Decision 232: Next Steps for Viet Nam’s Carbon Market Development

In January, the Prime Minister issued Decision 232/QD-TTg, which outlines a roadmap for carbon trading, assigning roles to key government agencies and financial institutions. The decision further specifies provisions of Decree No.06/2022/ND-CP and updates the implementation timeline, with the pilot phase scheduled to run from this year until 2028 and full implementation scheduled for 2029. It continues to distinguish Greenhouse Gas Emission Quotas and Certified Carbon Credits to offset emissions exceeding the quotas.

Decision 232/QD-TTg builds upon Decree 06/2022/ND-CP on the mitigation of greenhouse gas emissions by detailing a structured framework for emissions trading and market-based climate action. Decision 232 updates the timeline for the two-stage approach to developing the carbon market, aligning with Viet Nam’s long-term commitment to achieving net-zero emissions by 2050.

• The Pilot Phase (2025-2028) will focus on establishing regulatory mechanisms, identifying sectors subject to emissions trading, and conducting pilot carbon credit transactions. Trial operations and voluntary trading activities will help refine the system before full-scale implementation.
• Full Implementation will start in 2029. The emissions trading system will become mandatory, requiring high-emitting industries to comply with emission limits. Companies exceeding their permitted levels must purchase carbon credits, while those with lower emissions can sell surplus allowances.

The decision, as already outlined in Decree 06/2022/ND-CP, proposes two primary market commodities.

• Greenhouse Gas (GHG) Emission Quotas are designed as emission allowances which will be allocated to firms and facilities. During the pilot phase, they will be for free, but at a later stage, auctioning is also foreseen.
• Certified Carbon Credits (CCCs) are generated by mitigation projects under the domestic carbon credit exchange and offset mechanism or purchased internationally, i.e. from the Clean Development Mechanism (CDM), the Crediting Mechanism (JCM), and mechanisms under Article 6 of the Paris Agreement.

Both Greenhouse Gas Emission Quotas and Certified Carbon Credits will be tradable at Hanoi Stock Exchange. The handling of quotas and credits will be refined as the market develops.

A multi-sectoral approach is designed to establish a comprehensive and functional carbon market in Viet Nam. A total of 48 tasks have been assigned under Decision 232/QĐ-TTg, categorised into five key groups: (i) carbon market commodities, (ii) market participants, (iii) the national registry and carbon trading exchange, (iv) market operations, (v) awareness-building and capacity development activities.

The Ministry of Agriculture and Environment (MAE), formerly the Ministry of Natural Resources and Environment prior to government restructuring, will be the key agency responsible for overseeing the development of the carbon market in Viet Nam. MAE will ensure regulatory compliance and collaborate with other ministries to streamline market operations. Its key mandates include building the legal framework, establishing the national registration system for GHG emission quota and carbon credits, and developing the monitoring, reporting, and verification system. The ministry also oversees the processes related to credit issuance, validation, verification, and overall management of carbon credits within the system.

In parallel, the Ministry of Finance (MOF) is tasked with developing the financial and market mechanisms for carbon trading. This includes setting up rules for pricing, taxation, auctioning of emission quotas, and ensuring that the trading of carbon credits – both primary and secondary markets – is effectively regulated. Under MOF’s leadership, the Hanoi Stock Exchange will establish an official Carbon Credits Exchange, while the Viet Nam Securities Depository and Clearing Corporation will manage settlement processes, ensuring transparency and efficiency.

In addition, relevant ministries are also involved and assigned to integrate carbon trading requirements into sectoral strategy and support businesses in adapting to the system. Additionally, they will establish technical standards, regulatory frameworks, and sector-specific guidelines to support market participants in their respective industries. So far, guidelines for GHG inventories across sectors have been relatively comprehensive. These guidelines are critical legal documents for carbon market development, ensuring standardized emissions tracking and compliance. Viet Nam has issued regulations for waste management (Circular 17/2022), forestry (Circular 23/2023), livestock (Circular 19/2024), construction (Circular 13/2024), industry and trade (Circular 38/2023) and transportation (Circular 63/2024). To further assist, ministries are tasked with continuously providing technical support, awareness campaigns and training programs tailored to their respective industries.

Compared to its ASEAN peers, Viet Nam has made notable legal progress with Decision 232. Only Singapore and Indonesia are the most advanced in the region in terms of carbon market development. Singapore introduced a carbon tax in 2019, starting at S$5 per ton of CO₂e and set to increase to S$50-80 by 2030. The tax applies to large emitters, with revenue allocated to green transition projects. Indonesia launched its Indonesia Carbon Exchange in 2023, creating a regulated platform for carbon credit trading. However, most ASEAN countries are at various stages of development. Specifically, Malaysia, Thailand, the Philippines, Laos, and Brunei are currently drafting carbon pricing policies, piloting voluntary markets, and developing Emission Trading Systems (ETS).

Viet Nam’s progress in establishing a carbon market demonstrates its commitment to sustainable economic growth and climate action. However, significant challenges remain including the need to enhance regulatory enforcement, market infrastructure expansion, and greater private sector participation. Overcoming these barriers will be crucial for ensuring a fully functional and transparent carbon trading system that contributes effectively to Viet Nam’s net-zero target. Furthermore, continued collaboration between the government, industry stakeholders, and international partners will be essential in navigating these challenges and unlocking the full potential of the carbon market.