Pham Van Hoanh, editor-in-chief, VIR. Photo: Dung Minh

The domestic carbon market, which began operating on June 29, marks an important step in Vietnam's green transition while highlighting the need for stronger financial mechanisms to support its development, he said at a workshop on credit policy and carbon markets in Hanoi on October 14. The event was organised by VIR in coordination with the State Bank of Vietnam (SBV) at VIR's headquarters.

“If the carbon exchange is the market’s infrastructure, credit policy, the banking system and capital markets are the driving forces behind the green transition,” Hoanh said.

Credit policy plays a leading role in directing financial resources towards emissions reduction, helping businesses and individuals invest in greener activities and linking sustainable development objectives with the flow of capital throughout the economy.

The green transition ultimately requires tangible investments in cleaner technologies, energy efficiency, changes to production processes, low-emission agriculture, forest protection and development, waste treatment, renewable energy and more sustainable supply chains.

"To bring these projects to fruition, Vietnam needs a financial system capable of identifying, pricing, allocating and managing green capital," said Hoanh.

Vietnam’s carbon market framework was established under the 2020 Law on Environmental Protection and subsequently developed through a series of legal documents. The latest regulations include Decree No.29/2026/ND-CP on the domestic carbon exchange and Decree No.112/2026/ND-CP on international exchanges of greenhouse gas emission reduction outcomes and carbon credits.

Vietnam has also gained experience in monetising verified emissions reductions on international markets. In 2024, the country received its first $51.5 million payment from the World Bank for 10.3 million tonnes of verified emission reductions under the North Central Region Emission Reductions Programme.

The launch of allowance trading on 29 June 2026 introduced a new way of recognising the economic value of emissions reductions. However, the establishment of a trading platform alone will not ensure the market's long-term success.

"A sustainable carbon market also requires liquidity, reliable data, verification mechanisms, confidence among buyers and sellers, and a strong financial ecosystem to support market participants," Hoanh said.

Photo: Dung Minh

He highlighted several questions that policymakers, financial institutions and businesses need to address, including how to remove regulatory and financial bottlenecks, channel green capital towards the right projects, and enable banks to assess both the opportunities and risks associated with green investments.

Businesses must also be able to demonstrate the effectiveness of their transition efforts and access bank lending along with medium- and long-term financing from capital markets. Meanwhile, carbon value needs to become an increasingly reliable factor in financial decision-making.

These challenges were among the reasons VIR organised the workshop, bringing together policymakers, banks, businesses, experts and other stakeholders to exchange views and identify practical solutions.

"The carbon market would create a new economic driver when businesses could see the financial benefits of emissions reductions, banks and capital market institutions could manage green capital effectively, investors could identify value, and producers received commensurate benefits," said Hoanh.

He expressed his hope that discussions at the workshop would lead to concrete policy proposals, practical cooperation initiatives, and models that could be implemented in practice.

The event forms part of broader efforts to connect Vietnam’s carbon market development with credit policy and capital mobilisation, helping ensure that the country’s green transition is supported by the financial resources needed to deliver measurable results.

The workshop featured presentations by the SBV, the Asian Development Bank, and Agribank, followed by a discussion with representatives from regulatory authorities, capital markets, banks, businesses, and consulting organisations. Key topics included expanding green capital flows, improving businesses' access to finance, developing the carbon market, and strengthening the links between emissions reduction value and financial decision-making.