Dr. Nguyen
Nhat Ha Chi, ESG Manager, Dragon Capital
The
Vietnamese Government has made significant progress in promoting the benefits
of a carbon market, in particular following the commitment made by Prime
Minister Pham Minh Chinh at COP 26 to reach net-zero emissions by 2050. Since then,
the legal framework has been continually refined, amending and supplementing key
provisions such as raising the offset limit to 30 per cent from the previous 10
per cent, expanding market participation, and clearly defining eligible offset project
types.
In
parallel, the government has published a list of more than 2,000 entities required
to conduct greenhouse gas inventories; the core participants in the mandatory carbon
market. Early this year, it approved the Scheme on the establishment and development
of the carbon market in Vietnam with a three-phase roadmap, aiming for full nationwide
operations by 2029.
Alongside
regulation, authorities have actively rolled out training programs to build capacity
for participating businesses, focusing on guiding greenhouse gas inventory processes
and helping enterprises understand how the market operates.
For
the carbon market to operate effectively, it is essential to establish highly-liquid
carbon commodities to attract the broad participation of buyers, sellers, and other
stakeholders. This requires accelerating the completion of the legal framework and
technical infrastructure, along with clear mechanisms to encourage the
involvement of the private sector and financial institutions. Strengthening enterprises’
capacity for measurement – reporting – verification (MRV) should also be prioritized
to ensure transparency and efficiency in market operations.
We
hope the government will be more decisive in meeting set timelines, enabling Vietnam
to swiftly operationalize its carbon market and seize opportunities from trends
in global emissions reductions.
Commodities
are the backbone of any market, and for Vietnam’s carbon market, two main types
will be traded: emission allowances and carbon credits. In the early stages, while
allowances are still allocated free of charge, carbon credits will be a more flexible
commodity for private-sector transactions.
The
top priority is to promote projects that generate high-quality carbon credits. Currently,
in the absence of domestic legal frameworks and standards, projects should temporarily
adopt international standards to meet market requirements and attract buyers. At
the same time, Vietnam needs to expedite the issuance of national standards and
project approval procedures, as well as develop a domestic team of validators and
approvers to reduce verification costs and enhance the competitiveness of Vietnamese
carbon credits.
Additionally,
liquidity should be boosted by expanding international cooperation agreements to
trade credits under Articles 6.2 and 6.4 of the Paris Agreement. Rapidly signing
and implementing action plans with countries such as Singapore, Switzerland, Japan,
and South Korea will help broaden the buyer network, increase demand, and raise
the value of carbon credits.
In
the longer term, when allowances are allocated through auctions and more strictly
capped, the private sector will have opportunities to trade allowances more flexibly,
adding another source of commodities to the market.
Mr.
Le Quang Linh, Carbon Finance Expert, Consultancy on Development Institute (CODE)
Vietnam
is emerging as a bright spot on the global carbon market map. In 2023, the country
successfully transacted 10.3 million metric tons of CO₂ emission reduction results
with the World Bank, earning $51.5 million and securing a place among the top 15
largest sellers of carbon credits worldwide. It is estimated that annual revenue
from this activity could reach $300 million, creating a major opportunity to advance
the green economy.
However,
to turn potential into tangible results, Vietnam must address significant challenges
in legal frameworks, technology, finance, and public awareness.
On
the legal front, there is still no unified, clear regulation on procedures for trading,
managing, monitoring, and the ownership of carbon credits. Overlapping risks among
tax policies, fees, and mechanisms for transferring emission reduction results make
it difficult for businesses to plan long-term and reduce the market’s attractiveness
among international investors.
In
terms of technology and measurement – reporting – verification (MRV), Vietnam has
yet to master carbon credit conversion technologies and remains largely dependent
on imports. National capacity in greenhouse gas inventories, MRV, and the verification
of emission reduction results is still limited and does not yet meet international
standards.
Moreover,
waste-to-energy (WTE) projects require significant upfront investment, while waste
remains largely unsorted at the source, directly affecting operational efficiency.
Large-scale biochar production projects also face challenges due to the lack of
an industrial foundation and a stable supply of raw materials.
Meanwhile,
awareness of waste sorting, the full utilization of agricultural by-products, and
climate action remains limited. The majority of businesses and communities do not
fully understand how the carbon market operates or the financial and commercial
opportunities it offers.
