Dr. Nguyen Nhat Ha Chi, ESG Manager, Dragon Capital
The Vietnamese Government has made significant progress in promoting the benefits of a carbon market, in particular following the commitment made by Prime Minister Pham Minh Chinh at COP 26 to reach net-zero emissions by 2050. Since then, the legal framework has been continually refined, amending and supplementing key provisions such as raising the offset limit to 30 per cent from the previous 10 per cent, expanding market participation, and clearly defining eligible offset project types.
In parallel, the government has published a list of more than 2,000 entities required to conduct greenhouse gas inventories; the core participants in the mandatory carbon market. Early this year, it approved the Scheme on the establishment and development of the carbon market in Vietnam with a three-phase roadmap, aiming for full nationwide operations by 2029.
Alongside regulation, authorities have actively rolled out training programs to build capacity for participating businesses, focusing on guiding greenhouse gas inventory processes and helping enterprises understand how the market operates.
For the carbon market to operate effectively, it is essential to establish highly-liquid carbon commodities to attract the broad participation of buyers, sellers, and other stakeholders. This requires accelerating the completion of the legal framework and technical infrastructure, along with clear mechanisms to encourage the involvement of the private sector and financial institutions. Strengthening enterprises’ capacity for measurement - reporting - verification (MRV) should also be prioritized to ensure transparency and efficiency in market operations.
We hope the government will be more decisive in meeting set timelines, enabling Vietnam to swiftly operationalize its carbon market and seize opportunities from trends in global emissions reductions.
Commodities are the backbone of any market, and for Vietnam’s carbon market, two main types will be traded: emission allowances and carbon credits. In the early stages, while allowances are still allocated free of charge, carbon credits will be a more flexible commodity for private-sector transactions.
The top priority is to promote projects that generate high-quality carbon credits. Currently, in the absence of domestic legal frameworks and standards, projects should temporarily adopt international standards to meet market requirements and attract buyers. At the same time, Vietnam needs to expedite the issuance of national standards and project approval procedures, as well as develop a domestic team of validators and approvers to reduce verification costs and enhance the competitiveness of Vietnamese carbon credits.
Additionally, liquidity should be boosted by expanding international cooperation agreements to trade credits under Articles 6.2 and 6.4 of the Paris Agreement. Rapidly signing and implementing action plans with countries such as Singapore, Switzerland, Japan, and South Korea will help broaden the buyer network, increase demand, and raise the value of carbon credits.
In the longer term, when allowances are allocated through auctions and more strictly capped, the private sector will have opportunities to trade allowances more flexibly, adding another source of commodities to the market.
Mr. Le Quang Linh, Carbon Finance Expert, Consultancy on Development Institute (CODE)
Vietnam is emerging as a bright spot on the global carbon market map. In 2023, the country successfully transacted 10.3 million metric tons of CO₂ emission reduction results with the World Bank, earning $51.5 million and securing a place among the top 15 largest sellers of carbon credits worldwide. It is estimated that annual revenue from this activity could reach $300 million, creating a major opportunity to advance the green economy.
However, to turn potential into tangible results, Vietnam must address significant challenges in legal frameworks, technology, finance, and public awareness.
On the legal front, there is still no unified, clear regulation on procedures for trading, managing, monitoring, and the ownership of carbon credits. Overlapping risks among tax policies, fees, and mechanisms for transferring emission reduction results make it difficult for businesses to plan long-term and reduce the market’s attractiveness among international investors.
In terms of technology and measurement - reporting - verification (MRV), Vietnam has yet to master carbon credit conversion technologies and remains largely dependent on imports. National capacity in greenhouse gas inventories, MRV, and the verification of emission reduction results is still limited and does not yet meet international standards.
Moreover, waste-to-energy (WTE) projects require significant upfront investment, while waste remains largely unsorted at the source, directly affecting operational efficiency. Large-scale biochar production projects also face challenges due to the lack of an industrial foundation and a stable supply of raw materials.
Meanwhile, awareness of waste sorting, the full utilization of agricultural by-products, and climate action remains limited. The majority of businesses and communities do not fully understand how the carbon market operates or the financial and commercial opportunities it offers.
