Hanoi (VNA) – Vietnam is entering a new phase in developing its carbon market by launching domestic trading of greenhouse gas emission allowances and carbon credits, creating a market-based mechanism to drive emissions reduction, foster technological innovation, and strengthen business competitiveness as the country transitions towards a green economy.
Building the foundation for a carbon market
The Ministry of Finance (MoF) and the Ministry of Agriculture and Environment (MAE) have officially launched Vietnam's domestic carbon exchange, marking a major milestone in the country's efforts to establish a carbon market. Beyond supporting Vietnam's goal of achieving net-zero emissions by 2050, the exchange provides businesses with a mechanism to proactively manage emissions by trading emission allowances and carbon credits.
Nguyen Tuan Quang, Deputy Director of the MAE’s Department of Climate Change, said the market's technical infrastructure comprises three key components: the national registry for greenhouse gas emission allowances and carbon credits, the carbon trading platform, and the repository and settlement system.
Alongside infrastructure development, the Government has approved a pilot greenhouse gas emission allowance cap for the 2025–2026 period and allocated more than 511 million tonnes of CO₂ equivalent to 110 facilities. This forms the initial supply for Vietnam's domestic carbon market.
Under the cap-and-trade mechanism, businesses exceeding their allocated emission allowances must purchase additional allowances or use carbon credits to offset excess emissions, while those that cut emissions beyond their targets can sell surplus allowances.
Carbon credits, meanwhile, are generated through projects that deliver additional emissions reductions or greenhouse gas removals, including afforestation and forest restoration, renewable energy development, and waste treatment.
Transparency key to building market confidence
Experts say the launch of the trading platform is only the first step. The long-term success of the market will depend on a transparent system backed by robust measurement, reporting and verification (MRV) standards to ensure every transaction reflects genuine emissions reductions.
During the initial phase, the market will focus on high-emitting sectors such as thermal power, cement and steel production. Over the longer term, many experts have proposed gradually introducing auctions for emission allowances to better reflect the true cost of carbon while generating resources to support the green transition.
According to Tran Duc Phu of the Foreign Trade University, Vietnam currently has around 116 carbon projects at various stages of development, including 40 that have already been certified, with annual carbon credit issuance estimated at about 10.7 million credits. However, most of these credits are still sold to international buyers, while improvements are needed in the MRV system and benefit-sharing mechanisms to strengthen investor confidence.
From the business perspective, Doan Hong Nhung of the University of Law under the Vietnam National University, Hanoi, said complex MRV requirements, limited digital infrastructure and an incomplete carbon credit database have increased compliance costs, particularly for small and medium-sized enterprises. She called for standardised MRV procedures, a centralised carbon registry, measures to prevent double counting of credits, and stronger incentives such as green finance and tax preferences.
Meanwhile, Phan Duy Hoa of the Foreign Trade University noted that carbon credits have yet to be clearly recognised as property rights under Vietnamese law, making it difficult for businesses to transfer, account for or use them as collateral to access green financing. Establishing a clear legal status for carbon credits, he said, will help unlock the market's full potential.
As climate-related trade measures such as the EU's Carbon Border Adjustment Mechanism (CBAM) increasingly affect exports, a transparent domestic carbon market supported by verified emissions data will help businesses adapt, reduce compliance costs and enhance competitiveness. Without transparency and market confidence, however, carbon trading risks becoming a transactional exercise rather than an effective driver of real emissions reductions./.
