Vietnam approves plan to establish carbon market

27 February 2025

On 24 January 2024, Vietnam issued Decision No. 232/QD-TTg approving the establishment and development of a carbon market (“Decision 232”). Decision 232 came into effect on issuance.

Decision 232 sets out its objectives as being to:

  • develop a carbon market in Vietnam;
  • contribute to the implementation of Vietnam’s greenhouse gas (“GHG”) emission reduction target as committed in its Nationally Determined Contribution at low cost for businesses and society;
  • create new financial flows for greenhouse gas emission reduction activities;
  • promote green transformation;
  • develop low-emission technology;
  • contribute to improving the competitiveness of Vietnamese enterprises domestically and in the world market;
  • develop a low-carbon economy; and
  • proactively respond to climate change, towards achieving net zero emissions by 2050.

This article provides an overview of Vietnam’s plan to develop its carbon market.

Structure of Vietnam’s carbon market

Vietnam’s carbon market will be centralised and government-regulated and will trade in the following primary market commodities:

  • GHG emission quotas: GHG emission quotas will be allocated to regulated emitters. These regulated emitters include GHG emitters and enterprises operating in emitting sectors (collectively, “Emitters”). The current list of Emitters is set out in Decision 13/2024/QD-TTg and this list will be updated every two years.

The quotas will be allocated either for free or through auction.

  • Certified carbon credits: Carbon credits eligible for trading on the carbon market can be generated from domestic and international projects, including those from mechanisms such as Article 6 of the Paris Agreement and the Clean Development Mechanism. Eligible trading entities include:
    • Emitters with allocated emission allowances; and
    • Entities and individuals eligible to participate in the investment and trading of carbon credits pursuant to relevant laws.

Decision 232 provides that a National Registration System for these commodities will be developed by the Ministry of Natural Resources and Environment (“MONRE”). MONRE will also be in charge of activities relating to the borrowing, repayment, transferring, and offsetting of GHG quotas.

Trading of GHG emissions quotas and carbon credits is carried out on domestic carbon exchanges. The Hanoi Stock Exchange has been appointed to establish and operate a domestic carbon exchange. Carbon trading will be centralised, with emission quotas and carbon credits verified by MONRE and assigned unique identification codes. To participate in Vietnam’s carbon market, an entity must have a depository account for trading GHG emission quotas or a depository account for trading carbon credits.

The registration and issuance of codes for GHG emission quotas and carbon credits are carried out centrally to ensure that data is unified, synchronised and meets management and monitoring requirements.

The Vietnam Securities Depository and Clearing Corporation will handle registration, depository, and payment services. Automated systems will process payments based on trade results, ensuring simultaneous asset transfer and payment settlement via qualified commercial banks.

Timeframe

Decision 232 sets out Vietnam’s goals according to a timeframe spanning 2025 to 2029.

Period

Goals

Up to June 2025

·         Gradually build and perfect the legal framework for the exchange of greenhouse gas emission quotas, carbon credits, and the mechanism for exchanging and offsetting carbon credits, ensuring the legal basis for the pilot implementation of the carbon trading platform.

·         Build infrastructure to serve the requirements when the carbon market officially operates.

June 2025 - End of 2028

·         Continue to build and complete the infrastructure to serve the organisation and operation of the carbon market.

·         Pilot operation of the domestic carbon trading platform. Transfer of carbon credits and GHG emission reduction results to foreign and international partners is studied, specifically regulated in legal documents and considered and decided by competent authorities.

·         GHG emission quotas are studied and considered for free allocation to emitters in a number of large emission sectors. The ratio of carbon credits used to offset GHG emissions to the total GHG emission quota allocated is determined.

·         Carbon credits are confirmed for trading on the carbon exchange, including carbon credits obtained from programs and projects under the domestic carbon credit exchange and offset mechanism, the Clean Development Mechanism, the Joint Credit Mechanism, and the Mechanism under Article 6 of the Paris Agreement.

·         Continue to improve the management capacity and organisation of carbon market operations of state management agencies, as well as the capacity and awareness of enterprises, organisations, and individuals to meet the requirements when the carbon market officially operates.

From 2029 onwards

·         Officially operate the domestic carbon trading platform.

·         The sectors and facilities allocated GHG emission quotas are studied and considered for expansion.

·         Consideration given to adding types of certified carbon credits to trade on the carbon exchange.

·         Consideration given to expanding the subjects allowed to participate in carbon credit transactions on the carbon exchange.

·         Consideration given to connecting the domestic carbon market with regional carbon markets and the world carbon market, including the possibility of transferring carbon credits and sharing the results of GHG emission reduction with foreign partners.

·         Strengthen the capacity and awareness of enterprises, organisations, and individuals to meet new period requirements.

 

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