Another challenge is environmental integrity risk. Ensuring additionality and avoiding double counting is essential, particularly in bilateral transactions under Article 6.2 of the Paris Agreement, but remains a challenge for Vietnam.
To overcome these barriers, I believe Vietnam must implement a coordinated set of solutions.
First, improve the legal and policy framework: issue detailed guidelines on trading, managing, monitoring, and the ownership of carbon credits; and clearly define the market model (voluntary, compliance, or hybrid) to ensure stability and attract long-term investment.
Second, enhance technology and MRV capacity: invest in domestic research and development; engage in international cooperation to transfer advanced technologies, especially in WTE, large-scale biogas, and biochar; and develop an MRV system that meets international standards.
Third, mobilize green finance and develop innovative financial mechanisms such as blended finance, credit guarantees, and risk mitigation instruments; and strengthen cooperation with organizations such as the World Bank, the Green Climate Fund, the Asian Development Bank, and other international climate funds.
Fourth, raise awareness and encourage business participation: step up community outreach and education on the benefits of carbon projects and waste sorting at the source; and support businesses through training, advisory services, and policy incentives.
Fifth, improve the carbon credit registry system: establish and operate a national registry to manage the creation, transfer, and cancellation of Internationally Transferred Mitigation Outcomes (ITMOs), ensuring transparency and avoiding double counting.
Active participation in mechanisms under Article 6 of the Paris Agreement will help Vietnam mobilize international resources in both finance and technology, while safeguarding environmental integrity. Decree No. 119/2025/ND-CP has laid an important legal foundation, but to fully unlock potential, Vietnam needs a comprehensive strategy spanning institutions, technology, finance, and communication.
If pursued in the right direction, I believe Vietnam will not only meet its climate goals but also turn climate action into a driver of sustainable economic growth, affirming its pioneering role in the green transition.
Mr. Truong Tu Long, Climate and Sustainability Lawyer and Legal and Policy Expert, GREEN IN Vietnam
When the carbon market is introduced in Vietnam, many new opportunities will open up but not for all businesses.
I believe the main opportunities belong to two groups. The first consists of major emitters that have taken the lead in reducing greenhouse gas emissions in production to lower compliance costs. These companies are allocated a certain number of emission allowances by the government. If their actual emissions exceed the allocated allowances, they must purchase additional allowances or carbon credits to compensate.
Conversely, if a company implements emission reduction measures and its emissions are lower than its allocated allowances, it has the right to sell the surplus on the market. In this case, the company enjoys a dual benefit, reducing compliance costs while generating additional revenue.
The second group includes companies with the potential to develop carbon credit projects. These opportunities arise from a wide range of ideas, from advanced technologies such as renewable energy production and atmospheric carbon capture to agricultural solutions like low-emission rice cultivation or improving livestock feed. Recently, we have even been advising a company with an idea to generate carbon credits from insect farming.
Thanks to financing from the carbon market, ideas that once seemed impractical now have the chance to become reality.
Based on international experience, the earliest pioneers are often the ones who benefit most from the carbon market. To participate in the carbon market confidently and to take full advantage of the opportunities, businesses must first understand the market’s operating mechanisms clearly and comprehensively, avoiding both excessive optimism and extreme skepticism.
Tasks such as reducing emissions at factories or developing carbon credit projects require high expertise and complex processes. Therefore, companies need a skilled team with the necessary technical capacity to manage these activities.
In addition, businesses should develop an appropriate emissions reduction strategy, starting with assessing their current emissions, identifying “hotspots” in the production chain and finding ways to mitigate them. Sometimes, millions of dollars are hidden in the by-products of a company’s own production processes.
Currently, many companies have proactively studied the feasibility and piloted carbon credit projects, but most still rely on international standards such as Verra or the Gold Standard.
Therefore, I hope that Vietnamese regulators will soon issue a set of national standards and methodologies for carbon credit creation so that project developers have a clear basis for implementation. At the same time, to avoid “reinventing the wheel”, we could fully recognize widely-applied international standards and methodologies, similar to what the Indonesian Government has done.
Ms. Nguyen Kieu Trang, Senior Project Manager in Vietnam, FCC Partners Asia
Vietnam’s natural assets and economic structure give it strong potential for carbon reduction projects, especially in forestry, where forest coverage exceeds 42 per cent, or nearly 15 million ha, enabling REDD+ and reforestation initiatives.
