Businesses' responsibilities for Vietnam's upcoming carbon market

Ms. Cecilia Brennan, Economic Counsellor at the  Embassy of Australia in Vietnam

Establishing an effective carbon credit system will not only help Vietnam mobilize financial resources to achieve its net-zero emissions by 2050 target but also serve as a lever to enhance business competitiveness.

The process creates opportunities for innovation, strengthens market positioning, and attracts international investment. However, with nearly one-third of global emissions now covered by carbon pricing mechanisms, the market is becoming more demanding in terms of transparency and project quality. Supporting businesses in understanding and adapting to technical standards is therefore crucial as Vietnam prepares to pilot its carbon market in the near future.

In this journey, Australia has reaffirmed its commitment to supporting Vietnam through financial assistance, technical cooperation, and the sharing of operational experience. Having provided more than A$3 billion ($1.9 billion) in development support to Vietnam over the past 50 years, Australia now views climate and energy cooperation as a strategic pillar.

Since both countries committed to achieving net-zero emissions by 2050, collaboration in the climate, environmental, and energy sectors has become an important pillar of bilateral relations.

To turn those strategic commitments into reality, Australia has been working closely with Vietnam through multiple technical and financial platforms. Through the Business Partnerships Platform (BPP), Australia has invested nearly A$10 million ($6.4 million) in piloting low-emissions rice production models in the Mekong Delta and developing the voluntary carbon market. The Aus4Innovation program, worth A$33.5 million ($21.4 million), is supporting a climate-smart agricultural ecosystem capable of generating high-quality carbon credits.

In addition, through the Australia Climate Finance Partnership (ACFP), Australia has provided concessional financing to a domestic electric vehicle manufacturer to launch Vietnam’s first electric bus fleet, while also contributing to a trust lending fund at VPBank to support sustainable infrastructure development.

Cooperation with international organizations such as UNOPS (United Nations Office for Project Services) has also helped provide comprehensive support for Vietnam, from policy and legal frameworks to strengthening practical implementation capacity.

While each country has different economic and policy conditions, we remain committed to supporting Vietnam’s carbon market development through practical cooperation. Australia stands ready to share its roadmap and lessons learned from developing its own carbon market framework. 

Ms. Vu Thi Chau Quynh,  Deputy Director of the Department of Legal Affairs, Ministry of Finance

Meeting emission-reduction requirements is no longer optional or merely encouraged, but has become a prerequisite for businesses. To seize opportunities and overcome challenges in complying with emission-reduction requirements and participating in carbon exchanges, businesses need to adopt a long-term strategic approach.

Companies should view emission reductions not only as an administrative compliance obligation, but also as a matter of effectively managing carbon credits and allowances as tradable assets. At the same time, they should see the carbon market and carbon exchanges as tools to support emission reductions, rather than solely as avenues for profit.

Based on that approach, I believe businesses should focus on three key issues. First, proactively build carbon market capacity, understand carbon products, recognize the differences between emission allowances and carbon credits, and grasp the relevant legal rights and regulations in order to manage them effectively. At present, only 110 companies are covered by the allowance system, but that number will certainly change in the future. Businesses therefore need to prepare proactively.

Second, understand related tax and financial regulations. For example, under corporate income tax rules, income from the transfer of emission-reduction results and the first transfer of carbon credits after issuance by the enterprise granted those credits may be tax exempt.

Third, build long-term plans to optimize compliance costs for emission-reduction requirements. In some sectors, the room for reducing emissions in production is limited, so companies may choose to invest in advanced and efficient technologies.

Where suitable emission-reduction technology is unavailable or investment costs are too high, businesses can consider other measures, such as purchasing allowances or offsetting through carbon credits. Vietnam’s domestic carbon exchange will be a tool to help companies achieve these goals. 

Dr. Nguyen Phuong Nam, Vice Chairman of the Ho Chi Minh City Green Business Association

Vietnam currently has 110 companies selected for pilot emission allowance allocations, to participate in the market during the pilot phase. Of these are 51 of Vietnam’s 61 cement companies. Participants in the pilot carbon market are mainly businesses with the right to buy and sell allowances and comply with quota allocations.

From a business perspective, I see very strong demand to participate in the market. Nine out of every ten companies undergoing green transformation want to join. However, businesses need to clearly understand their role and position in this market.

