According to the draft proposal for the establishment and development of a carbon market in Vietnam, the carbon market will undergo a pilot phase nationwide from 2025 to 2028. By 2029, the carbon market will be officially operational across the country, incorporating additional verified carbon credits for trading and expanding the range of participants eligible to trade carbon credits on the exchange.
At a meeting held on October 7, 2024, to finalize the draft proposal, Deputy Prime Minister Trần Hồng Hà highlighted the significant potential of the carbon market to attract investment and drive technological development.
However, he acknowledged that global consensus on mechanisms, policies, technical standards, and the equitable allocation of carbon quotas is still lacking. To address this, the draft outlines a gradual approach to piloting Vietnam’s carbon market, emphasizing a “learn-and-adapt” strategy to align with global trends.
The Deputy Prime Minister directed the Ministry of Finance to work closely with the Ministry of Natural Resources and Environment (MoNRE), as well as other ministries and sectors, to review legal frameworks for the establishment, operation, management, and monitoring of the domestic carbon market.
He stressed that the proposal must be concise, with clear principles and objectives, focusing on establishing a fully functional domestic carbon exchange in terms of legal, human, and policy frameworks. International trading will not be pursued initially, except for exchanges under international agreements.
The proposal also specifies that tasks and solutions be assigned to specific ministries and agencies, with clear timelines and deliverables, such as legal documents, organizational structures, infrastructure, and human resources.
Implementation of the proposal must ensure alignment with international standards, including legal systems, consultation and appraisal procedures, and carbon credit measurement and allocation processes. This would pave the way for integrating Vietnam’s carbon market with regional and global markets in the future.
Strategic Objectives
The development of Vietnam’s carbon market aims to support the country’s commitment to reducing greenhouse gas emissions as outlined in its Nationally Determined Contributions (NDC), while minimizing costs for businesses and society. It seeks to create new financial flows for emission reduction activities, promote green transitions, and advance low-carbon technologies.
This approach will enhance the competitiveness of Vietnamese businesses both domestically and internationally, foster a low-carbon economy, and strengthen the country’s capacity to combat climate change, with the ultimate goal of achieving net-zero emissions by 2050.
Key Phases of Implementation
- 2025–2028:
During the pilot phase, the carbon market will be tested nationwide. Carbon credits will not be sold internationally, and there will be no regulations connecting domestic carbon credits with regional or global markets. - 2029 Onward:
The carbon market will officially launch nationwide. Verified carbon credits will be introduced for trading, and the scope of eligible participants will expand. Research will also begin on integrating the domestic carbon market with regional and global markets.
Core Tasks and Solutions
The draft proposal outlines five key areas of focus:
- Carbon Market Goods: Defining and managing emission quotas and carbon credits as marketable commodities.
- Market Participants: Expanding and regulating the range of entities eligible to participate in the carbon market.
- Carbon Exchange Platform: Establishing and operating a robust domestic carbon trading platform.
- Market Operations: Ensuring smooth and transparent market functions through monitoring and oversight mechanisms.
- Awareness and Capacity Building: Enhancing public understanding and technical expertise to support market development.
Institutional Roles and Responsibilities
The MoNRE will oversee the management of carbon market goods, including greenhouse gas emission quotas and carbon credits. Its duties include resolving complaints, handling violations, and setting technical and operational standards for the carbon exchange.
The Ministry of Finance will manage activities related to the trading of carbon market goods, including addressing complaints and violations. Both ministries will work together to ensure the smooth functioning of the market.
Vietnam’s development of a carbon market reflects its commitment to addressing climate change and aligning with global practices. By fostering innovation, attracting investment, and promoting low-carbon technologies, the country aims to enhance its economic competitiveness while meeting its ambitious environmental goals.
This strategic move underscores Vietnam’s dedication to creating a sustainable future and establishing itself as a leader in the transition to a low-carbon economy.
