Businesses and carbon market

In the context of climate change emerging as one of the greatest challenges to the sustainable development of humanity, many countries and territories have implemented emission reduction policies, with a carbon market considered an important and effective tool.

In Vietnam, Prime Minister Pham Minh Chinh approved the Carbon Market Development Project on January 24, 2025. From now to 2028, Vietnam will conduct trial market operations, and by 2029 will officially launch and connect with the global carbon market. Participation in the carbon credit market will allow local enterprises to curb their environmental impact and bolster their reputation and global competitiveness.

Opportunities for businesses

The carbon market is a unique financial market where carbon credits can be bought and sold, in two main forms: mandatory and voluntary. According to Dr. Bui Duy Tung, Lecturer at RMIT University Vietnam, the carbon credit trading floor provides businesses with a transparent and efficient platform, enabling them to easily buy and sell carbon credits to comply with greenhouse gas emission regulations. Active participation in this market also demonstrates a company’s commitment to environmental protection, thereby enhancing its reputation and brand image in the eyes of customers and partners.

At the same time, compliance with international emission standards will create favorable conditions for businesses when exporting goods, especially in the context of many countries applying carbon tax measures on imported products.

A typical example is the Carbon Border Adjustment Mechanism (CBAM) - a policy of the European Commission to impose carbon taxes on imported goods from other countries. The EU officially began piloting CBAM during a transitional period starting from October 1, 2023, with full implementation scheduled for 2026. Analysts note that if a business exports 1 ton of steel, it will need to purchase carbon certificates equivalent to the emissions generated in producing that volume. Without emission reduction measures, CBAM costs could amount to 20-35 per cent of the value of goods. This creates a strong incentive for Vietnamese businesses to invest in environmental initiatives, which can also bring significant financial benefits.

In addition, carbon credits are essentially licenses or quotas that allow the holder to emit a certain amount of carbon or other greenhouse gases, usually equivalent to one ton, into the atmosphere.

According to Dr. Nguyen Thanh Cong, Deputy Head of the Carbon Market Department within the Department of Climate Change at the Ministry of Agriculture and Environment, the carbon market will open up a range of new business opportunities, such as investing in projects and selling credits to polluting facilities that exceed their allocated quotas. For instance, under Decree No. 119 on emission quota allocations, thermal power, cement, and steel enterprises are allowed to purchase up to 30 per cent of their allocated quota in carbon credits for offsetting. “This is a relatively high and flexible limit for enterprises participating in the market to comply with greenhouse gas emission quotas,” he said.

Through the trading floor, enterprises can choose between investing in clean technology to reduce emissions or purchasing carbon credits from other entities. This encourages businesses to optimize costs while driving technological innovation in an environmentally-friendly direction.

Clearing bottlenecks

The International Finance Corporation (IFC) recently conducted a survey on the readiness of Vietnamese enterprises to participate in the voluntary carbon market. The survey covered 240 enterprises across four sectors: rice production, food and beverage manufacturing, livestock farming, and waste management.

Most survey responses came from large enterprises earning high revenue, with private and foreign companies accounting for a significant share. The results showed that readiness was generally low due to limitations in resources and finance. There were also notable knowledge gaps, such as a lack of awareness about carbon credit standards and mechanisms, as well as difficulties in understanding standard conditions, data requirements, and project registration procedures.

Ms. Vo Hoang Nga, Director of ESG (environmental, social, and governance) at TTC AgriS (the Thanh Thanh Cong - Bien Hoa Joint Stock Company), told the recent Vietnam Carbon Market Forum 2025 that businesses face significant challenges in getting projects approved and implemented, with the registration process for carbon credit issuance typically taking two to three years and in some cases up to four years.

Meanwhile, a sugarcane production enterprise in north-central Thanh Hoa province has engaged in carbon credit transactions directly between enterprises. However, the process encountered obstacles due to a lack of clear regulations and legal guidelines for the model. When the company applied for a license to implement its project, authorities were unsure how to proceed due to the absence of a specific legal framework in the field.

Dr. Nguyen Phuong Nam, Climate Change expert and CEO of Klinova, said one key bottleneck in Vietnam’s legal regulations on new commodities such as carbon credits is the lack of clarity on who invests the funds to create carbon credits during the design, construction, and operation of a “green project” or greenhouse gas reduction project. Furthermore, the law has not clearly defined which individual or legal entity holds ownership rights and is entitled to profits from the sale of carbon credits once they are issued by international organizations such as Verra or Gold Standard.

Vietnam currently has no organization with both the professional capacity and legal authority to issue carbon credits generated by domestic mitigation projects. Without clear legal definitions of ownership, or prior agreements between stakeholders, conflicts could arise between the initial project investor, the operating unit, and individuals or organizations using the project’s infrastructure, vehicles, and machinery. In the event of a dispute, these assets would be difficult to protect under the law. Such uncertainty about carbon rights poses a significant risk for investment decisions.

Dr. Nam noted that Vietnam is still in the process of finalizing its legal framework for the carbon market. While it is important to launch the domestic carbon market quickly, it is even more crucial to have clear regulations on how carbon credits are created in the country.

Vietnam has introduced regulations such as Decree No. 119/2025/ND-CP, which amends and supplements certain provisions of Decree No. 06/2022/ND-CP on greenhouse gas emission reductions and ozone layer protection. Under the planned roadmap, the pilot phase for the greenhouse gas emission quota and carbon credit trading market will run from June 2025 to the end of 2028.

However, legal regulations remain vague on the process of creating such commodities. Carbon credit projects also face practical barriers, as there is currently no organization to guide the process or methodology for obtaining credits issued by either domestic or international bodies, let alone to oversee trading activities.

Therefore, Dr. Nam recommended introducing policies to encourage the development of carbon credit projects certified by international organizations while Vietnam works to establish competent domestic issuers. Domestic carbon credit standards should align with internationally-recognized benchmarks to avoid risks in future cross-border transactions of this new type of commodity. “This is also to protect the legitimate interests of pioneering enterprises investing in emission reduction projects and creating new commodities such as carbon credits,” he emphasized.

At a more transformative level, particularly to support private enterprises seeking a green transition, Dr. Nam suggested that, in the spirit of fostering innovation, the State could introduce preferential tax, credit, and financial policies to encourage investment in clean technology. Additionally, competent authorities should soon issue guidelines to promote the registration and creation of voluntary carbon credits (VCM) for pioneering enterprises in Vietnam.