market.

Vietnamese carbon market yet to achieve lift off The establishment of the country’s first carbon credit trading floor demonstrates proactive adaptation of international environmental rules, but current policy may impede Vietnam’s market growth process.