On September 16, 2025, Vietnam and Singapore officially signed an Implementation Agreement under Article 6 of the Paris Agreement.
Vietnam and Singapore signed the implementation agreement under Article 6 of the Paris Agreement
This bilateral pact establishes a legal framework for Vietnamese organizations to register greenhouse gas reduction projects and generate carbon credits that are recognized and transferable to Singapore. It marks Vietnam’s first foray into the Paris Agreement’s carbon trading mechanisms and Singapore’s second deal with an ASEAN neighbor in under a month (following an agreement with Thailand in August). Leaders from both countries lauded the signing as a “pioneering” step that underscores their strong commitment to international carbon market cooperation and a substantive contribution to global climate efforts. Singapore’s Minister for Sustainability and the Environment Grace Fu noted that this “opens up new opportunities” for the transition to a low-carbon economy, while Vietnam’s Acting Minister of Agriculture and Environment Trần Đức Thắng hailed it as a breakthrough unlocking new climate finance to spur investment in clean technologies, emissions reduction, renewable energy, and sustainable agriculture.
Under the agreement, both governments will ensure that carbon credits transferred to Singapore are transparently accounted for and compliant with Paris rules (through “corresponding adjustments” to avoid double counting). Notably, Singapore has committed to channel the equivalent of 5% of the credit proceeds to Vietnam’s climate adaptation efforts, as it does in all its Article 6 partnerships. This revenue share for adaptation will support resilience projects in Vietnam, adding to the tangible local benefits expected from the carbon projects – such as new jobs, improved clean water access, better energy security, and pollution reduction. The deal thus not only helps Singapore meet its climate goals, but also directs funding to Vietnam’s sustainable development priorities.
What the Carbon Credit Deal Means for Vietnam
For Vietnam, the pact with Singapore represents a significant economic and environmental opportunity. It creates a channel to attract international investment into emissions-cutting projects across all sectors, from renewable power and energy efficiency to forestry and waste management. The Vietnamese ministry emphasized that the bilateral framework will “unlock new climate finance” and encourage fresh capital inflows into advanced low-carbon technologies and innovations. This aligns with Vietnam’s strategy to achieve net-zero emissions by 2050 and its efforts to build a domestic carbon market. In fact, Vietnam is launching a pilot Emissions Trading System (ETS) in 2025 as part of its net-zero commitment, and it has updated its Law on Environmental Protection and issued new decrees (e.g. Decree 119/2025) to harmonize carbon credit regulations with international standards. These reforms mean Vietnam is “Article 6-ready,” giving confidence to both local and foreign investors that carbon credits from Vietnam will meet global integrity criteria.
Crucially, this deal positions Vietnam as a regional leader in carbon markets. By pioneering Article 6 cooperation in Southeast Asia (alongside Thailand), Vietnam signals that it can supply high-quality carbon credits to the world. The government hopes Singaporean companies and others will actively invest in emission-reduction projects in Vietnam, generating “high-quality carbon credits” and helping shape a robust regional carbon market with Vietnam as a key hub. Each international carbon credit sold will represent verified reductions in Vietnam’s emissions beyond its own NDC (Nationally Determined Contribution) obligations – effectively turning Vietnam’s extra mitigation potential into a commodity for export. The proceeds from credit transfers will support Vietnam’s continued climate action at home, creating a virtuous cycle of green growth. As Swiss diplomat Aldo de Luca observed during recent talks, Vietnam’s determination and swift action on carbon market readiness have been “a strong source of inspiration” for partners. In short, the agreement boosts Vietnam’s credibility and visibility on the global climate finance stage, potentially making it a magnet for green investment and technology transfer.
