Vietnam’s commitment to achieving net-zero emissions by 2050 is not only an international obligation but also a catalyst for transforming the country’s growth model and strengthening the competitiveness of its economy. It should be viewed as a “priority pass” that enables Vietnamese businesses to compete more effectively in global markets.
The carbon credit market should be recognized as a new driver of economic development. As green development requirements increasingly become the standard for international trade, carbon markets are emerging as a new global marketplace, generating financial resources to accelerate technological innovation and enhance business competitiveness.
Vietnam has been among the pioneering countries in implementing international climate agreements and has established the institutional framework that serves as a prerequisite for developing a carbon market. However, significant work remains to ensure the market develops sustainably, with strong accountability, transparency, and credibility in the eyes of the international community.
In particular, quality must be the cornerstone of every carbon credit project. As international requirements become more stringent, Vietnam needs to build a modern system of tools to strengthen verification capacity and ensure the transparency of emissions reduction outcomes.
Businesses and the private sector must be at the center of the green transition. Companies are the ones that develop emissions reduction projects, generate carbon credits, and directly enhance the competitiveness of Vietnam’s economy in international markets.
The development of the carbon market will require close coordination between the government, businesses, and international partners. International cooperation will continue to play a critical role. The experience, financial resources, technology, technical assistance, and advisory support provided by international organizations will help Vietnam accelerate the development of its carbon market and integrate more quickly into the global carbon trading system.
I am confident that with the government’s strong commitment, together with the support of the scientific community, international organizations, and the business sector, Vietnam will gradually build a transparent, efficient carbon market that is well integrated with international markets. Such a market will make a meaningful contribution to the country’s net-zero target by 2050 while creating a new engine of economic growth for Vietnam.
*
Mr. Pham Nam Hung, Representative from the Carbon Market Division at the Department of Climate Change under the Ministry of Agriculture and Environment
Having been involved in drafting Vietnam’s legal framework on greenhouse gas emissions reduction and carbon credits, I have seen a fundamental shift in the country’s approach to carbon market governance over the past decade. We have moved from the perspective of a learner to that of a proactive market participant.
The recently-issued Decree No. 112/2026/ND-CP reflects the government’s role in creating the most flexible and business-friendly environment possible. Around ten years ago, regulations were primarily focused on administrative oversight. Today, that thinking has evolved. Carbon credit projects are now recognized as a tool for reducing emissions and delivering Vietnam’s Nationally Determined Contribution (NDC). The new policy framework provides businesses with stronger incentives and a clearer pathway to participate in the carbon market.
The legal framework has also advanced more quickly than many expected. Though the Paris Agreement was adopted in 2015, the implementation guidance for Article 6 was not finalized until COP29 in Baku, Azerbaijan, in December 2024. Even before those rules were completed, however, the government had assigned the Ministry of Natural Resources and Environment, now the Ministry of Agriculture and Environment, to lead research on policy options for managing Vietnam’s participation in carbon trading under Article 6.
Now that a relatively comprehensive legal framework is in place, the next critical step is implementation, followed by continuous evaluation and refinement. Carbon markets, particularly those operating under Article 6, remain a new area, and time will be needed to review implementation, draw lessons, and improve the system.
Vietnam also needs to adopt a long-term strategy for participating in the global carbon market. Thailand provides a useful example. Its carbon credit mechanism has already entered a high-quality phase, gaining recognition from leading international organizations and qualifying for mechanisms such as CORSIA [the Carbon Offsetting and Reduction Scheme for International Aviation]. Achieving that position required at least five years of sustained preparation and investment.
At the same time, Vietnam needs to select and standardize guidance on carbon standards, methodologies, additionality requirements, sustainability criteria, and other key technical elements so that businesses can implement projects effectively. These are two essential prerequisites for producing high-quality carbon credits.
