Developing a Carbon Credit market in Vietnam

On January 24, 2025, the Vietnamese Government issued Decision No. 232/QD-TTg approving the Project on Establishing and Developing a Carbon Market in Vietnam. This is a strategic decision aimed at fostering the development of a domestic carbon market while addressing existing bottlenecks.

Overall Objectives

Develop a carbon market in Vietnam to support the country's Nationally Determined Contribution (NDC) target of reducing greenhouse gas emissions at a low cost, and to generate new financing for emission reduction activities.

Promote a green transition, develop low-emission technologies, enhance the competitiveness of enterprises, foster a low-carbon economy, and respond to climate change, aiming for net-zero emissions by 2050.

Roadmap for Carbon market development

Period until June 2025 - completing the legal framework

• Gradually build and perfect the legal framework for the trading of greenhouse gas emission allowances, carbon credits, and mechanisms for credit trading and offsetting, ensuring a legal basis for the pilot implementation of a carbon exchange.

• Develop the infrastructure for market operation. Enhance the capacity of state management agencies to manage and operate the carbon market, as well as the capacity and awareness of enterprises, organizations, and individuals to participate in this market.

Period from 2025 to 2028 - pilot implementation of carbon markets nationwide

• Pilot the operation of a nationwide carbon exchange.

• Continue to perfect the system of legal documents serving the organization and operation of the carbon market.

Period from 2029 - official operation nationwide

• The sectors and facilities allocated greenhouse gas emission allowances will be considered for expansion according to a roadmap.

• Consider adding more types of verified carbon credits for trading on the exchange.

Goods on the Vietnamese Carbon market

- Greenhouse gas emission allowances: Allocated to entities in the list of sectors and facilities that must conduct greenhouse gas inventories, as stipulated by the Prime Minister, through both free allocation and auction methods.

- Verified carbon credits traded on the market

• Carbon credits obtained from programs and projects under the domestic credit trading and offsetting mechanism, in accordance with the law.

• Carbon credits obtained from programs and projects under international credit trading and offsetting mechanisms (Clean Development Mechanism - CDM; Joint Crediting Mechanism - JCM; Article 6 of the Paris Agreement).

Entities participating in transactions in the carbon market

- For greenhouse gas emission allowances: Entities in the list of sectors and facilities that must conduct greenhouse gas inventories, as stipulated by the Prime Minister, and to which greenhouse gas emission allowances are allocated.

- For carbon credit trading

• Entities in the list of sectors and facilities that must conduct greenhouse gas inventories, as stipulated by the Prime Minister, and to which greenhouse gas emission allowances are allocated.

• Organizations implementing programs or projects under the domestic credit trading and offsetting mechanism, or implementing programs or projects under international credit trading and offsetting mechanisms, in compliance with Vietnamese law.

• Organizations and individuals eligible to participate in carbon credit investment and trading activities.

Lessons from other Countries

• China - The world's largest emitter: Launched its national carbon market in 2021. However, China has encountered numerous challenges, particularly with the lack of synchronization in the Measurement, Reporting, and Verification (MRV) system, leading to a lack of data reliability. Additionally, keeping carbon credit prices low to reduce the burden on enterprises has unintentionally discouraged them from improving their technology.

• South Korea: Implemented its carbon market in 2015 but faced strong opposition from industries such as chemicals and automobiles, as businesses feared that the cost of purchasing carbon credits would reduce their competitiveness. To address this issue, the South Korean government provided financial support and tax reductions to businesses while organizing communication programs to raise awareness about the long-term benefits of participating in the market.

• Thailand: Began piloting a voluntary carbon market from 2013-2015. However, Thailand struggled to build a transparent and reliable MRV system. One of Thailand's biggest challenges was the lack of consistency in managing emissions data.

Significant opportunities from Decision No. 232/QD-TTg

• Enable Vietnam to leverage the carbon market as a strategic tool to achieve its Net Zero commitment by 2050.

• Opportunity to build a domestic carbon credit market and prepare Vietnam to participate more deeply in the international market, attracting financial resources from developed countries, based on the unified principles from COP 29.

• This decision strives to address issues by setting a clear timeline for building a world-class MRV system, ensuring that emissions data is measured, reported, and verified in a consistent and transparent manner.

The carbon market is an effective tool for Vietnam to achieve its Net Zero goal and sustainable development. However, the road ahead is still fraught with challenges. By combining lessons from other countries, the legal framework from COP 29, and the highlights of Decision No. 232/QD-TTg, Vietnam has a significant opportunity to build an effective carbon market, achieve its Net Zero goal, and contribute positively to the global fight against climate change.

References

An T. (n.d.). Sắp vận hành thí điểm thị trường carbon tại Việt Nam. VietNamNet News. https://vietnamnet.vn/sap-van-hanh-thi-diem-thi-truong-carbon-tai-viet-nam-2366473.html

Huy M. (2025, January 25). Việt Nam sẽ thí điểm sàn giao dịch carbon từ 2025, vận hành chính thức vào 2029. Nhịp Sống Kinh Tế Việt Nam & Thế Giới. https://vneconomy.vn/techconnect//viet-nam-se-thi-diem-san-giao-dich-carbon-tu-2025-van-hanh-chinh-thuc-vao-2029.htm

Thanh T. (2025, February 6). Hai loại hàng hóa được giao dịch trên thị trường carbon Việt Nam. Tin Tức moitruong.net.vn. https://moitruong.net.vn/hai-loai-hang-hoa-duoc-giao-dich-tren-thi-truong-carbon-viet-nam-80726.html

Vinh P. (2025, January 31). Phát triển thị trường carbon, Việt Nam cần tham khảo gì từ các nước đi trước? Tạp Chí Kinh Tế Sài Gòn. https://thesaigontimes.vn/phat-trien-thi-truong-carbon-viet-nam-can-tham-khao-gi-tu-cac-nuoc-di-truoc/