Initially completing operating foundation

The Ministry of Finance, in coordination with the Ministry of Agriculture and Environment, recently launched the domestic carbon exchange, marking an important step in the formation of the carbon market in Viet Nam. The operation of the exchange not only contributes to helping businesses realise the goal of net-zero emissions by 2050, but also opens up a new economic mechanism, enabling emitting facilities to proactively calculate and choose appropriate emission reduction options through the trading of quotas and carbon credits.

Nguyen Tuan Quang, Acting Deputy Director of the Department of Climate Change under the Ministry of Agriculture and Environment, said the technical infrastructure serving the operation of the domestic carbon exchange comprises three components. The national registry system for greenhouse gas emission quotas and carbon credits is managed and operated by the Ministry of Agriculture and Environment; the carbon trading system is organised and operated by the Ha Noi Stock Exchange; and the carbon transaction depository and settlement system is organised and operated by the Viet Nam Securities Depository and Clearing Corporation.

Along with institutional and technical improvements, the Prime Minister issued Decision No 263/QD-TTg dated February 9, 2026, approving the total pilot greenhouse gas emission quota for the 2025-2026 period. The Ministry of Agriculture and Environment also issued a decision on the pilot allocation of greenhouse gas emission quotas to 110 facilities. With more than 511 million tonnes of CO2 equivalent, Viet Nam immediately has a large-scale “supply of goods” to be put on the trading platform. However, the launch of the exchange is only the beginning. More importantly, the market must operate transparently, with a reliable measurement and verification system, thereby creating incentives for businesses to achieve substantive emission reductions instead of merely buying and selling credits in name.

Under the emissions trading system, the state determines the total permitted emissions and allocates quotas to facilities. Businesses that emit beyond their quotas must buy more; those that reduce emissions effectively can save costs or sell their surplus quotas. This mechanism turns emissions into a specific economic cost, thereby encouraging businesses to invest in clean technology, use energy more efficiently and transform their production models.

Put simply, for example, if a factory is allocated 150,000 tonnes of CO2 equivalent in a year and, thanks to technological innovation, production process improvements and the use of cleaner fuels, emits only 120,000 tonnes, the remaining 30,000 tonnes of quota can be traded as a special type of commodity.

Carbon credits, however, are formed in a different way. They are generated by projects that deliver additional greenhouse gas emission reductions or removals compared with the business-as-usual scenario. For example, if a new forest planting or restoration project is certified to have absorbed an additional 35,000 tonnes of CO2, after measurement, verification and certification, it may be issued a corresponding 35,000 carbon credits. These credits can then be sold to businesses wishing to offset their emissions. Thus, if a business emits beyond its allocated quota, it must buy additional quotas or use carbon credits for offsetting in accordance with regulations.

Need for data transparency and stronger market confidence

In the initial stage, the carbon market focuses on major emitting sectors such as thermal power, iron and steel, and cement. Quotas are allocated to help businesses become familiar with the new mechanism. However, in the long term, many experts believe that it is necessary to consider a roadmap for auctioning quotas in order to more fully reflect carbon costs, while generating revenue for reinvestment in green transition.

According to Tran Duc Phu from the Foreign Trade University, the voluntary carbon market in Viet Nam remains at an early stage but has great potential. Viet Nam currently has around 116 carbon projects at different stages of development, of which 40 projects have been certified; the total volume of credits issued each year is estimated at around 10.7 million credits.

Forestry projects account for a large proportion, alongside wind power, biogas, waste treatment and electric mobility. Most credits are currently sold to international buyers through bilateral agreements. The technical system for measurement, reporting and verification (MRV) still depends heavily on data and guidance from central agencies. Technical capacity at the local level needs to continue to be trained and supplemented. Specific benefit-sharing mechanisms among the State, forest owners, communities and stakeholders still need to be completed. These limitations may directly affect investor confidence.

From the perspective of private sector market access, Doan Hong Nhung from the University of Law under Viet Nam National University, Ha Noi, said complex MRV requirements, incomplete digital infrastructure and databases for credit management are increasing compliance costs, especially for small and medium-sized enterprises. Therefore, it is necessary to standardise the MRV system, develop a centralised registry, limit double counting of credits and apply incentive mechanisms such as green credit and tax incentives to attract businesses to invest in emission reduction projects.

Another important issue is the legal status of carbon credits. Phan Duy Hoa from the Foreign Trade University said carbon credits in Viet Nam have not yet been defined as either administrative licences or property rights. This creates difficulties for businesses in establishing ownership, transferring credits, recognising assets or using credits as collateral to access green credit. Therefore, it is necessary to establish carbon credits as intangible property rights, thereby creating a legal basis for businesses to use credits in financial transactions.

In the context of climate-related trade mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) increasingly affecting exports, the domestic carbon market is also a tool to help businesses proactively adapt. Experts say the impact of CBAM depends on production technology, energy structure and the ability to measure and verify emissions data. Businesses with high carbon intensity or a lack of reliable data will face higher compliance costs.

Therefore, developing the carbon market is not only aimed at fulfilling climate commitments, but is also a requirement for enhancing competitiveness. A transparent market, with a reliable registry system and verified emissions data, will help businesses reduce risks when participating in green supply chains. Conversely, without data, oversight and trust, the market may merely create more transactions without generating substantive emission reduction results.