Approval of the Scheme for Establishing and developing the carbon market in Vietnam

Deputy Prime Minister Tran Hong Ha has signed Decision No. 232/QĐ-TTg on January 24, 2025, approving the Scheme for Establishing and developing the carbon market in Vietnam.

The overall objective of the Scheme is to develop Vietnam’s carbon market, contributing to the implementation of the greenhouse gas (GHG) emission reduction targets committed under the Nationally Determined Contributions (NDCs) at the lowest cost to businesses and society. The Scheme aims to create new financial flows for GHG emission reduction activities, promote green transition, develop low-emission technologies, enhance the competitiveness of Vietnamese enterprises in both domestic and international markets, foster a low-carbon economy, and proactively respond to climate change, with the ultimate goal of achieving net-zero emissions by 2050.

The Scheme sets a target to gradually build and finalize the legal framework for the trading of allowances, carbon credits, and mechanisms for carbon credit exchange and offsetting before June 2025, ensuring a legal basis for piloting a carbon trading platform and developing the necessary infrastructure to facilitate market operations. The management capacity of state agencies, as well as the awareness and readiness of enterprises, organizations, and individuals, will be improved to ensure their active participation in the carbon market.

Vietnam strives to develop a centralized carbon market (Photo: baochinhphu.vn)

According to the Scheme, tradable assets in the carbon market will include two types: GHG emission allowances, allocated to entities listed under the mandatory GHG inventory sectors specified by the Prime Minister, either free of charge or through auctions. Carbon credits, recognized for trading in the market, including carbon credits generated from domestic programs and projects under Vietnam’s carbon credit exchange and offsetting mechanism, in accordance with national regulations; carbon credits generated from international mechanisms, including carbon credits from the Clean Development Mechanism (CDM), the Joint Crediting Mechanism (JCM), and credits under Article 6 of the Paris Agreement.

Trading of allowances and carbon credits will take place on the domestic carbon trade exchange. The Hanoi Stock Exchange (HNX) is responsible for developing and providing services for this exchange, in compliance with technical and operational requirements set by the Ministry of Natural Resources and Environment (MONRE), in coordination with the Ministry of Finance (MOF) and other relevant ministries and agencies.

The organization of transactions in the carbon market will follow a centralized model through the carbon trade exchange. Allowances and carbon credits verified by MONRE will be assigned a unique domestic identification code to facilitate trading. Participants in the carbon market must have a transaction account for allowances or carbon credits. The registration and issuance of identification codes for allowances and carbon credits will be managed centrally to ensure consistency, data integrity, and regulatory oversight.

The Vietnam Securities Depository and Clearing Corporation (VSDC) will provide custody and clearing services based on technical and market management requirements established by MONRE in coordination with the MOF and other relevant agencies.

Transaction settlements will be conducted automatically, based on trading results provided by the HNX, ensuring that the transfer of assets occurs simultaneously with payment processing at designated commercial banks. Payments for carbon trading transactions will be handled by commercial banks that meet the necessary conditions to provide financial services for allowance and carbon credit trading.

The MONRE will coordinate with the MOF, the Ministry of Agriculture and Rural Development (MARD), the Ministry of Construction (MOC), the Ministry of Industry and Trade (MOIT), the Ministry of Transport (MOT), and other relevant agencies to ensure the effective operation of the domestic carbon market, preventing unregulated or speculative trading that could lead to resource losses, financial instability, or threats to national security and social order.

To achieve the set objectives, the Scheme outlines five groups of tasks and implementation measures, including measures related to tradable assets in the carbon market, measures concerning market participants, measures for the national registry system and carbon trading platform, measures for organizing and operating the carbon market, and measures to enhance awareness and capacity building.

Source: Ministry of industry and trade of the socialist republic of Vietnam