What are the financial risks that SMEs need to be aware of (e.g., price volatility, increased verification costs)?

Small and Medium-sized Enterprises (SMEs) participating in the carbon credit market need to pay special attention to a range of financial risks that could affect the feasibility and investment efficiency of their projects. Firstly, the risk of carbon credit price volatility is one of the biggest challenges. In the Voluntary Carbon Market (VCM), prices can fluctuate sharply depending on the type of credit, the certification standard (such as Verra, Gold Standard), and accompanying factors like sustainability benefits. According to a report by Ecosystem Marketplace (2025)65, Verra credit prices have fluctuated from USD 3 to USD 15, and at times even dropped below USD 2. To mitigate this risk, SMEs should consider signing forward contracts and choosing high-standard projects that come with clear social and environmental co-benefits.

Secondly, the costs for the Measurement, Reporting, and Verification (MRV) process are often higher than anticipated. Expenses such as baseline establishment, Project Design Document (PDD) preparation, periodic monitoring, and independent verification can result in costs of up to USD 15,000-40,000 for SMEs over a 5-year cycle (Verra, 2023). The solution is for SMEs to allocate an additional 20–30% budget contingency and utilize the grouped project approach to share costs.

Thirdly, the current low liquidity of the domestic market makes selling carbon credits difficult. The lack of an official exchange in Vietnam increases the risk of credits being inventoried or sold at a loss. Therefore, SMEs should proactively seek partners early, sign Power Purchase Agreements (PPAs), or connect with international platforms such as AirCarbon Exchange or South Pole.

Furthermore, policy change is a major risk given that Vietnam's Emissions Trading System (ETS) is currently in the pilot phase. Changes in quotas, technical standards, or legal regulations could cause some credits to lose value. Businesses should regularly monitor information from the Ministry of Agriculture and Environment, participate in policy forums, and prioritize highly linkable international standards such as JCM, VCS, or Gold Standard.

Finally, risks related to transparency and ethics are also noteworthy. If a project is suspected of lacking additionality or being involved in greenwashing, the credits will be difficult to accept in the market. SMEs should ensure transparency throughout the entire cycle, use reputable verification bodies, and link projects to Sustainable Development Goals (SDGs).66 67 68

References

65. Ecosystem Marketplace. (2025). State of the Voluntary Carbon Markets Report 2023. Ecosystem Marketplace. https://www.ecosystemmarketplace.com/publications/state-of-the-voluntary-carbon-market-report-2023/
66. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). (2025). Just transition in action. GIZ Viet Nam. https://www.giz.de/en/downloads_els/Just%20Transition%20in%20Action%20-%20GIZ%20Viet%20Nam.pdf
67. World Bank. (2024). Viet Nam receives $51.5M World Bank payment for reducing emissions through forest preservation. World Bank. https://www.worldbank.org/en/news/press-release/2024/03/21/viet-nam-receives-51-5m-world-bank-payment-for-reducing-emissions-through-forest-preservation
68. Industry and Trade Magazine. (2025). Awareness of carbon credits among small and medium-sized enterprises in Thai Nguyen province. Tạp chí Công thương. https://tapchicongthuong.vn/nhan-thuc-ve-tin-chi-carbon-cua-cac-doanh-nghiep-nho-va-vua-tren-dia-ban-tinh-thai-nguyen-122986.htm