Vietnam has been preparing the necessary conditions to be able to pilot the carbon market from the end of 2025 and will officially operate this market in 2029. To date, the Project on establishing and developing the Vietnam carbon market has been issued by the Prime Minister. The domestic carbon trading floor is also being developed by the Ministry of Finance and submitted to the Government, and is expected to be launched for trial operation in 2025...
In recent times, Vietnam has issued many policies related to the organization and development of the carbon market. Based on the provisions of the Law on Environmental Protection (Article 139), the Government has detailed regulations on the organization and development of the carbon market in Decree No. 06/2022/ND-CP. Along with that are the Prime Minister's decisions related to the list of sectors and facilities emitting greenhouse gases to be inventoried; and the carbon market development project.
To continue institutionalizing legal regulations on carbon market development, the Government has assigned the Ministry of Agriculture and Environment to coordinate with relevant ministries and branches to draft and submit to the Government for promulgation Decree No. 119/2025/ND-CP amending and supplementing a number of articles of Decree No. 06/2022/ND-CP regulating greenhouse gas emission reduction and ozone layer protection, effective from August 1, 8, to resolve difficulties and update amended and supplemented policies, especially related to the organization and development of the carbon market. The Decree has provided regulations on the mechanism for creating domestic carbon credits, as well as international exchanges...
CARBON MARKET WILL BE OFFICIALLY OPERATE FROM 2029
The roadmap for developing the carbon market in Vietnam has been stipulated in Decree 06, detailed in the Project on establishing and developing the carbon market and legalized in Decree 119.
Mr. Nguyen Van Minh, Head of Carbon Market Department, Department of Climate Change, Ministry of Agriculture and Environment, said that in the first phase from now until the end of 2026, Vietnam will focus on implementing quota allocation for facilities with large greenhouse gas emissions in 3 main sectors including: thermal power, iron and steel production, and cement with about 150 facilities.
In the next phase, we will consider expanding to other fields in the list issued by the Prime Minister.
Decree 119 also adjusts a number of market principles on quota repayment, borrowing, transfer, offset and exchange. Regarding borrowing, establishments can borrow up to 15% of the greenhouse gas emission quota allocated for the next period of that establishment to make repayment.
“In particular, the rate of using carbon credits for offset has increased from 10% to 30% of the allocated greenhouse gas emission quota of the facility, creating favorable conditions for facilities in the early stages that have not been able to convert technology to be able to buy carbon credits on the exchange to offset emissions exceeding their quota. All activities of exchanging greenhouse gas emission quotas and carbon credits are carried out on the domestic carbon exchange,” Mr. Minh stated.
In addition to the domestic carbon credit exchange mechanism, the Decree also stipulates international carbon credit exchange and offset mechanisms. Accordingly, there are 3 main mechanisms including: the carbon credit exchange and offset mechanism within the framework of the United Nations Framework Convention on Climate Change (according to Article 6.2), the mechanism according to Article 6.4...
Mr. Nguyen Van Minh, Head of Carbon Market Department, Department of Climate Change.
During the pilot phase until the end of 2028, along with completing the legal corridor, Vietnam will build technical systems to be able to operate the exchange. The Ministry of Finance is currently leading the establishment of a carbon trading platform, which is expected to be launched in 2025. The Ministry of Agriculture and Environment has led the development of a national registration system for greenhouse gas emission quotas and carbon credits.
According to Mr. Minh, the experience of implementing the JCM mechanism is the foundation for countries to implement bilateral cooperation. This is also the foundation for the United Nations Framework Convention on Climate Change to establish mechanism 6.2 - bilateral cooperation mechanism.
Mr. Minh said that Vietnam's priority in the coming period when cooperating with partners is to focus on projects with large investment capital, high costs of implementing greenhouse gas emission reduction, and the technology applied to the projects is new, advanced, and not yet available in Vietnam.
During the pilot phase until the end of 2028, along with completing the legal corridor, Vietnam will build technical systems to be able to operate the exchange. Currently, the Ministry of Finance is presiding over the establishment of the carbon exchange and is expected to launch in 2025.
The Ministry of Agriculture and Environment has taken the lead in developing a national registration system for greenhouse gas emission quotas and carbon credits. The Ministry is also coordinating with relevant ministries and sectors to establish a system for reporting greenhouse gas inventory results, measuring and reporting on online mitigation assessments to facilitate facilities to make online reports.
From 2029, Vietnam will officially operate the carbon market. Accordingly, a series of new policies will be updated, including reviewing the quota auction, quota allocation ratio, expanding the subjects of quota allocation consideration, perfecting policies to implement the domestic carbon credit creation mechanism, etc.
To contribute to achieving the Net Zero target by 2050, Vietnam plans to apply a greenhouse gas emission quota allocation mechanism, and organize a centralized trading market for both greenhouse gas emission quotas and carbon credits.
According to experts, this is a popular mechanism in the world to reduce greenhouse gas emissions and protect the environment. Carbon trading is a market-based solution to solve environmental problems.
CREATE A NET ZERO ECONOMY BY 2050
Sharing the establishment of a domestic carbon trading floor, Mr. Tran Minh Giang, Deputy Head of the Financial Market Legal Department, Legal Department, Ministry of Finance, said that in early 2025, the Ministry of Finance chaired and advised the Prime Minister to issue Decision No. 232/QD-TTg approving the Project on the establishment and development of the Vietnamese carbon market. In the Project, the Prime Minister assigned the Ministry to preside over the drafting of a Decree on the domestic carbon trading floor.
To date, the Ministry has completed the draft Decree on carbon trading floors for submission to the Government for consideration and promulgation. It is expected that when promulgated, the carbon trading floor will be a centralized trading floor. The floor will create an effective price determination mechanism for businesses participating in the market; providing a transparent, fair, public, and safe trading mechanism for participants in the transaction.