Looking ahead, Vietnam must also strengthen implementation capacity at every level while building a larger pool of internationally-accredited validation and verification bodies, as well as qualified advisory firms, capable of independently assessing domestic carbon projects. Developing this ecosystem is essential if Vietnam is to compete on equal terms with other countries in the region and retain more of the financial value generated by carbon projects. In practice, validation and verification costs are substantial, and addressing this challenge will be critical to improving the country’s competitiveness in the years ahead.
* * *
Green Carbon develops carbon credit projects in agriculture and forestry, with a particular focus on emissions reduction from rice cultivation. Vietnam is one of the world’s largest rice-producing countries, with more than 3.9 million ha of rice farmland. This represents a highly-promising area for emission reductions and carbon credit generation.
Based on our experience, the most important lesson from these projects is that they do far more than reduce emissions. They also deliver sustainable benefits for farmers - not only by creating additional income but also by introducing farming techniques that lower production costs, making farmers more willing to participate in projects over the long term.
Vietnam’s agriculture and forestry sectors also generate large volumes of agricultural and forestry residues. By converting these byproducts into biochar, Green Carbon is pursuing new technologies that can generate high-quality, high-value carbon credits for international trading.
One of the biggest challenges we have encountered is collecting accurate agricultural and baseline data. To address this, we have worked closely with local authorities, including provincial Departments of Agriculture, agricultural cooperatives, and commune leaders, to establish a coordinated approach to data collection and management. This not only improves data accuracy but also demonstrates the integrity of the projects.
The priority is not simply to collect data through individual projects but to establish a systematic approach to data management. Green Carbon is currently working with city and provincial Departments of Agriculture to develop digital applications and platforms for managing agricultural data.
For project developers such as Green Carbon, the top priority is to proactively attract investment from countries that have already implemented stringent emissions regulations, such as emissions trading systems (ETS) or carbon taxes. For example, Green Carbon is mobilizing overseas investment through bilateral mechanisms, including the Joint Crediting Mechanism (JCM) between Vietnam and Japan, as well as bilateral carbon cooperation mechanisms with Switzerland and Singapore. A similar mechanism with South Korea is also expected to be introduced.
We believe facilitating the transfer of carbon credits to developed countries is essential to building a strong foundation for Vietnam’s domestic emissions trading system and supporting the long-term development of the country’s carbon market.
* * *
The launch of the carbon exchange is a pivotal moment for Vietnam. It transforms the country’s ambitious net-zero commitment by 2050 from a pledge into a practical plan of action. Instead of relying only on regulations, Vietnam is creating a dynamic, market-based system that gives businesses a powerful incentive to reduce their emissions. This is a fundamental tool for driving the deep, structural changes needed to build a low-carbon economy.
This move also positions Vietnam as a leader in Southeast Asia, providing a valuable model for other nations in the region as they develop their own climate strategies. It sends a clear signal that Vietnam is serious about balancing economic growth with environmental responsibility, showing that climate action is not a barrier to development but a gateway to a more sustainable and prosperous future.
Critically, by establishing this market, Vietnam is building the foundation needed to attract international green investment and connect with global carbon markets. This will unlock new sources of climate finance, support sustainable industries, and create quality jobs for the Vietnamese people.
The immediate priority should be to ensure the market is trustworthy. This means strengthening the systems for monitoring, reporting, and verifying emissions (MRV) to guarantee that every carbon credit represents a real reduction in emissions. Clear rules and strong oversight will build confidence for everyone involved, from regulators to businesses. As the market matures, it will also be important to ensure sufficient market liquidity so that carbon pricing can effectively guide investment and emissions reduction decisions.
At the same time, we need to focus on the “supply” side of the market - the carbon credits themselves. Vietnam has enormous potential to generate high-quality credits from its forests, nature-based solutions, and circular economy and clean technology initiatives. By developing robust standards and fair benefit-sharing mechanisms, Vietnam can unlock this potential and ensure that local communities also benefit from these projects.
