In anticipation of the year of Snake, Deputy Prime Minister – Tran Hong Ha signed and released Decision No. 232/2024/QD-TTg on the Approval for the establishment and development of the carbon market in Vietnam on 24 Jan 2025 to materialize the regulations under Law on Environmental Protection and guiding legislations.
Principally, the carbon market in Vietnam comprises two types of “commodities”. The first type includes greenhouse gas (GHG) emission allowances, which are allocated to facilities listed in the categories of sectors and facilities subject to GHG inventory as prescribed by the Prime Minister. These allowances are distributed through two methods: free allocation and auction-based allocation.
The second type consists of carbon credits that are officially recognized for trading in the market. These carbon credits include those obtained from domestic programs and projects under the carbon credit exchange and offsetting mechanisms in accordance with Vietnamese law. Additionally, carbon credits derived from international exchange and offset mechanisms are also recognized, including credits obtained from the Clean Development Mechanism (CDM), the Joint Crediting Mechanism (JCM), and Article 6 mechanisms of the Paris Agreement.
Various entities participate in Vietnam’s carbon market, categorized based on the type of transactions they engage in. For transactions involving GHG emission allowances, participants include facilities listed in the categories of sectors and facilities subject to GHG inventory as designated by the Prime Minister, which are allocated such allowances.
For transactions involving carbon credits, participants include not only the aforementioned facilities subject to GHG inventory but also organizations implementing programs and projects under domestic carbon credit exchange and offset mechanisms, as well as those operating under international mechanisms in compliance with Vietnamese law and international agreements to which Vietnam is a signatory. Additionally, organizations and individuals meeting the eligibility criteria may engage in investment and trading activities related to carbon credits, however, the qualifications for the recognition of these investors/traders are not available, we all should cool our heels for a while as the system is set to pilot from June 2025.
Supporting organizations play a crucial role in facilitating transactions within the carbon market. Depending on the projected scale of the market, these entities may provide essential transaction support services, ensuring the smooth operation and efficient functioning of Vietnam’s evolving carbon trading framework.
Hanoi Stock Exchange will be in charge of the technical development of the market infrastructure in collaboration with MONRE, in the meanwhile, the registration system has yet to be regulated since our Partner Nghiep Nguyen’s discussion at the Green Economy Forum & Exhibition last October.
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