Another
challenge is environmental integrity risk. Ensuring additionality and avoiding double
counting is essential, particularly in bilateral transactions under Article 6.2
of the Paris Agreement, but remains a challenge for Vietnam.
To
overcome these barriers, I believe Vietnam must implement a coordinated set of solutions.
First, improve the legal and policy framework:
issue detailed guidelines on trading, managing, monitoring, and the ownership of
carbon credits; and clearly define the market model (voluntary, compliance, or hybrid)
to ensure stability and attract long-term investment.
Second, enhance technology and MRV capacity:
invest in domestic research and development; engage in international cooperation
to transfer advanced technologies, especially in WTE, large-scale biogas, and biochar;
and develop an MRV system that meets international standards.
Third, mobilize green finance and develop
innovative financial mechanisms such as blended finance, credit guarantees, and
risk mitigation instruments; and strengthen cooperation with organizations such
as the World Bank, the Green Climate Fund, the Asian Development Bank, and other
international climate funds.
Fourth, raise awareness and encourage
business participation: step up community outreach and education on the benefits
of carbon projects and waste sorting at the source; and support businesses through
training, advisory services, and policy incentives.
Fifth, improve the carbon credit registry
system: establish and operate a national registry to manage the creation, transfer,
and cancellation of Internationally Transferred Mitigation Outcomes (ITMOs), ensuring
transparency and avoiding double counting.
Active
participation in mechanisms under Article 6 of the Paris Agreement will help Vietnam
mobilize international resources in both finance and technology, while safeguarding
environmental integrity. Decree No. 119/2025/ND-CP has laid an important legal foundation,
but to fully unlock potential, Vietnam needs a comprehensive strategy spanning institutions,
technology, finance, and communication.
If
pursued in the right direction, I believe Vietnam will not only meet its climate
goals but also turn climate action into a driver of sustainable economic growth,
affirming its pioneering role in the green transition.
Mr.
Truong Tu Long, Climate and Sustainability Lawyer and Legal and Policy Expert, GREEN
IN Vietnam
When
the carbon market is introduced in Vietnam, many new opportunities will open up
but not for all businesses.
I
believe the main opportunities belong to two groups. The first consists of major
emitters that have taken the lead in reducing greenhouse gas emissions in production
to lower compliance costs. These companies are allocated a certain number of emission
allowances by the government. If their actual emissions exceed the allocated allowances,
they must purchase additional allowances or carbon credits to compensate.
Conversely,
if a company implements emission reduction measures and its emissions are lower
than its allocated allowances, it has the right to sell the surplus on the market.
In this case, the company enjoys a dual benefit, reducing compliance costs while
generating additional revenue.
The
second group includes companies with the potential to develop carbon credit projects.
These opportunities arise from a wide range of ideas, from advanced technologies
such as renewable energy production and atmospheric carbon capture to agricultural
solutions like low-emission rice cultivation or improving livestock feed. Recently,
we have even been advising a company with an idea to generate carbon credits from
insect farming.
Thanks
to financing from the carbon market, ideas that once seemed impractical now have
the chance to become reality.
Based
on international experience, the earliest pioneers are often the ones who benefit
most from the carbon market. To participate in the carbon market confidently and
to take full advantage of the opportunities, businesses must first understand the
market’s operating mechanisms clearly and comprehensively, avoiding both excessive
optimism and extreme skepticism.
Tasks
such as reducing emissions at factories or developing carbon credit projects require
high expertise and complex processes. Therefore, companies need a skilled team with
the necessary technical capacity to manage these activities.
In
addition, businesses should develop an appropriate emissions reduction strategy,
starting with assessing their current emissions, identifying “hotspots” in the production
chain and finding ways to mitigate them. Sometimes, millions of dollars are hidden
in the by-products of a company’s own production processes.
Currently,
many companies have proactively studied the feasibility and piloted carbon credit
projects, but most still rely on international standards such as Verra or the Gold
Standard.
Therefore,
I hope that Vietnamese regulators will soon issue a set of national standards and
methodologies for carbon credit creation so that project developers have a clear
basis for implementation. At the same time, to avoid “reinventing the wheel”, we
could fully recognize widely-applied international standards and methodologies,
similar to what the Indonesian Government has done.
Ms.
Nguyen Kieu Trang, Senior Project Manager in Vietnam, FCC Partners Asia
Vietnam’s
natural assets and economic structure give it strong potential for carbon reduction
projects, especially in forestry, where forest coverage exceeds 42 per cent, or
nearly 15 million ha, enabling REDD+ and reforestation initiatives.