Looking ahead, the opportunity is to align with international standards. This will allow Vietnam to attract global climate finance and participate in international carbon trading under the Paris Agreement. By building a high-integrity market now, Vietnam can ensure its businesses remain competitive in a world that is rapidly moving toward a low-carbon future.
The UNDP is committed to supporting Vietnam every step of the way, just as we have with many other countries around the world. We bring global expertise and local knowledge to help build a market that works for Vietnam.
Our support is comprehensive. We are already providing technical assistance in designing core parts of the market infrastructure, such as the National Carbon Registry System and standards for forest-based carbon credits. We are also focused on building capacity, ensuring that both government agencies and private sector companies have the knowledge and skills they need to participate effectively.
As the market develops, we will continue to provide technical advice on regulations, linking with international markets, and implementing the frameworks required for international cooperation under Article 6 of the Paris Agreement.
A major focus for us will be helping Vietnam expand the supply of high-integrity carbon credits, especially from its forests and other nature-based solutions. We will help strengthen carbon credit methodologies, assess which projects have the greatest potential, and ensure they meet the highest standards of quality and transparency.
Ultimately, our goal is to help Vietnam build a predictable and well-governed carbon market. A strong market will not only drive down emissions but also unlock climate finance and attract the private investment needed to power Vietnam’s green transition.
Dr. Nguyen Nhat Ha Chi
Head of ESG at Dragon Capital
Every effective market rests on two fundamentals: attractive goods and a diversified ecosystem of participants.
Regarding goods, carbon allowances and credits are unlike most conventional traded assets. They are created and defined through regulatory and verification frameworks, and their market value is largely shaped by policy. Their most important price driver is not a physical supply shock but regulatory change. This is an entirely new logic for Vietnamese enterprises, and the pilot exchange is where they will absorb it: that emissions are now a cost, that reductions can become revenue, and that investment in cleaner technology is, in effect, a hedge.
The compliance mechanism shapes the participants in the same way. It requires companies to measure, report, and verify their emissions, and to incorporate carbon into their annual corporate planning. This discipline - reliable data, internal capacity, and management attention - is exactly what investors will later depend on when they assess the market.
In addition, there are some bottlenecks. On the demand side, the challenge comes from the nature of this market itself: demand for carbon is created by policy, not by consumption, and policy must strike a delicate balance between economic growth and emissions reduction. Demand will therefore build gradually, and in the meantime the market risks trading in bursts around compliance deadlines. The answer is to treat carbon as a genuinely tradable good rather than a pure compliance instrument by allowing the banking of allowances across compliance periods, developing hedging tools, and progressively widening participation beyond compliance entities.
The supply side is where the deeper bottlenecks lie: the quality of carbon credits and the transparency of emissions data.
On credit quality, the problem is simple to state: a buyer cannot easily tell whether a credit is genuine. When buyers cannot tell the difference, everyone gravitates to the cheapest credits, and honest, high-quality projects are pushed out of the market. This is exactly what happened in the global voluntary carbon market, where transactions in forest conservation credits fell sharply after several studies raised concerns that many projects may have overstated their impact.
On data transparency, the solution is more tractable because disclosure and auditing can be mandated. Encouragingly, the rules are largely in place: the national registry, mandatory emissions reporting for around 2,000 facilities, and the verification framework are all established in law. The real challenge now is not the rules but the people. Reliable data requires capable hands on both sides: enterprises that can produce it and professionals who can verify it. As reporting begins at scale, demand for both skill sets will grow quickly, calling for training, simplified templates for smaller emitters, and more accredited verifiers and intermediaries to bridge the factory floor and the trading screen.
Therefore, we need to prioritize resolving these bottlenecks. First, use the pilot period to make emissions inventories accurate and audits credible; data integrity is the foundation on which everything else stands. Second, issue the policy framework for carbon projects, including methodologies, registry rules, and verification standards, as early as possible. Carbon projects take years to develop before they generate a single tradable credit. If project developers can begin building projects during the pilot phase, a supply of high-quality domestic offsets will be ready when the carbon market moves into full operation in 2029.