In 2023, the country sold 10.3 million forest carbon credits to the World Bank for over $51 million, revealing the sector’s revenue potential.
Agriculture is another key area, with large-scale low-emission rice farming pilots in the Mekong Delta using alternate wetting and drying, by-product reuse, and optimized fertilization to cut methane emissions. Solid waste management, via waste-to-energy and biogas, also reduces pollution and produces tradable carbon credits.
I believe the carbon market serves as a supplementary financial mechanism to mobilize resources beyond the State budget, especially from the private sector and international partners. With the development of the voluntary carbon credit market and preparations for launching the mandatory carbon market (ETS), Vietnam is opening a new investment channel for emission reduction projects.
According to estimates from international organizations, Vietnam’s carbon market could reach a scale of $500 million to $1.2 billion by 2030, with the potential to reduce 146-167 million metric tons of CO₂ annually.
For businesses, participation lowers compliance costs, opens green finance access, enhances branding, and supports ESG (environmental, social, and governance) compliance. Companies can sell credits from internal projects or buy them to offset excess emissions, creating flexibility and cost optimization.
To effectively seize opportunities from the carbon market, I believe three key groups of solutions must be implemented simultaneously.
First, businesses need to proactively conduct greenhouse gas inventories, develop long-term emission reduction strategies, and select suitable models to generate tradable carbon credits. This is a critical foundation for preparing to join the mandatory ETS from 2025.
Second, the government needs to complete the legal framework, particularly regulations related to measurement - reporting - verification (MRV); ownership rights for carbon credits; mechanisms for allowance allocation and auctions; and processes for resolving disputes and violations.
Third, a national carbon credit trading platform should be established soon to create a transparent and accessible market for all businesses. At the same time, policies should support small and medium-sized enterprises (SMEs), including green credit, technical training, and access to climate investment funds such as the Green Climate Fund and the Just Energy Transition Partnership, or financing from international organizations like the World Bank and the Asian Development Bank.
If implemented effectively, these steps will make the carbon market a strategic driver of both net-zero targets and green economic growth.
Mr. Nguyen Tien Hai, Director, PoA Carbon Vietnam Management JSC
Vietnam’s carbon market has two types: compliance and voluntary. Historically, the compliance market, mainly under the Clean Development Mechanism (CDM), dominated, but demand has always been the key bottleneck. While Vietnam registered over 270 CDM projects, only about 80 recorded transactions, and just a handful sold credits multiple times. The 30 per cent success rate was largely due to difficulties securing reputable buyers.
The CDM market peaked from 2007-2011, with prices above $25 per credit, but after the Kyoto Protocol’s first commitment period ended in 2012, prices collapsed to as low as $0.15; below production costs.
In the voluntary market, carbon credit projects are developed and registered under mechanisms such as the Gold Standard (GS), the Verified Carbon Standard (VCS), and, more recently, the Global Carbon Council. This market began to grow after 2012. Vietnam now has over 120 registered voluntary projects, about 70 per cent of which have traded credits, far outperforming the compliance market.
Though many domestic activities have the potential to reduce greenhouse gas emissions, developing them into carbon credit projects is not easy. Current registration criteria are strict, requiring proof of additionality, the early consideration of credit benefits, demonstration of financial or technical barriers, and evidence that the project is not common practice. As a result, the number of successfully-registered projects and credits issued for Vietnam remains limited.
The biggest challenge for project owners is finding reputable buyers. Many projects are successfully registered but are never verified for credit issuance, or credits are issued but remain unsold.
Rules for carbon credit mechanisms are becoming stricter. Previously, renewable energy projects could be developed and registered for carbon credits, but now some mechanisms have tightened requirements, VCS has excluded renewable energy types such as hydropower, solar, and wind, while GS only accepts renewable electricity projects if that type accounts for less than 5 per cent of total installed capacity in the system.
As a result, project developers in Vietnam will need to shift to other types such as afforestation, alternate wetting and drying in rice cultivation, improved cooking stoves, water filtration systems, and other social projects. However, these social projects often involve high development, validation, verification, monitoring, and management costs, while generating relatively few credits, making profit margins low.