In
2023, the country sold 10.3 million forest carbon credits to the World Bank for
over $51 million, revealing the sector’s revenue potential.
Agriculture
is another key area, with large-scale low-emission rice farming pilots in the Mekong
Delta using alternate wetting and drying, by-product reuse, and optimized fertilization
to cut methane emissions. Solid waste management, via waste-to-energy and biogas,
also reduces pollution and produces tradable carbon credits.
I
believe the carbon market serves as a supplementary financial mechanism to mobilize
resources beyond the State budget, especially from the private sector and international
partners. With the development of the voluntary carbon credit market and preparations
for launching the mandatory carbon market (ETS), Vietnam is opening a new investment
channel for emission reduction projects.
According
to estimates from international organizations, Vietnam’s carbon market could reach
a scale of $500 million to $1.2 billion by 2030, with the potential to reduce 146-167
million metric tons of CO₂ annually.
For
businesses, participation lowers compliance costs, opens green finance access, enhances
branding, and supports ESG (environmental, social, and governance) compliance. Companies
can sell credits from internal projects or buy them to offset excess emissions,
creating flexibility and cost optimization.
To
effectively seize opportunities from the carbon market, I believe three key groups
of solutions must be implemented simultaneously.
First,
businesses need to proactively conduct greenhouse gas inventories, develop long-term
emission reduction strategies, and select suitable models to generate tradable carbon
credits. This is a critical foundation for preparing to join the mandatory ETS from
2025.
Second,
the government needs to complete the legal framework, particularly regulations related
to measurement – reporting – verification (MRV); ownership rights for carbon credits;
mechanisms for allowance allocation and auctions; and processes for resolving disputes
and violations.
Third,
a national carbon credit trading platform should be established soon to create a
transparent and accessible market for all businesses. At the same time, policies
should support small and medium-sized enterprises (SMEs), including green credit,
technical training, and access to climate investment funds such as the Green
Climate Fund and the Just Energy Transition Partnership, or financing from international
organizations like the World Bank and the Asian Development Bank.
If
implemented effectively, these steps will make the carbon market a strategic driver
of both net-zero targets and green economic growth.
Mr.
Nguyen Tien Hai, Director, PoA Carbon Vietnam Management JSC
Vietnam’s
carbon market has two types: compliance and voluntary. Historically, the compliance
market, mainly under the Clean Development Mechanism (CDM), dominated, but demand
has always been the key bottleneck. While Vietnam registered over 270 CDM projects,
only about 80 recorded transactions, and just a handful sold credits multiple times.
The 30 per cent success rate was largely due to difficulties securing reputable
buyers.
The
CDM market peaked from 2007-2011, with prices above $25 per credit, but after the
Kyoto Protocol’s first commitment period ended in 2012, prices collapsed to as low
as $0.15; below production costs.
In
the voluntary market, carbon credit projects are developed and registered under
mechanisms such as the Gold Standard (GS), the Verified Carbon Standard (VCS), and,
more recently, the Global Carbon Council. This market began to grow after 2012.
Vietnam now has over 120 registered voluntary projects, about 70 per cent of which
have traded credits, far outperforming the compliance market.
Though
many domestic activities have the potential to reduce greenhouse gas emissions,
developing them into carbon credit projects is not easy. Current registration criteria
are strict, requiring proof of additionality, the early consideration of credit
benefits, demonstration of financial or technical barriers, and evidence that the
project is not common practice. As a result, the number of successfully-registered
projects and credits issued for Vietnam remains limited.
The
biggest challenge for project owners is finding reputable buyers. Many projects
are successfully registered but are never verified for credit issuance, or credits
are issued but remain unsold.
Rules
for carbon credit mechanisms are becoming stricter. Previously, renewable energy
projects could be developed and registered for carbon credits, but now some mechanisms
have tightened requirements, VCS has excluded renewable energy types such as hydropower,
solar, and wind, while GS only accepts renewable electricity projects if that type
accounts for less than 5 per cent of total installed capacity in the system.
As
a result, project developers in Vietnam will need to shift to other types such as
afforestation, alternate wetting and drying in rice cultivation, improved cooking
stoves, water filtration systems, and other social projects. However, these social
projects often involve high development, validation, verification, monitoring, and
management costs, while generating relatively few credits, making profit margins
low.
