Carbon market drives strong momentum for Viet Nam's energy transition

As one of the first companies to conduct a transaction immediately after Vietnam's carbon trading exchange officially commenced operations, AES Viet Nam views the occasion as a significant milestone for both the company and the country's energy transition.

According to Mr. Oliver Marquette, President of AES Viet Nam, carbon markets have been established in many countries and have proven effective in driving emissions reductions through market-based mechanisms.

"Carbon markets help establish a price for carbon and allow market forces to identify the most cost-effective solutions for reducing emissions. Therefore, Viet Nam's development of its own carbon market marks a highly significant milestone," he said.

Mr. Marquette said AES Vietnam completed its first transaction just minutes after the inaugural trading session began.

"We are very proud to have taken part in this historic moment and look forward to remaining an active participant in the carbon market in the years ahead," he said.

Carbon to become a key pricing factor

According to Mr. Marquette, the greatest significance of the carbon market lies not in the trading of carbon credits itself, but in establishing a price for greenhouse gas emissions. Once carbon is assigned a price, emitting businesses will need to factor carbon costs into their production decisions, creating stronger incentives to invest in clean technologies and low-emission energy sources.

For AES Vietnam, as a power producer, greenhouse gas emissions generated from electricity generation will need to be offset through the purchase of emissions allowances or carbon credits on the market.

"Every tonne of carbon emitted must be offset by carbon credits. This will become a critically important part of our business operations," he said.

Drawing on AES's experience in Europe, Mr. Marquette noted that the cost of purchasing emissions allowances has become a significant component of the operating costs of coal-fired power plants. This has compelled companies to adjust their investment strategies and accelerate the development of lower-emission power sources such as natural gas, hydropower, and renewable energy.

He believes that, once fully developed, the carbon market will help reshape the economics of the power sector and provide tangible incentives for Vietnam's decarbonization efforts.

The right timing for Viet Nam

Responding to views that Viet Nam has introduced a carbon market later than many other countries, the President of AES Viet Nam said each country follows its own development path and that Viet Nam is progressing on schedule.

According to Mr. Marquette, even Europe took many years to establish the legal framework, refine market mechanisms, and build a sufficiently broad participant base before its carbon market became fully effective.

"I do not believe Viet Nam is behind. This is a natural stage of development, and now is the right time to launch the market," he said.

He also welcomed Viet Nam's plan to expand the market from 2029, when a larger number of businesses are expected to participate in carbon trading. In his view, the current phase offers companies an opportunity to familiarize themselves with trading procedures, gain practical experience, and prepare for a larger, more mature market in the future.

For AES Viet Nam, the company's first transaction was intended primarily to test trading procedures rather than generate financial returns.

"The priority is to understand how the market operates, identify trading partners, and prepare thoroughly for the next stage," he said.

With many years of experience participating in carbon markets around the world, AES Viet Nam enjoys certain advantages as an early entrant. However, Mr. Marquette emphasized that it is equally important for Vietnamese businesses to engage with the market as early as possible.

"Companies that begin participating now will have time to learn and adapt before the market expands significantly. That will be a major competitive advantage in the future," he stressed.

AES Viet Nam is a subsidiary of The AES Corporation (US), one of the world's leading energy companies and one of the largest U.S. investors in Viet Nam's energy sector. Established in Viet Nam in 2010, the company operates the 1,242 MW Mong Duong 2 BOT Thermal Power Plant in Quang Ninh Province and is developing the 2,250 MW Son My 2 Combined Cycle Gas Turbine (CCGT) Power Plant and the Son My LNG Terminal in Binh Thuan Province. In addition, AES Vietnam is expanding its investments in renewable energy and battery energy storage systems (BESS), supporting Viet Nam's energy transition and greenhouse gas emissions reduction efforts.