Even before the carbon market was established, pioneering companies pursuing green transformation in Vietnam were largely driven by market demand. Most members of the Ho Chi Minh City Green Business Association export products to international markets, with some shipping to as many as 165 countries and territories.

In practice, the biggest challenge for businesses is not technology or financing but awareness of opportunities and related risks, both financial and legal. Regulations on ownership rights for carbon credits have not yet been fully clear. This is one reason many businesses remain hesitant to invest in creating such assets. When companies spend capital to generate credits, they need certainty over ownership rights and profit potential.

Now that the regulatory framework is becoming clearer, businesses are expected to begin participating more actively in the near future. However, creating carbon credits requires one and a half to two years, involving complex technical processes, MRV (Monitoring, Reporting, and Verification) systems, and legal procedures that demand substantial resources.

Meanwhile, most businesses still do not have dedicated carbon management departments. As a result, while the willingness to participate is there, practical implementation remains limited.

Vietnamese businesses are fully ready to participate in the carbon market if given the opportunity. Companies see more opportunity in Vietnam than in many other countries. We hope State regulators will create more opportunities for businesses to take part in pilot programs. 

Mr. Nguyen Van Thang, Deputy Director of the PVEP SongHong Co.

As a company operating in the energy industry, a sector with high CO2 emissions, we view participation in emission-reduction solutions not only as a responsibility but as an inevitable trend.

Over the past five years, together with Japanese partners, we have studied options for CO2 capture and storage. Our focus has been on identifying potential sites and using depleted oil and gas fields, as well as existing offshore infrastructure, to store CO2 underground.

This is a major advantage for Vietnam’s energy industry compared with many other sectors, as we already have oil and gas infrastructure and decades of geological expertise. If used effectively, this could significantly reduce investment costs compared with building entirely new systems.

We are currently finalizing studies to identify pilot storage locations. By the end of 2026, we expect to complete the design phase and move toward pilot implementation. Over the next five to ten years, our goal is to move from pilot-scale CO2  storage to commercial deployment.

Experience in the US, Japan, Australia, and regional pioneers such as Indonesia and Malaysia shows that CO2 storage projects can generate profits. Governments in these countries have also introduced incentives, such as setting specific prices for storing each ton of  CO2. This has helped attract foreign capital and create economic returns for businesses.

We hope Vietnam’s oil and gas industry can eventually use depleted fields and offshore platforms for CO2 storage, similar to more advanced markets. This would not only help reduce emissions from the energy sector but also generate profits for businesses. A clear investment policy framework from the government is therefore essential. We are working with relevant authorities on mechanisms that can ensure commercial returns from CO2 storage.

Once the carbon market becomes operational, we expect it to attract more investors and potentially open the way for cross-border CO2 storage. 

Ms. Bui Thi Nha Trang, Sustainability Team Manager at Control Union

In line with global trends, most countries and major brands have set net-zero targets. On that path, they are implementing a wide range of measures across supply chains. A clear example is the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes strict carbon emission requirements on goods and pushes businesses to either purchase carbon certificates or shift to greener production.

Implementation will begin based on 2026 operating data. Businesses therefore need to prepare carefully so that by the end of this year they can clearly disclose the emissions associated with products entering the European market.

As a company that verifies greenhouse gas inventories and carbon credit programs, we see many businesses in Vietnam eager to act, particularly in conducting product emissions accounting to join international supply chains.

However, many face limitations in emission-factor information, while historical activity data has often not been fully or clearly recorded. This is the biggest obstacle for companies seeking to conduct inventories or achieve carbon neutrality.

As upstream suppliers in global supply chains, Vietnamese exporters need emissions data covering products, production processes, and factories before goods enter international markets. Where data remains incomplete but a company has a clear strategy, it can select base years with the most reliable records and combine them with internationally-recognized emission factors.

We have supported businesses with product emission inventories, carbon neutrality programs, and factory emissions accounting. All of these require traceability and data built over time. It is entirely achievable, but companies need a clear plan on what information to collect and how it will support their goals.

Trading carbon credits to offset emissions is also important. Vietnamese businesses with the capacity to generate carbon credits for international trading should focus on developing these projects to create economic value. 

Associate Professor Luong Duc Long, Vice Chairman and Secretary General of the Vietnam National Cement Association (VNCA)

Cement is one of three sectors selected for pilot greenhouse gas emission quotas. Specifically, 51 of Vietnam’s 61 cement companies are included in the pilot allowance allocation program for 2025-2026. The sector accounts for a significant share of total quotas, at around 28.8 per cent of the national allocation in 2025 and 28.1 per cent in 2026.