I
believe the potential for developing and issuing new carbon credits will narrow
over time. New technologies such as carbon capture and storage require high investment
costs; the shift to hydrogen in the energy sector is expensive; and offshore wind
projects have very high capital requirements. Due to these high costs, the number
of feasible projects will be limited, reducing overall credit potential.
Even
forestry projects face stricter criteria for new plantations, limiting their credit
potential. In all cases, proving additionality is increasingly demanding.
That
said, private enterprises still hold strong potential to drive market and project
development. Once they clearly see the benefits of carbon credit projects, they
will be more proactive in implementation. To create momentum, the government should
promptly issue legal frameworks, such as a decree on international trading of greenhouse
gas mitigation outcomes and carbon credits under Articles 6.2 and 6.4 of the Paris
Agreement, while allocating allowances at reasonable levels and allowing partial
use of credits for offsetting. This will create market demand, which in turn stimulates
supply.
To
build supply, Vietnam should quickly establish and operate a national registry for
greenhouse gas emission allowances and carbon credits; approve mechanisms, methodologies,
and eligible project types; and provide clear guidance for domestic project development.
In
addition, there should be incentives for high-impact emission reduction projects,
such as tax breaks, preferential pricing (similar to past renewable energy feed-in
tariffs), concessional loans, foreign investment attraction, and private sector
engagement.
To
advance the carbon market, the Ministry of Finance has drafted a decree on a domestic
carbon trading platform. The domestic market is expected to begin pilot operations
until the end of 2028. However, much remains to be done to generate tradable products
for this exchange.
Mr. Nguyen Hoang Nam. Environmental, Social &
Governance (ESG) Leader and Partner, Assurance Services, PwC Vietnam
Vietnam is making strategic progress in developing a carbon market, which
is central to its net-zero emissions by 2050 goal. The government’s phased approach
began with this year’s Decision No 232/QD-TTg, which outlined a roadmap from piloting
carbon trading in 2025 to launching a full-scale national market by 2029. This gradual
rollout allows time to build institutional capacity and refine mechanisms.
A key recent milestone is Decision No 21/2025/QD-TTg, introducing Vietnam’s
green taxonomy. Effective from August, it defines environmental criteria across
seven sectors and sets up a verification system, enhancing transparency and investor
confidence while facilitating carbon credit generation and access to green finance.
Beyond policy, Vietnam is also implementing practical measures: establishing
a national carbon exchange via the Hanoi Stock Exchange, building a registry system,
and offering training and incentives for businesses to adopt low-emission practices.
International collaboration and private sector engagement have also been encouraged
to support carbon credit platforms and eco projects.
While challenges remain, particularly in measurement – reporting –
verification (MRV) systems, market liquidity, and private sector readiness, Vietnam’s
carbon market development is ambitious, well-structured, and gaining momentum. The
government’s integrated strategy reflects strong climate leadership and long-term
vision.
Driving private sector engagement in Vietnam’s carbon market requires a strategic
blend of domestic policy and international best practices.
To begin with, establishing a clear and adaptive regulatory framework is fundamental.
International examples show that transparent and enforceable rules, aligned with
global standards like Article 6 of the Paris Agreement, build investor confidence
and market credibility. The government’s recent decrees and pilot programs are positive
steps, but consistent enforcement and transparency are key.
In addition, capacity building plays a pivotal role. Many Vietnamese enterprises,
particularly SMEs, lack the technical expertise to engage effectively. Global experience
highlights the value of targeted training programs and stakeholder engagement to
close this gap.
Moreover, financial incentives and risk mitigation are essential. Lessons from
the Kyoto Protocol era emphasize the need for predictable carbon pricing and access
to green finance. Mechanisms such as blended finance and public guarantees can help
de-risk private investments and stimulate participation.
Equally important is institutional coordination. Successful carbon markets
rely on strong collaboration across ministries, especially the Ministry of Agriculture
and Environment, the Ministry of Finance, and the Ministry of Foreign Affairs, to
ensure policy coherence and facilitate international transactions.
Lastly, Vietnam should leverage international standards and verification systems
to build trust and ensure quality. Robust monitoring, reporting, and third party
validation are critical to aligning with global expectations and attracting foreign
investment.
By addressing these priorities, Vietnam can unlock private sector innovation,
drive green growth, and accelerate its transition to a low carbon economy.