I believe the potential for developing and issuing new carbon credits will narrow over time. New technologies such as carbon capture and storage require high investment costs; the shift to hydrogen in the energy sector is expensive; and offshore wind projects have very high capital requirements. Due to these high costs, the number of feasible projects will be limited, reducing overall credit potential.
Even forestry projects face stricter criteria for new plantations, limiting their credit potential. In all cases, proving additionality is increasingly demanding.
That said, private enterprises still hold strong potential to drive market and project development. Once they clearly see the benefits of carbon credit projects, they will be more proactive in implementation. To create momentum, the government should promptly issue legal frameworks, such as a decree on international trading of greenhouse gas mitigation outcomes and carbon credits under Articles 6.2 and 6.4 of the Paris Agreement, while allocating allowances at reasonable levels and allowing partial use of credits for offsetting. This will create market demand, which in turn stimulates supply.
To build supply, Vietnam should quickly establish and operate a national registry for greenhouse gas emission allowances and carbon credits; approve mechanisms, methodologies, and eligible project types; and provide clear guidance for domestic project development.
In addition, there should be incentives for high-impact emission reduction projects, such as tax breaks, preferential pricing (similar to past renewable energy feed-in tariffs), concessional loans, foreign investment attraction, and private sector engagement.
To advance the carbon market, the Ministry of Finance has drafted a decree on a domestic carbon trading platform. The domestic market is expected to begin pilot operations until the end of 2028. However, much remains to be done to generate tradable products for this exchange.
Mr. Nguyen Hoang Nam. Environmental, Social & Governance (ESG) Leader and Partner, Assurance Services, PwC Vietnam
Vietnam is making strategic progress in developing a carbon market, which is central to its net-zero emissions by 2050 goal. The government’s phased approach began with this year’s Decision No 232/QD-TTg, which outlined a roadmap from piloting carbon trading in 2025 to launching a full-scale national market by 2029. This gradual rollout allows time to build institutional capacity and refine mechanisms.
A key recent milestone is Decision No 21/2025/QD-TTg, introducing Vietnam’s green taxonomy. Effective from August, it defines environmental criteria across seven sectors and sets up a verification system, enhancing transparency and investor confidence while facilitating carbon credit generation and access to green finance.
Beyond policy, Vietnam is also implementing practical measures: establishing a national carbon exchange via the Hanoi Stock Exchange, building a registry system, and offering training and incentives for businesses to adopt low-emission practices. International collaboration and private sector engagement have also been encouraged to support carbon credit platforms and eco projects.
While challenges remain, particularly in measurement - reporting - verification (MRV) systems, market liquidity, and private sector readiness, Vietnam’s carbon market development is ambitious, well-structured, and gaining momentum. The government’s integrated strategy reflects strong climate leadership and long-term vision.
Driving private sector engagement in Vietnam’s carbon market requires a strategic blend of domestic policy and international best practices.
To begin with, establishing a clear and adaptive regulatory framework is fundamental. International examples show that transparent and enforceable rules, aligned with global standards like Article 6 of the Paris Agreement, build investor confidence and market credibility. The government’s recent decrees and pilot programs are positive steps, but consistent enforcement and transparency are key.
In addition, capacity building plays a pivotal role. Many Vietnamese enterprises, particularly SMEs, lack the technical expertise to engage effectively. Global experience highlights the value of targeted training programs and stakeholder engagement to close this gap.
Moreover, financial incentives and risk mitigation are essential. Lessons from the Kyoto Protocol era emphasize the need for predictable carbon pricing and access to green finance. Mechanisms such as blended finance and public guarantees can help de-risk private investments and stimulate participation.
Equally important is institutional coordination. Successful carbon markets rely on strong collaboration across ministries, especially the Ministry of Agriculture and Environment, the Ministry of Finance, and the Ministry of Foreign Affairs, to ensure policy coherence and facilitate international transactions.
Lastly, Vietnam should leverage international standards and verification systems to build trust and ensure quality. Robust monitoring, reporting, and third party validation are critical to aligning with global expectations and attracting foreign investment.
By addressing these priorities, Vietnam can unlock private sector innovation, drive green growth, and accelerate its transition to a low carbon economy.
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