Cement output is expected to have reached about 96.36 million tons in 2025. The sector has been allocated 69.94 million tons of CO₂-equivalent, while actual emissions are estimated at as much as 84 million tons of CO2. This leaves a wide gap between pilot quotas and real emissions.

Though emission reductions have been discussed for more than 20 years, many businesses have only recently begun to engage. Some still have not built internal capacity and must hire outside consultants to prepare greenhouse gas inventory reports.

The main challenge is the cost of technology investment. More than 80 per cent of cement output comes from large plants with investments ranging from hundreds of millions to billions of dollars. Replacing production lines or major equipment with lower-emission technology requires substantial financial resources. Without strong economic pressure from quotas or penalties, many companies have been slow to act.

I propose a phased roadmap for reducing emissions in the cement sector based on technology readiness and compliance costs.

The first phase, through 2030, should focus on no-regret options. These include optimizing heat and power use, waste heat recovery for electricity generation, digitalized operations, and increasing the use of alternative fuels. These measures can be implemented immediately and deliver direct economic benefits through lower energy costs.

The second phase, from 2030 to 2040, should expand low-carbon cement materials and adopt new binders such as geopolymer or belite clinker where suitable. By then, MRV (Monitoring, Reporting, and Verification) systems, along with carbon pricing mechanisms, should be fully developed.

The third phase, after 2040, should activate Carbon Capture and Storage (CCS) and Carbon Capture and Utilization (CCU) solutions once the technology and financial infrastructure are mature enough to address remaining difficult-to-abate emissions. While research on CCS and CCU must begin now, large-scale investment should follow a realistic timeline that businesses can absorb.

Any roadmap must be linked to market demand. We need to promote green-labeled cement so customers become familiar with using it. One positive sign is the shift in the concrete industry. Professional concrete producers already see the economic benefits of buying lower-clinker cement and blending additives, helping cut costs and improve margins.

Mr. Pham Hoai Trung, Chairman of the Azitech Technology Co.

On the path toward net-zero emissions, carbon removal credits are no longer just a supporting tool but a decisive core element. Unlike avoidance credits, which focus on reducing emissions, removal credits directly absorb or eliminate CO2 already in the atmosphere and store it over the long term. Common storage methods include forests, soil, oceans, and materials such as biochar. In every realistic scenario, some industries are difficult to fully decarbonize. Carbon removal is therefore essential to offset residual emissions and achieve net-zero.

For this tool to be effective and internationally recognized, the State needs to complete the legal framework based on several pillars, including defining the legal status of removal credits, integrating them into national strategy and greenhouse gas inventories, and aligning them with Vietnam’s Nationally Determined Contributions (NDCs).

Policy should clearly distinguish between emission-reduction credits and removal credits, while setting core quality criteria such as additionality, permanence, and prevention of emissions leakage. Without these standards, credits will struggle to gain international acceptance.

Another critical pillar is a standardized MRV (Monitoring, Reporting, and Verification) system. This is the trust infrastructure of the carbon market. The government should issue clear MRV guidelines, build emission-factor databases, establish baselines, and define common practices for each sector. Standardization ensures credits can be compared, verified, and traded internationally.

It is also essential to clarify ownership mechanisms and benefit-sharing arrangements, particularly for projects involving agriculture, forests, and communities, to avoid disputes and create long-term incentives.

The success of the carbon market will also depend heavily on business execution capacity. Companies need robust data systems aligned with international standards such as ISO 14064 and the GHG Protocol. Without reliable data, businesses cannot prove the amount of carbon removed.

Carbon credits are not a fixed source of revenue. Their value fluctuates with market prices and comes with operating costs, including MRV expenses. Companies therefore need professional financial models, such as NPV (Net Present Value) and IRR (Internal Rate of Return) assessments, to evaluate investment efficiency.

Businesses must also strengthen their ability to work with verification bodies and global carbon exchanges while ensuring full transparency.

In my view, carbon removal credits are the key to completing the net-zero equation, where cutting emissions alone is no longer enough and carbon must also be removed from the atmosphere. To unlock this opportunity, Vietnam needs a strong policy framework and a capable business community. Carbon can then become not just a cost to cut, but an asset that can be measured, verified, and commercialized, creating new competitive opportunities for Vietnamese businesses in global markets.