The Ministry of Finance has completed the draft Decree on carbon trading floor for the Government to consider and issue. It is expected that when issued and put into operation, it will be a centralized trading floor for both greenhouse gas emission quotas and carbon credits. The goal of the floor is to create a financial mechanism, economic incentives, promote businesses to reduce emissions, invest in environmentally friendly technology, and contribute to creating a Net Zero economy by 2050.
The basic, consistent principle set forth in the process of developing the Project on establishing and developing the carbon market as well as drafting the Decree on domestic carbon trading floors is to organize a centralized trading floor for both greenhouse gas emission quotas and carbon credits.
“Although these two commodities are not financial or securities products, the orientation is to link the transactions of the carbon exchange with units that have experience operating the stock market. This approach will take advantage of the technological infrastructure, experience and human resources of units that have operated the stock market; save money; improve efficiency, speed up the preparation process to soon pilot the operation of the exchange,” Mr. Giang explained.
In this view, carbon trading would accommodate both mandatory and voluntary carbon market models. Which model to adopt would depend on two factors: the commodities traded and the market participants.
During the pilot phase, the Ministry of Finance expects transactions to be spot and will continue to research derivative trading products to supplement them depending on demand and market size.
It is expected that the Hanoi Stock Exchange (HNX) will provide trading services for greenhouse gas emission quotas and carbon credits. The Vietnam Securities Depository and Clearing Corporation (VSDC) will provide depository and transaction settlement services.
The organization of transactions of the carbon exchange will be carried out through a number of trading intermediaries, identified as qualified securities companies, approved by the Vietnam Stock Exchange and VSDC to participate in the trading and payment system. In addition, a number of commercial banks will perform the payment function for greenhouse gas emission quota and carbon credit transactions.
According to this approach, the Decree will be the basis for market operating units and intermediaries supporting transactions, depository, and payment in the market to prepare technological infrastructure and human resources to provide services to the market.
Regarding the trading method, it is expected to use a model requiring a deposit before trading. It is expected that the trading method on the market in the first pilot phase will be negotiated transactions on an electronic platform. The Ministry of Finance analyzed: the expected market size is not large, liquidity is not high, and goods on the market in the first phase lack standardization... so the order matching method will not be suitable in the pilot phase. In the future, depending on the market size, some new trading methods such as order matching will be researched and introduced.
Mr. Giang emphasized that the goal of the IT infrastructure will be ready for trading when the quota is allocated. During the pilot period (until December 31, 12), service providers in the market will not charge fees for providing trading and depository services, in order to support the market. During the pilot period of the floor, the Ministry will also continue to study and perfect regulations on prices, taxes, fees, and charges related to the purchase and sale of greenhouse gas emission quotas and carbon credits.
To develop the market, the Ministry will coordinate with the Ministry of Agriculture and Environment after the pilot research phase, adding a number of new products (such as derivatives), new trading mechanisms (order matching)...
OPPORTUNITIES TO IMPLEMENT CARBON CREDIT PROJECTS FROM THE JCM MECHANISM
At the Forum "Promoting businesses to participate in the Joint Crediting Mechanism (JCM) towards readiness to participate in the carbon market in Vietnam" recently organized by the Vietnamese Ministry of Agriculture and Environment in coordination with the Japanese Ministry of Environment, experts said that according to regulations, carbon credits from JCM projects will be exchanged on the carbon exchange in Vietnam.
Sharing about the creation of carbon credits from the JCM mechanism, Mr. Iino Satoru, Director General, Global Environment Agency, Ministry of the Environment of Japan, emphasized that the JCM is a bilateral mechanism in which Japanese agencies coordinate with countries including Vietnam to share emission reduction results. The JCM mechanism brings many benefits including contributing to the NDC and sustainable socio-economic development of countries, reducing costs, and creating other values in the supply chain.
Mr. Iino Satoru Director, Global Environment Agency, Ministry of the Environment, Japan.
The projects focus on new areas with great potential for emission reduction. Along with potential areas, we are implementing many projects in the energy sector, especially large-scale renewable energy, energy storage, agriculture, forestry, carbon capture, utilization and storage, Hydrogen utilization, ammonia, energy conversion (conversion of coal power plants…).
According to Mr. Iino Satoru, among 30 JCM partner countries in the world, 250 projects implemented with a total investment of more than 3 billion USD, Vietnam is one of the most active countries in Southeast Asia.
Of the 250 JCM projects, Vietnam has about 50 projects focusing on energy efficiency, energy consumption, wind power, transportation, etc. Typical examples include the 20MW biomass power project in Hau Giang, contributing to green energy development; a large-scale waste-to-energy project in Bac Ninh to reduce methane gas at landfills and greenhouse gas emissions, etc.
Emphasizing the potential from the implementation of JCM, Mr. Iino Satoru pointed out that the projects focus on new areas with great potential in reducing emissions. “Along with potential areas, we are implementing many projects in the energy sector, especially large-scale renewable energy, energy storage, agriculture, forestry, carbon capture, utilization and storage…
Basically, the principles, terms, infrastructure (procedures, data, information) have been built and are being completed. Mr. Iino Satoru emphasized to private companies that the system is ready for deployment.
It is important to promote investment flows into potential sectors such as agriculture, forestry, energy conversion and carbon capture and storage technology, which Japanese enterprises have successfully deployed in Vietnam.
To support this process, in April 4, the Japanese Government established a new agency, the JCM Agency (JCMA). The entire process from project development to carbon credit issuance will be simplified for partner countries, including Vietnam.
Source: https://tienphong.vn/chuan-bi-dieu-kien-cho-van-hanh-phat-trien-thi-truong-carbon-post1764339.tpo