The world is under a lot of pressure of climate change, countries and businesses no longer a bystander when the amount of greenhouse gas emissions become an important indicator to assess the level of sustainable development. In that context, credits carbon and namely certificates of CERS (Certified Emission Reductions) is becoming a strategic tool for business has shown commitment to the environment have just found the economic benefits clear.
In Vietnam, a series of policies related to reducing emissions, building the carbon market and domestic emissions reporting required already – are being deployed. Business if not actively capture this trend will be at risk of lagging – both legal and business opportunities.
However, many organizations still vague about CERS is nothing as valuable as how to approach? This article Lac Viet Computing will explain comprehensive, clear about the nature of CERS and the actual value that the business can exploit.
1. Overview of CERS is what?
1.1. CERS what is?
CERS (Certified Emission Reductions) is certified emission reduction can be certified, be granted for the project has the ability to reduce or avoid greenhouse gas emissions, especially CO₂. In other words, each CERS represent 1 ton CO₂ or greenhouse gas equivalent has been removed from the atmosphere through the project, environmental protection.
This certificate birth in the framework of clean development mechanisms (Clean Development Mechanism – CDM) under the Kyoto protocol of the united Nations. The goal is to facilitate developing countries – such as Vietnam – have the opportunity to access clean technology, at the same time attract investment from the developed countries are obliged to reduce emissions by allowing them to buy back emissions have been reduced in other countries.
1.2. Purpose of introduction and mechanism of action of CERS
The core purpose of CERS is to encourage developing countries to implement projects that benefit the environment, such as renewable energy, waste management, energy saving, replace fossil fuels...
After completing and recognized, these projects will be measuring the amount of greenhouse gases fell and was issued CERS, respectively. The organization or business in developed countries, which are obliged to cut emissions as prescribed – can-acquisition of CERS is to compensate the emission excess in their country.
For example, A business in Vietnam, investment in construction of a biomass power plant replace coal fired oven traditional. In a year, the project helps to reduce 20.000 tons of CO₂ compared to the old method. When is the authority accreditation certificate, business will be granted 20.000 CERS, equivalent to 20,000 tons of greenhouse gases have been removed. These certificate can sell on the international market to earn additional revenue.
1.3. The difference between CERS and the type of signal only other carbon
On the market today, there exists many type of signal only carbon but not always worth the same role. Below is the basic difference between CERS and a number of other popular types:
- CERS (Certified Emission Reductions): The credit belongs to the market, compliance is closely monitored by the executive Committee CDM of the united Nations. All data, emissions must be measured, reported, verified by the Tuesday of independence.
- VERs (Verified Emission Reductions): The credit arising from the market voluntarily (voluntary carbon market). The verification also due to the independent organization made, but not of the legal framework international as CERS. VERs usually have more flexibility, but legal value lower.
- EUA (European Union Allowances): Are quotas for emissions in the ETS system of the European union. This is a credit only for the business in Europe and not be able to exchange freely with CERS.
In summary, CERS legal high is global recognition should have good liquidity and high reputation over many types of credit other. Business owner CERS not only can trade easily, but also used as a clear demonstration of the commitment to reduce emissions – sustainable development.
2. CERS mean for businesses in Vietnam?
In the context of an economy increasingly under pressure from demand for sustainable development, the only stop in the slogan “green chemistry” is not enough. Businesses want to maintain competitive advantage need to prove with data specific measurable results. And CERS – certified emission reduction can attest – not only mean the environment but also open up economic opportunities for the long-term strategy for businesses in Vietnam.
2.1. The opportunity to generate revenue from emission reduction
One of the practical benefits, the best of CERS is the ability to create additional revenues from the operation to reduce emissions that business capital is made.
A lot of businesses are currently investing in:
- Solar power plant, biomass power
- Project waste water or exhaust gas
- Solution energy saving, large-scale
If the project meets the standard of measurement verification, business can be registered under the clean development mechanism (CDM) and is issued CERS corresponding to the amount of greenhouse gases reduced. These certificates can then sell to institutions or countries wishing to offset emissions in excess, through the exchanges international or bilateral transaction.
For example, A paper company investment boiler biomass replacing the oven the old oil helps to reduce 10,000 tons of CO₂ per year. After the verified certificate, the company was granted 10.000 CERS, can sell for an average of 2-5 USD/ton, equivalent to from 20,000 to 50,000 USD/year just from reducing emissions.
Business not only recover part of the cost of investment, but also turn efforts to protect the environment of cash flow really helped the green investment becomes feasible, more attractive financially.
2.2. CERS as a tool to assert sustainable brand
In the business environment today, the branding no longer stop in products or services that expanded into the value that the business creates for the community and the environment. Owner CERS is a proof can be for the commitment to sustainable development that.
The certificate CERS can be:
- Integrated in the report ESG (environmental, social and governance)
- Presented in the sustainability report or annual report
- Used in brand communications or profile international tender
In particular, with the export business or join the global supply chain, owning CERS will increase credibility in the eyes of international partners, which increasingly rigorous in the selection of suppliers that meet the criteria environment.
With CERS, Business not only assert themselves in the right direction in the trend of “green economy”, but also expand cooperation opportunities, call capital access international markets in a more favourable way.
2.3. Catch the market trends, credits carbon in Vietnam
Months 1/2022, The Prime minister issued Decision no. 01/2022/QD-TTg on the roadmap for a carbon market in Vietnam, which emphasize:
- Building system trading credits carbon in water
- From the pilot 2025
- Official operation from the year 2028
This means that, in just a few years, to reduce emissions, track emissions, and trading credits carbon will become a mandatory part of manufacturing operations – business in Vietnam.
