New official amendments to Vietnam’s ETS decree – the main law governing the country’s nascent carbon market – have emerged since our last update in December 2024. The program features a pilot phase, slated to start as early as June 2025 – albeit without much function given that the country still lacks a national carbon registry. The country’s government competencies were reorganised over Q1, with a newly-created ministry in charge of the ETS since early March. A major meeting about the ETS decree on 24 March saw Vietnam’s prime minister announce the program’s initial scope: about 150 emitters in thermal power generation, cement manufacture, and iron & steel production will be covered in the pilot phase. Officials also established the program’s tradable units (allowances and offsets), as well as designating Hanoi’s stock exchange as the venue for trading.
Vietnam’s target under the Paris Agreement is to achieve net-zero emissions by 2050, and to curb GHG emissions by 15.8% below the business-as-usual level in 2030 (read our previous analyst update for further details on these targets). The government intends for the ETS it has been developing for years to serve as a tool to help the nation achieve this goal. The legal basis for that ETS is Decree 06/2022 on Mitigation of Greenhouse Gas Emissions and Protection of Ozone Layer, a broad outline of principles and frameworks that regulators have been amending over the years as they decide on the scope, coverage, trading rules and other elements of Vietnam’s future carbon market.
Officials had initially aimed to adopt an official revised version of Decree 06/2022 in late 2023, but the timeline continues to get pushed back…
On 24 January, Vietnam’s Deputy Prime Minister issued Decision 232 formally approving the national ETS…
Sources: Veyt, based on information from Vietnam’s former Ministry of Natural Resources and Environment (MONRE), now Ministry of Agriculture and Environment (MAE)
| Implementation phases | Pilot phase (June 2025- End of 2028), national ETS phase (from beginning 2029 onwards) |
| Allocation plans | 2025-2026, 2027-2028, 2029-2030 |
| Allocation method | Free allocation in the pilot phase, auctioning will be introduced at a later stage |
| Sectors covered initially | Thermal power generation, iron & steel, cement production |
| Estimated number of entities covered initially | 150 |
| Estimated emission coverage initially | 40% of Vietnam’s total emissions |
| Tradable units | Emission allowances called ‘Greenhouse Gas (GHG) Emission Allowances’, and offset credits called ‘Certified Carbon Credits (CCCs)’ |
| Market participants | Only covered entities can trade ‘GHG Emission Allowances’. Financial institutions and individual persons can also trade CCCs. |
| Trading platform | Hanoi Stock Exchange |
| Offset use | Offsets may account for up to 20% of a covered entity’s allocated volume |
| Borrowing rule | Covered entities may borrow future allowances up to 15% of their allocated volume to meet compliance obligations. These borrowed allowances cannot be traded. |
| Banking rule | Until the end of 2030, covered entities are allowed to carry their unused allowances into subsequent compliance years. |
The Deputy Prime Minister stated on 24 March that Vietnam aims to follow a “learning-by-doing” approach in implementing its ETS…
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