Net Zero refers to a state where the total amount of greenhouse gases released into the atmosphere does not increase. Simply put, Net Zero is the amount of greenhouse gases emitted into the environment that is not greater than the amount of greenhouse gases removed from the atmosphere.
What is Net Zero?
Global warming is proportional to the amount of greenhouse gases accumulated over the years, which means that the planet will continue to warm as long as global emissions remain greater than zero. International scientists have agreed that in order to prevent the unpredictable consequences of climate change, carbon dioxide (CO2) emissions must be reduced by 45% by 2030 compared to 2010 levels and reach net zero emissions (Net Zero) by 2050.
Net Zero refers to a state where the total amount of greenhouse gases released into the atmosphere does not increase. Simply put, Net Zero is the amount of greenhouse gases emitted into the environment that is not greater than the amount of greenhouse gases removed from the atmosphere.
The term Net Zero is important because it is the state at which global warming stops. The 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) held at the end of 2021 set out many important goals in responding to climate change, including achieving net zero emissions by 2050 and keeping the Earth’s temperature from increasing more than 1.5 degrees Celsius. The 2070 scenario limits global warming to 2 degrees Celsius.
COP26 calls on countries to set even stronger reduction targets until 2030, aiming for carbon neutrality by mid-century.
So how can we achieve the goal of reducing greenhouse gas emissions?
There are three ways to do this. The first is to reduce the amount of emissions into the atmosphere during the process of electricity production, transportation, agriculture, etc. People can switch from fossil fuels to renewable energy; abandon gasoline and diesel cars to switch to electric or hydrogen cars.
However, not all production and economic activities can reduce greenhouse gas emissions to 0. Therefore, these industries must use the second method of compensating by carbon capture measures such as planting trees and applying technology.
This technology uses machines to remove carbon from the air, then solidify this emission and bury it underground.
If implementing both of the above methods still does not bring emissions to “Net Zero”, businesses have another option, which is to buy carbon credits.
A carbon credit is a permit that allows the owner to emit a certain amount of CO2 or other greenhouse gases. In the market, buying and selling carbon, or more precisely, buying and selling CO2 emissions, is done through credits. One credit allows the emission of one ton of CO2 or the equivalent in other greenhouse gases.
In other words, businesses will have to pay for the emissions they emit during their production process. Conversely, businesses that fully absorb emissions, even exceeding the amount of greenhouse gases they emit, can sell carbon credits.
Đồ hoạ: Alex Chu
The Net Zero Race
Europe is one of the regions that is accelerating the Net Zero race by implementing a green industry plan. In particular, the continent is increasing support for businesses to compete fairly with the US to become a center for electric vehicle production and reduce dependence on China.
Europe will increase licensing for businesses investing in technology areas such as carbon storage, green Hydrogen production, etc.
The EU will increase subsidies for the development of decarbonization technology. Current EU funds for this area are currently around 250 billion euros.
Member states will focus on improving skills and setting standards for skills related to this area.
The EC will accelerate the signing of trade agreements to ensure the necessary supplies of important raw materials in the green industry.
In the UK, the country has proposed a plan to ban the sale of fossil fuel-powered vehicles by 2030, quadruple offshore wind power capacity, and increase green space by 30,000 hectares each year by 2025.
In the US, the country is promoting the development of electric vehicles and clean energy by reducing taxes. Accordingly, electric vehicles produced in North America and meeting the requirement of localizing batteries will receive a tax incentive of 7,500 USD.
Many major automakers have announced a roadmap to completely stop producing gasoline vehicles such as Mercedes-Benz, Volvo, Hyundai, Ford… The time frame chosen by automakers is from 2025 to 2030.
What will Vietnam do in this race?
Not out of the world trend, Vietnam has also committed to participating in the race towards the goal of Net Zero by 2050 to respond to climate change.
At the COP26 Conference, Vietnam committed to net zero emissions by 2050; no new coal power plants by 2030 and phase out coal power by 2040; declaration on forests and land use; joining the global adaptation coalition; reducing methane emissions by 30% by 2030 compared to 2020 levels.
Recently, the Government approved the VIII electricity plan, in which, by 2050, the proportion of renewable energy will reach over 70% and completely eliminate coal-fired thermal power.
In this power plan, the goal by 2030 is for the power sector to control greenhouse gas emissions to reach about 204-254 million tons and about 27-31 million tons by 2050. The goal is to reach a peak emission level of no more than 170 million tons by 2030, provided that the commitments under JETP are fully and substantially implemented by international partners.
In addition to increasing the proportion of renewable energy and reducing fossil power, another solution is to save energy. According to some experts, Vietnam’s potential for energy savings and emissions is huge, especially in industries such as cement at 50%, ceramics at 35%, coal-fired power plants at 25%, textiles and dyeing at 30%, commercial buildings at 25%, steel at 20%, agricultural processing at 50%, etc.
Experts say that businesses that commit early will enjoy the advantage of being a pioneer, positioning their brands in the face of changing consumer trends, new technologies and new markets.
Vietnam also has a policy to encourage people to switch to electric vehicles. Accordingly, within 3 years from March 1, 2022, the first registration fee for battery-powered electric cars will be 0%.
From March 1, 2025 to February 28, 2027, the registration fee for battery-powered electric cars with 9 seats or less is 50% of the registration fee for gasoline cars with the same number of seats.
In addition, Vietnam has a preferential corporate income tax (CIT) policy of 10% for 15 years, tax exemption for no more than 4 years and 50% reduction of CIT payable for no more than 9 subsequent years for corporate income from new investment projects in the field of environmental protection.
Regarding value-added tax (VAT), it is stipulated that carbon credit transfer fees are not subject to VAT declaration and payment; it is stipulated that goods and services that contribute to greening the economy are not subject to this tax.
Regarding special consumption tax, preferential tax rates for products such as biofuel, environmentally friendly cars, etc.
However, achieving Net Zero emissions will be very costly. The Ministry of Industry and Trade quoted Ms. Nguy Thi Khanh, Director of the Green Innovation and Development Center (GreenID), saying that it is estimated that Vietnam will need about 147-221 billion USD in the period of 2022-2050. This goal requires support from international organizations, private enterprises and the carbon market.
At the workshop “Realizing the Government’s commitment to bring net zero emissions to reality: Opportunities and challenges for businesses”, Mr. Pham Van Tuan, Deputy Director of the Department of Climate Change, said that Vietnam is currently unable to apply the technology of burying CO2 underground due to the very high cost. Therefore, the current measure is to increase forest area.
According to the World Bank’s estimates (2022), Vietnam may need to invest an additional 368 billion USD by 2040, equivalent to 6.8% of GDP per year, when pursuing a development path that combines resilience and net zero emissions.
Of which, the decarbonization journey to meet international commitments accounts for about 30% of the resource demand.
However, the public sector will only be able to meet about 1/3 of the required resources; while the green financial market is still in its early stages of development, the resources mobilized through the green financial market are very small compared to the demand.
According to the Ministry of Finance, on average, in the past 5 years, state budget expenditure for environmental causes has reached over 21 trillion VND per year.