Any business start early will have the advantage pronounced:
- Clearly understand the mechanism, measurement, registration, commercialization CERS
- Available team system service data check or connected exchanges in the future
- Can re-sell signal only in the country or retaining to offset emissions if is legally binding
Not only one step ahead of the administrator emissions, businesses also avoid the risk of animals, fined or lose the opportunity to join the market when the official policy in force.
3. Conditions to be issued CERS
To be issued CERS, businesses need to ensure three main elements:
Firstly, the project must be “additional” (additionality) – meaning that the project is done only if there is support from the clean development mechanism (CDM). This ensures that the emission reduction does not happen in a natural way that there are factors that encourage additional from the list.
Monday, the project needs to have the ability to measure, verify the amount of greenhouse gas emission reduction through the methods have been internationally recognized. This requires the project to set up the system to track, collect data and process test closely by independent unit Tuesday.
Tuesday, the project needs to be approved by two levels:
- Authority national (Designated National Authority – DNA) of Vietnam, is responsible for ensuring that the project complies with the policies of national interest.
- The executive committee CDM (CDM Executive Board) which belongs to the un agency review finally to the recognition of CERS for the project.
This process helps enterprises not only to comply with international standards but also build a management system emissions, they can take advantage of for many other purposes such as reporting, ESG, credit record, green or bid for the project, public – private in the future.
The parties may purchase – sale of CERS today
Once granted, CERS can be sold for parties wishing to offset emissions, in the form of the transaction, directly or through the floor intermediaries.
The parties usually buy CERS, including:
- Business development in the country has pledged to cut emissions under the Kyoto protocol, but has not reached targets and need to purchase more credits to compensate.
- Financial institutions, investment funds, ESG are looking for credits carbon to balance the portfolio.
- International organizations, NGOS or multinational corporations need to maintain its position carbon neutral in reporting social responsibility.
Channel transaction downloads:
- The exchanges of carbon such as Carbon Trade Exchange, IHS Markit...
- Bilateral agreement (OTC – over-the-counter) between the business owner and buyer.
- Floor transactions, credits carbon in Vietnam: According to The government's plans, floor transactions, the official will be piloted in the year 2025, full operation from 2028. When that CERS can be traded inland according to the transparent mechanism is managed by The state.
Business benefits received: 't just stop at reducing emissions, the enterprise can now turn the amount of greenhouse gas cuts are a source of fact, at the same time participate in a market full of potential are formed in Vietnam and the world.
4. The basic process for registration of CDM project certificate CERS
Although participation in clean development mechanism (CDM) to receive a certificate CERS can hear through quite complex but in fact this process has been standardized and can be deployed post with suitable preparation. Here are the basic steps businesses need to know to step by step approach owns CERS:
Step 1: building design documentation project (PDD – Project Design Document)
This is the first step, also the most important platform. The business will need to build a document that describes the entire project according to the format specified by the united Nations, which includes:
- Description of technology – main activities of the project
- The calculation of the amount of greenhouse gases to be cut every year
- Method of measurement monitoring
- Analysis “additional” – news prove that the project is done only when there is support from mechanism CDM
- Impact assessment environmental and social (if available)
Important note: PDD should be written in English, using the methodology has been internationally approved. This is the documentation will be evaluated by independent parties and international agencies should invest seriously accurate right from the start.
Step 2: approval from The relevant national authorities (DNA) of Vietnam
DNA is the representative body of the country in the reviews confirm the CDM project. In Vietnam, this role belongs to the Ministry of natural resources and the Environment.
Business need filing include:
- Narrative project summary
- Document PDD
- Commitment to comply with the requirements for sustainable development
DNA will consider whether the project is appropriate with the development of socio – economic and policy environment of Vietnam or not. If approved, the business will receive the approval letter national (Letter of Approval – Speaker) – conditions required to be registered internationally.
Step 3: Appraisal organized by the independent inspection (DOE – Designated Operational Entity)
After being approved in the country, PDD will be sent to an institution accredited independent international – called DOE, be appointed by the executive Committee CDM.
DOE will:
- Assess the reasonableness of transparency of the entire project
- Verify that the methods of measurement of emissions is correct, can be realized
- Conduct field surveys, if necessary
If projects meet the requirements, DOE will establish the appraisal report and the proposed executive Committee CDM project approval.
Step 4: register with the executive Committee CDM (EB – Executive Board)
The complete record after the DOE appraisal will be sent to the executive Committee CDM united Nations to review official.
Once approved, the project will be announced on the system global registration of CDM and officially became qualified project released CERS.
Step 5: perform measurement – verification and the requirement to issue CERS
After the project goes into actual operation, a business must perform measurement of emissions to be cut by the method already registered. This data will be reviewed periodically by DOE to ensure accuracy.
Each verification (usually 1 year), the business will submit reports, suggestions, pending the number of CERS corresponding to the amount of emissions has been proven to be reduced.
CERS are issued will be recorded in the account book of business at the UNFCCC Registry, from which it can be traded, transferred to the purchaser in the international market.
In summary, to own CERS, businesses need to have a real project create value to reduce emissions, build readiness measurement system and participate in the verification process transparent. Whatever the technique, this is the door opened new source of revenue, brand reputation and the opportunity to compete in a green economy.
In the context of Vietnam is gradually formed carbon market inland, the standard ESG gradually becomes a measure of the popularity of the investors, understanding approach CERS is no longer your own large corporations, which is a realistic opportunity for any business that is implementing the project environmentally friendly.
Business start early will have a big advantage: active in admin emissions, ready to meet regulations while expanding opportunities to reach the capital deals and international partners. If you are owner or preparing to deploy a project has the potential to reduce emissions, this is an ideal time to learn more about CERS.
