Global Carbon Markets Become Increasingly Fragmented: Why Can the Price of One Ton of CO₂ Differ by as Much as Five Times?

As major economies accelerate their journey toward carbon neutrality, CO₂ emissions are increasingly being treated as a tradable commodity. Unlike traditional commodities, however, one ton of CO₂ reduced or removed no longer carries the same value everywhere. In reality, the price of carbon credits can vary by as much as five times—or even more—depending on project quality, certification standards, and market demand.

This trend is presenting Vietnamese businesses with a new challenge: carbon is no longer merely an environmental issue but is becoming a decisive factor in international competitiveness.

Carbon Is Becoming a New Production Cost

For decades, greenhouse gas emissions were largely regarded as an “invisible cost” of industrial activity. However, as climate change has begun to generate tangible economic impacts, developed countries have increasingly moved to place a price on carbon.

The European Union operates one of the world’s largest carbon trading systems through the EU Emissions Trading System (EU ETS). Carbon allowance prices in Europe have at times exceeded EUR 100 per ton of CO₂, creating a significant cost burden for industries such as steel, cement, aluminum, chemicals, and energy.

At the same time, the European Union’s Carbon Border Adjustment Mechanism (CBAM) is gradually expanding its scope to imported goods. This means exporters from carbon-intensive economies may face additional carbon-related costs when accessing European markets.

Beyond Europe, major economies including China, South Korea, Japan, the United Kingdom, Canada, and Singapore are either establishing or expanding carbon pricing mechanisms to support their green transition strategies.

Against this backdrop, Vietnam has officially entered the pilot phase of its domestic carbon market under Decree No. 119/2025/ND-CP. Large emitters will increasingly need to account for carbon emissions as a production cost component, much like raw materials, electricity, or labor expenses.

Heavy Industries Face Unprecedented Transition Pressures

For high-emission sectors such as cement, steel, thermal power, and chemicals, reducing emissions is not a task that can be completed overnight.

Many businesses continue to operate production facilities that were built decades ago. Replacing technologies, upgrading equipment, or transitioning to cleaner energy sources requires substantial capital investment and lengthy implementation periods.

In the cement industry, solutions such as waste heat recovery for power generation, alternative fuel substitution, or carbon capture, utilization, and storage (CCUS) technologies often require investments worth tens or even hundreds of billions of Vietnamese dong per project.

As a result, during the early stages of carbon market development, many companies are choosing to purchase emission allowances or carbon credits to offset excess emissions rather than immediately undertaking deep technological transformations.

This is also the path followed by many developed economies. In Europe, carbon markets were designed to create economic incentives for gradual industrial transformation rather than imposing abrupt and potentially disruptive emission reduction requirements.

The Underlying Reasons Behind Wide Carbon Credit Price Differences

During the early development of carbon markets, many assumed that one ton of CO₂ reduced anywhere in the world would hold the same value.

International experience has shown otherwise.

The fundamental reason is that today’s market is no longer buying simply “carbon volume”; it is increasingly buying “carbon quality.”

A carbon credit commands a premium only when buyers are confident that the claimed emissions reductions or removals are real, measurable, verifiable, and durable over time.

As a result, international rating agencies and buyers increasingly focus on factors such as:

• Additionality of the project.
• Long-term permanence of emissions reductions or carbon removals.
• Data transparency and traceability.
• The quality of Monitoring, Reporting, and Verification (MRV) systems.
• Social and biodiversity co-benefits.
• The risk of reversal or non-permanence.

For example, a reforestation project supported by rigorous monitoring, biodiversity conservation measures, and local community development programs may command a significantly higher price than a project focused solely on carbon sequestration.

This explains why carbon credits representing the same amount of CO₂ can trade at dramatically different prices across markets.

The World Is Moving from “Carbon Quantity” to “Carbon Quality”

Following a series of controversies surrounding carbon credit quality between 2020 and 2024, international markets have begun to change their approach.

Multinational corporations are no longer prioritizing the cheapest credits available. Instead, they are increasingly seeking independently verified credits that demonstrate genuine environmental impact.

In the aviation sector, carbon credits eligible under the International Civil Aviation Organization’s (ICAO) CORSIA framework often command significantly higher prices than conventional voluntary credits.

Across North America and Europe, credits associated with ecosystem restoration, old-growth forest conservation, and advanced carbon removal technologies are attracting growing investment flows.

This trend highlights a critical reality: the global carbon market is entering a new phase of consolidation and quality differentiation, where project integrity matters more than the sheer volume of credits issued.

Vietnam Faces Significant Opportunities—but Also Major Challenges

Vietnam is widely regarded as one of Southeast Asia’s most promising carbon credit suppliers due to its extensive forest resources, diverse agricultural sector, and strong renewable energy development potential.

However, natural advantages alone do not guarantee successful commercialization.

Experiences from Australia, New Zealand, and Indonesia demonstrate that the true value of carbon credits depends heavily on data quality, emissions measurement capabilities, and market transparency.

Many experts believe that Vietnam’s greatest challenge today is not generating carbon credits but proving their quality according to international standards.

An underdeveloped MRV framework, fragmented emissions data systems, and unresolved questions regarding carbon credit ownership remain key bottlenecks that must be addressed.

If these challenges can be overcome, Vietnam could not only meet domestic compliance needs but also become an increasingly important participant in the global carbon credit supply chain.

A New Competitive Race for Businesses

International experience suggests that carbon markets are not merely environmental policy instruments; they are increasingly becoming tools that reshape industrial competitiveness.

Businesses that delay their green transition may face rising carbon costs, stricter trade regulations, and a gradual loss of competitiveness in major export markets.

Conversely, companies that proactively invest in cleaner technologies, improve energy efficiency, and develop robust emissions management strategies may transform carbon from a cost burden into a valuable financial asset.

In the emerging low-carbon economy, competitive advantage will no longer be determined solely by production costs or company size. Increasingly, it will depend on an organization’s ability to reduce emissions and generate high-quality carbon credits that are recognized and valued by international markets.