As carbon pricing becomes an increasingly important feature of global trade, developing a carbon market has become a strategic priority for economies seeking to remain competitive while meeting climate commitments.
In Vietnam, the Law on Environmental Protection 2020 identifies carbon market development as a key pillar of the country’s Nationally Determined Contribution (NDC) and net-zero ambitions. Since then, the government has steadily built the legal framework needed to establish and operate a domestic market.
The legal framework began with Decree No. 06/2022/ND-CP on greenhouse gas emissions mitigation and ozone layer protection, which introduced provisions on carbon market development and corporate greenhouse gas inventories. It was later updated by Decree No. 119/2025/ND-CP.
Legal foundation
In early 2025, the Prime Minister approved the Scheme for the Establishment and Development of Vietnam’s Carbon Market. This was followed by Decree No. 29/2026/ND-CP, issued on January 19, 2026, establishing the legal basis for a market-based trading system for emission allowances and carbon credits.
In April 2026, the government further strengthened the framework with Decree No. 112/2026/ND-CP on the international transfer of greenhouse gas emissions reductions and carbon credits.
Experts describe the Decree establishing the domestic carbon exchange as the final “missing piece” in Vietnam’s carbon market framework. Together with policies on emission allowance allocation and international carbon credit trading, it connects the domestic market with global carbon markets.
The government has also laid the groundwork for trading. Decision No. 263/QD-TTg approved the pilot greenhouse gas emissions cap for 2025-2026, followed by Decision No. 699/QD-BNNMT issued by the Ministry of Agriculture and Environment (MAE) on the pilot allocation of emission allowances.
The measures create the initial supply of tradable assets while helping regulated businesses become familiar with emission allowance management, trading, and compliance. Experts say allocating emission allowances to 110 facilities during the 2025-2026 pilot phase marks a major milestone, transforming emission rights into a tradable asset and paving the way for the first transactions on Vietnam’s domestic carbon exchange.
Ahead of the exchange’s launch, the Department of Climate Change at the MAE signed cooperative agreements with relevant stakeholders to help ensure a stable, secure, transparent, and efficient market.
Mr. Nguyen Tuan Quang, Acting Deputy Director of the Department of Climate Change, said the agreements demonstrate not only the organizational and technical readiness needed to launch the exchange but also Vietnam’s commitment to using market-based instruments to reduce greenhouse gas emissions, promote green growth, and advance sustainable development.
Launching the exchange
Another milestone came on June 29, when Vietnam’s domestic carbon exchange officially began operations. According to the Hanoi Stock Exchange, the launch reflects the commitment of the government, the Ministry of Finance, the MAE, and other relevant agencies to promote green growth and sustainable development.
The launch is more than a technical milestone; it aligns environmental responsibility with business interests while supporting the country’s sustainable development. The carbon market gives businesses a mechanism to optimize the cost of cutting emissions through trading emission allowances and carbon credits. Rather than viewing emissions reductions solely as a compliance obligation, companies now have a market-based tool to manage costs and invest in cleaner technologies.
Ms. Vu Thi Chan Phuong, Chairwoman of the State Securities Commission, said that as climate change becomes an increasingly pressing global challenge, developing a green and circular economy while promoting sustainable growth has become an inexorable trend. She said the launch of the domestic carbon exchange is particularly significant because it not only creates a transparent marketplace for trading emission allowances and carbon credits, but also helps establish market-based carbon pricing.
Mr. Nguyen Tien Hai, Technical Manager at the Energy and Environment Consultancy JSC, described the domestic carbon exchange as a major step forward for Vietnam, saying it would help the government achieve its net-zero target while enabling businesses to meet their compliance obligations at the lowest possible cost. The exchange also provides a marketplace where the first 110 companies receiving pilot emission allowances can trade with one another.
Under current regulations, two types of assets can be traded on the exchange: emission allowances and carbon credits. Though no carbon credits have been certified and approved for trading as yet, experts expect eligible carbon credit projects to emerge in the near future, beginning with projects transitioning from the Clean Development Mechanism (CDM) to the Paris Agreement’s Article 6.4 mechanism.
Vietnam is moving beyond its domestic carbon market to connect with international carbon markets. Decree No. 112/2026/ND-CP marks the country’s shift from building a domestic carbon market to connecting with international markets, while providing Vietnam’s first dedicated legal framework for implementing Article 6 of the Paris Agreement.
By incorporating the latest international guidance under Article 6, the Decree provides a unified legal basis for Vietnam to participate in cross-border carbon trading and other international cooperation mechanisms. As the global carbon market continues to expand, demand for international carbon credit trading is rising among both governments and businesses seeking to meet climate commitments.
Experts view Decree No. 112 as a milestone in Vietnam’s carbon market development, opening the door to green investment, advanced technologies, and deeper international climate cooperation while supporting the country’s low-carbon transition and net-zero ambitions.
New channel for green finance
Carbon markets have become a global phenomenon. More than 80 countries and territories now operate such a market, with the global market exceeding $100 billion. Its value is expected to continue growing as more economies adopt carbon pricing and expand international carbon trading.
According to the World Bank, the number of countries and territories implementing compliance carbon pricing instruments has risen from 58 to 87 over the past decade. In 2025, these mechanisms generated approximately $107 billion in revenue, up 2 per cent year-on-year and underscoring their growing role in the transition to low-emissions economies.
Mr. Truong Tu Long, Climate and Sustainability Lawyer and Legal and Policy Expert at GREEN IN Vietnam (GreenCIC), said the pilot launch of the carbon exchange marks an important milestone, making Vietnam one of a relatively small number of countries to establish a mandatory carbon market.
The carbon market gives businesses a mechanism to optimize the cost of cutting emissions through trading emission allowances and carbon credits. Rather than viewing emissions reductions solely as a compliance obligation, companies now have a market-based tool to manage costs and invest in cleaner technologies.
Meanwhile, Ms. Nguyen Kieu Trang, Senior Project Manager in Vietnam at FCC Partners Asia, said the exchange is more than a marketplace for emission allowances and carbon credits. By putting a market price on greenhouse gas emissions, it creates financial incentives for businesses to invest in clean technologies and adopt low-carbon business models.
International experience demonstrates the effectiveness of carbon markets. Major economies, including the EU, China, and South Korea, have made them a cornerstone of their climate policies. “For Vietnam, the carbon exchange will not only help mobilize private capital for its green transition, but also create a meaningful carbon price signal,” Ms. Trang said.
Beyond helping businesses meet emissions reduction obligations, the exchange is expected to become a key piece of economic infrastructure for the green transition, directing capital toward projects that deliver measurable emissions reductions. As the market matures, it could play a pivotal role in mobilizing investment for climate action and supporting Vietnam’s net-zero ambitions.
Research by GreenCIC estimates that the domestic carbon market could help businesses save between $400 million and $800 million in compliance costs, freeing up capital for emissions reduction technologies. Participation in international carbon markets could also enable Vietnam to attract between $500 million and $2 billion in climate finance and green investment.
Mr. Nguyen Dinh Tho, Deputy Director of the Institute of Strategy and Policy for Agriculture and Environment, said carbon markets are more than an environmental policy tool, they are a new economic platform that will encourage businesses to modernize technologies, improve resource efficiency, and integrate more deeply into low-emissions supply chains.
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