A New Avenue for Singapore, Switzerland, Japan, and Korea
For Singapore and other climate-ambitious economies, Vietnam’s entry into Article 6 cooperation opens an important new avenue to meet emission targets cost-effectively. Singapore, a densely populated city-state with limited renewable energy capacity, has identified international carbon credits as a “viable and effective complementary pathway” to achieve its 2030 and 2050 climate goals. It introduced a carbon tax and is pursuing solar and imported renewables, but still faces hard-to-abate emissions. Access to credits from Vietnam allows Singapore to offset part of its emissions by funding cheaper emissions cuts abroad – a pragmatic strategy to reach net-zero by 2050. Singapore has now inked nine Article 6 agreements worldwide (with countries ranging from Ghana and Peru to Papua New Guinea and Rwanda) to secure a pipeline of authorized carbon credits. By adding Vietnam to this portfolio, Singapore strengthens its supply options in Asia and deepens its role as a regional carbon trading hub. (Singapore’s growing carbon services industry already counts around 150 companies involved in carbon trading, project development, and verification, reflecting its ambition to become Asia’s carbon marketplace.)
Other countries are likewise eyeing Vietnam’s carbon credit potential. Switzerland, for example, has been a pioneer buyer of international carbon credits under Article 6 – it has signed deals to fund clean cookstove and electric mobility projects in nations like Peru, Ghana, and Thailand in return for credited emissions reductions. Switzerland is now in negotiations with Vietnam to form its own bilateral carbon agreement. Swiss officials recognize Vietnam’s vast mitigation opportunities (such as renewable energy and industrial decarbonization) and have expressed eagerness to invest in “high-tech, low-emission and environmentally friendly sectors” of Vietnam’s economy. They see Vietnam’s burgeoning carbon market framework and recent legal reforms as a solid foundation for cooperation. Once a Switzerland-Vietnam pact is in place, Swiss-funded projects in Vietnam – like electrified transport or methane-reducing infrastructure – could yield certified credits that help Switzerland reach its stringent 2030 climate targets. Notably, under Article 6 Switzerland and others require a “corresponding adjustment” from host countries, meaning Vietnam would adjust its emission inventory so that reductions sold to Switzerland are not counted toward Vietnam’s own NDC. This ensures the environmental integrity of the trade and exemplifies the high standards Vietnam is committing to.
Japan has already been partnering with Vietnam on carbon-cutting projects for years through the Joint Crediting Mechanism (JCM). The JCM, a bilateral scheme Japan launched in 2013, finances projects (renewable energy, energy efficiency, waste methane capture, etc.) in developing countries and shares the resulting emission reductions between Japan and the host. Vietnam has been one of the most active JCM hosts, with multiple projects installed – from solar power plants to landfill gas recovery – yielding credits that Japan can apply toward its goals. This experience means Vietnam-Japan cooperation on carbon credits is well established, and those efforts are expected to continue and expand. Japan is integrating JCM credits into Article 6 accounting, so future credits from Vietnam will likely count as Article 6.2-compliant transfers. In essence, Japan’s head start in Vietnam demonstrates the appeal: Vietnam offers relatively low-cost abatement opportunities that complement Japan’s domestic cuts while supporting Vietnam’s sustainable development.
South Korea is another major player looking to source overseas credits, and Vietnam is on its radar. South Korea’s climate plan allows for using international carbon credits to fulfill 13% of its 2030 emissions reduction target, equivalent to 37.5 million tonnes CO₂ to be obtained from abroad by 2030. To that end, Seoul has set up a joint committee with Hanoi to explore Article 6 projects and broader climate cooperation. Korean companies and agencies are already scouting Vietnam for projects – for instance, one Korean developer is assessing programs to capture and destroy potent refrigerant greenhouse gases in Vietnam, which could generate valuable credits for Korea’s use. With the new Vietnam-Singapore agreement signaling that Vietnam’s framework for credit transfers is operational, other bilateral deals could quickly follow. Korea could negotiate its own implementation agreement with Vietnam, or facilitate Korean firms to invest under the existing framework and then arrange government-level authorization for credit transfers. Either route would help South Korea diversify its international credit portfolio across Southeast Asia. Moreover, Korea has experience building emissions trading systems and is supporting Vietnam’s domestic ETS rollout with technical assistance – a collaboration that builds trust and know-how, paving the way for future credit purchases. In summary, countries like Singapore, Switzerland, Japan, and South Korea see Vietnam as an emerging supplier of high-quality carbon credits, thanks to its climate policies and untapped mitigation potential. Sourcing credits from Vietnam allows these nations to hit their climate targets while financing green growth in a fast-developing economy – a mutual win for both sides.
