Vietnam has steadily built and refined the legal framework for the operation and development of a carbon market in recent years. Soon after the Law on Environmental Protection 2020 was issued, the government promulgated Decree No. 06/2022/ND-CP on greenhouse gas emission reductions and ozone layer protection. It then issued Decree No. 119/2025/ND-CP, amending and supplementing several articles of Decree No. 06, with more detailed regulations on corporate responsibilities for greenhouse gas inventories and the allocation of emission quotas. 

At the beginning of 2025, the Prime Minister approved a scheme for establishing and developing Vietnam’s carbon market. More than a year on, the country has formed the legal corridor needed to prepare for its launch. 

In early 2026, the government issued Decree No. 29/2026/ND-CP dated January 19, on the domestic carbon exchange. More recently, in early April, Decree No. 112/2026/ND-CP on the international exchange of greenhouse gas emissions reduction outcomes and carbon credits was promulgated by the Prime Minister. 

Foundation for the market

Experts see these regulations as important milestones that complete the legal framework and create the basis for operating and developing a carbon market in Vietnam. Mr. Truong Tu Long, Policy and Law Expert at GREEN IN Vietnam, said the decree on a domestic carbon exchange, which sets out specific trading rules, would be a key missing piece and a foundation for the market’s operation and growth under Decision No. 232/QD-TTg approving the national carbon market development plan. 

Ms. Nguyen Hong Loan, Director of the Green Climate Innovation Co. (GreenCIC), said Decree No. 29 marked a shift from policy design to actual market operation in Vietnam. For the first time, the buying, selling, and transfer of emission quotas and carbon credits are placed within a centralized trading framework with clear rules and State oversight. 

The Ministry of Agriculture and Environment (MAE), in coordination with the Ministry of Finance (MoF), has developed the infrastructure needed to operate a carbon market. According to the Department of Climate Change at the MAE, Vietnam’s carbon market is being organized around three main pillars.

First, greenhouse gas emission quotas apply to 110 of the country’s largest emitters, concentrated in three sectors: thermal power, steel, and cement. Second, a domestic carbon credit mechanism is being built to create credits that can meet corporate demand in the emissions trading system (ETS). Third, foreign investment capital and technology are to be attracted through mechanisms for international carbon credit exchanges. 

Mr. Pham Nam Hung from the Department of Climate Change’s Carbon Market Division said that once Decree No. 112 takes effect, on May 19, 2026, more projects are expected to register, helping attract additional resources. 

Vietnam has designated a pilot phase for the market, from 2026 to 2028, to help businesses become familiar with market operations while allowing regulators to gain experience, develop oversight tools, and complete infrastructure. After the pilot phase, the government will review results and decide on official operations, while also considering links with international carbon markets. 

Mr. Do Thanh Lam, representing the Legal Department at the MoF, said two types of products will be traded on the domestic exchange: greenhouse gas emission quotas, and carbon credits. Emission quotas have already been allocated to the 110 enterprises in the thermal power, steel, and cement sectors. 

With carbon credits, only three categories will be eligible for trading on the domestic exchange: credits generated from domestic exchange and offset mechanisms; credits under Article 6.2 of the Paris Agreement; and credits under Article 6.4 of the Paris Agreement. 

During the pilot period, through the end of 2028, the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation will not charge service fees. 

Financing green growth

Carbon market development has become a global trend and is increasingly viewed as a new financing channel. More than 80 countries and territories worldwide have launched carbon markets, with the global market now exceeding $100 billion in value. That figure is expected to continue rising as more countries establish carbon markets and join international trading activities. 

In Vietnam, the Department of Climate Change said the market’s primary objective is to cut greenhouse gas emissions and fulfill national climate commitments, including Nationally Determined Contributions (NDCs), while supporting the goal of net-zero emissions by 2050. 

Participation in the carbon market can also enhance the competitiveness of Vietnamese businesses, particularly exporters facing increasingly common green standards in international markets. 

Experts said the domestic carbon exchange and the broader carbon market would create an effective carbon pricing mechanism, which would allow businesses to generate additional financial flows through trading activities while encouraging investment in green technologies and emission reductions. 

Research estimates that operating a domestic carbon market could help businesses cut compliance costs by $400 million to $800 million, freeing funds for greenhouse gas reduction technologies. If Vietnam participates in international carbon markets, it could attract between $500 million and $2 billion in climate finance and green transition support. 

Ms. Loan said the carbon exchange is not merely a compliance tool but also represents new economic infrastructure for the green transition. A centralized, transparent, and supervised trading mechanism can reduce transaction costs, limit legal risks, and build trust among businesses and investors. 

She added that market-based pricing and resource allocation would channel capital toward projects delivering real emissions reductions. Companies and projects with lower abatement costs would gain a competitive advantage, encouraging technological innovation and stronger emissions management. 

However, to fully capture these benefits, businesses need to prepare in terms of awareness, technical capacity, governance capability, and participation strategies. 

The MoF also urged relevant entities to proactively prepare matters regarding legal compliance, governance, and technical infrastructure. Businesses allocated emission quotas or holding carbon credits should study the legal framework carefully and develop structured quota and credit management plans. 

Companies should also build suitable trading strategies to optimize compliance costs, weighing whether to participate in the market or invest directly in green transformation and emissions reductions. Experts said businesses with smart strategies would be able to join the market at optimal cost while generating financial benefits. 

Carbon market development has become a global trend and is increasingly viewed as a new financing channel. More than 80 countries and territories worldwide have launched carbon markets, with the global market now exceeding $100 billion in value. That figure is expected to continue rising as more countries establish carbon markets and join international trading activities.