Opportunities for Carbon Credit Developers and Investors in Vietnam
The Vietnam-Singapore carbon credit pact also unlocks new opportunities for private-sector project developers and investors. With a clear bilateral framework now in place, developers have a viable path to get their emission-reducing projects in Vietnam approved and connected to international buyers. Vietnam’s Ministry of Agriculture and Environment has indicated that detailed guidelines for project approval and a list of eligible methodologies (e.g. for renewable energy, forestry, or waste management projects) will be announced soon. This transparency is critical: businesses can start structuring projects – such as a wind farm, a forest conservation initiative, or a methane capture facility – knowing what standards they must meet for the resulting carbon credits to be Article 6-authorized and exportable. Once authorized, these credits can command premium prices from buyers like Singapore or Switzerland who need high-integrity credits to meet compliance goals.
Several sectors in Vietnam offer fertile ground for carbon credit projects. Agriculture and land use, for instance, hold great promise given Vietnam’s nearly 10 million hectares of farmland. Practices like climate-smart farming, rice paddy methane reduction, and agroforestry can cut emissions and generate tradable credits, all while boosting productivity for farmers. A case in point is Lam Son Sugar, a Vietnamese agribusiness that converted 500 hectares of sugarcane fields to an organic, low-emission cultivation model. This pilot project – done in partnership with international organizations – is seeking global certification so it can sell carbon credits, with revenue flowing back to farmers in its supply chain. As Vietnam’s Article 6 framework takes hold, more such projects can bloom, attracting impact investors and carbon credit aggregators. Energy is another area: Vietnam has immense renewable energy potential (solar, wind, hydro) and energy efficiency opportunities. Developers can leverage the new agreement to propose additional renewable projects beyond Vietnam’s power development plan, using carbon finance to tip marginal projects into viability. Similarly, forest conservation and restoration projects (REDD+ initiatives) in Vietnam’s rich forest areas could secure funding by selling credits for avoided deforestation or reforestation – now made easier by the prospect of authorized international transfers.
Financial institutions are expected to play a supportive role. Banks and investment funds, seeing a clearer regulatory environment, may develop carbon credit financing products – for example, loans or bonds tied to the future credit revenues of a project. Carbon project developers, including local firms and joint ventures, will need upfront capital to implement projects (like installing biodigesters on farms or upgrading factory equipment). With a government-backed mechanism to monetize the emissions saved, these projects become bankable. Vietnam’s emerging carbon market thus offers a new asset class for investors interested in climate-related ventures. Over time, as Vietnam links its domestic carbon market with international ones, carbon credits could even be traded on exchanges (the Hanoi Stock Exchange is preparing a platform for carbon credit trading by late 2025). This liquidity will further entice developers and financiers to engage.
In the big picture, Vietnam’s collaboration with Singapore under Article 6 is a signal to the market: Vietnam is open for business in carbon trading. It invites entrepreneurs to develop projects that cut emissions in exchange for a share of the credit revenues. This could accelerate Vietnam’s transition to clean growth by tapping private capital and innovation. For businessmen and investors, especially those following sustainable finance trends, Vietnam is becoming a key destination for climate investment. The country’s dual commitment to a domestic carbon market and international credit trading means a broader range of project types and sizes can find financing. As one ASEAN policy forum noted, an interoperable carbon market across the region could generate up to $3 trillion in cumulative revenue and 13.7 million green jobs by 2050 – and Vietnam is poised to capture a sizable slice of that pie by acting early. The new Vietnam-Singapore agreement is therefore more than a one-off deal; it’s a cornerstone in the foundation of a Southeast Asian carbon market that rewards emissions reductions and fosters sustainable development. Business leaders and investors with an eye on ESG opportunities would do well to watch this space – and perhaps participate in the next wave of carbon projects in Vietnam catalyzed by this landmark agreement.
Thị trường Carbon
