Vietnam Delays the Launch of Its Carbon Market to 2029

The Vietnamese government is adjusting its timeline for the implementation of its carbon market. Initially planned for 2028, the official launch will now take place in 2029 after a three-year pilot phase. This delay aims to strengthen the regulatory and technical framework.

Share:

Vietnam is establishing a carbon market to regulate and control industrial greenhouse gas (GHG) emissions. The decision to delay its launch to 2029 aligns with the government’s intent to fine-tune the regulatory framework and ensure a smooth transition for businesses.

An Evolving Regulatory Framework

Vietnam’s carbon market is based on several key legislative texts, including Decree No. 06/2022/ND-CP, which defines the rules for emission reporting and quota trading. Decision No. 232/QĐ-TTg, signed by Deputy Prime Minister Trần Hồng Hà, postponed the implementation timeline and outlined the key steps for the pilot phase from 2025 to 2028.

Amendments proposed in April and December 2024 further clarify quota allocation methods, reporting obligations, and eligibility criteria for companies. These adjustments reflect the government’s effort to align its framework with international standards while considering local economic conditions.

A Pilot Phase Before Full Implementation

The carbon market will be introduced in multiple stages. By June 2025, the regulatory framework will be finalized, defining quota allocation rules and emission monitoring methodologies. A pilot phase will then run until the end of 2028, involving approximately 100 industrial facilities, particularly in the energy, metallurgy, and cement sectors. These industries account for nearly 40% of regulated emissions.

Selected companies will have to comply with allocated emission quotas and will be able to buy or sell allowances on a dedicated platform. This phase will assess the system’s effectiveness and allow for adjustments before full-scale deployment in 2029.

Targeted Sectors and Quota Allocation

Vietnam’s carbon market will primarily focus on three high-emission industrial sectors:

– Energy: Coal- and gas-fired power plants.
– Metallurgy: Steel production and blast furnace operations.
– Cement: Clinker manufacturing and cement production.

The Ministry of Industry and Trade (MOIT) will propose quotas for thermal power plants and steel plants, while the Ministry of Construction (MOC) will oversee cement sector quotas. The first quota allocations will be distributed in December 2025 for the years 2025 and 2026, followed by additional allocations in October 2027 and October 2029.

Interaction with International Mechanisms

Vietnam plans to integrate its carbon market with international carbon credit mechanisms, including:

– Clean Development Mechanism (CDM), inherited from the Kyoto Protocol.
– Joint Crediting Mechanism (JCM), a bilateral partnership primarily with Japan.
– Article 6 of the Paris Agreement, allowing for the international transfer of mitigation outcomes (ITMO).

In the long term, the government may connect its market to regional or global platforms to improve liquidity and offer businesses greater flexibility in their carbon offset strategies.

A Strategic Response to the EU’s CBAM

The European Union has introduced a Carbon Border Adjustment Mechanism (CBAM) that will tax imports of certain products based on their carbon footprint. For Vietnamese businesses, particularly in steel and cement, this measure could result in additional costs.

By establishing a carbon market, the Vietnamese government aims to:

– Avoid double taxation: Companies already paying a carbon price in Vietnam may, under certain conditions, receive exemptions or reductions on additional EU levies.
– Strengthen competitiveness: The cement and steel sectors, particularly affected by CBAM, will be encouraged to lower emissions to maintain market access in Europe.
– Align with international standards: A national carbon market with a robust monitoring and verification system would facilitate recognition of Vietnam’s decarbonization efforts by trade partners.

Implications for Businesses and Investors

The establishment of a carbon market presents several challenges for Vietnamese businesses. They must adapt to new requirements for measuring, reporting, and verifying emissions while optimizing costs.

Economic players will be encouraged to adopt low-carbon technologies to minimize exposure to quota costs. Additionally, companies that proactively adapt to these changes could gain privileged access to international financing dedicated to the energy transition.

Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.
French greenhouse gas emissions are expected to rise by 0.2% in the first quarter of 2025, indicating a global slowdown in reductions forecast for the full year, according to Citepa, an independent organisation responsible for national monitoring.
The Republican budget bill passed by the U.S. Senate accelerates the phase-out of tax credits for renewable energies, favoring fossil fuels and raising economic concerns among solar and wind industry professionals.
Rapid growth in solar and wind capacities will lead to a significant rise in electricity curtailment in Brazil, as existing transmission infrastructure remains inadequate to handle this massive influx of energy, according to a recent study by consulting firm Wood Mackenzie.
In April 2025, fossil fuels represented 49.5% of South Korea's electricity mix, dropping below the symbolic threshold of 50% for the first time, primarily due to a historic decline in coal-generated electricity production.
The US Senate Finance Committee modifies the '45Z' tax credit to standardize the tax treatment of renewable fuels, thereby encouraging advanced biofuel production starting October 2025.
According to the 2025 report on global energy access, despite notable progress in renewable energy, insufficient targeted financing continues to hinder electricity and clean cooking access, particularly in sub-Saharan Africa.
While advanced economies maintain global energy leadership, China and the United States have significantly progressed in the security and sustainability of their energy systems, according to the World Economic Forum's annual report.
On the sidelines of the US–Africa summit in Luanda, Algiers and Luanda consolidate their energy collaboration to better exploit their oil, gas, and mining potential, targeting a common strategy in regional and international markets.
The UK's Climate Change Committee is urging the government to quickly reduce electricity costs to facilitate the adoption of heat pumps and electric vehicles, judged too slow to achieve the set climate targets.
The European Commission will extend until the end of 2030 an expanded state-aid framework, allowing capitals to fund low-carbon technologies and nuclear power to preserve competitiveness against China and the United States.
Japan's grid operator forecasts an energy shortfall of up to 89 GW by 2050 due to rising demand from semiconductor manufacturing, electric vehicles, and artificial intelligence technologies.
Energy-intensive European industries will be eligible for temporary state aid to mitigate high electricity prices, according to a new regulatory framework proposed by the European Commission under the "Clean Industrial Deal."
Mauritius seeks international investors to swiftly build a floating power plant of around 100 MW, aiming to secure the national energy supply by January 2026 and address current production shortfalls.
Madrid announces immediate energy storage measures while Lisbon secures its electrical grid, responding to the historic outage that affected the entire Iberian Peninsula in late April.
Indonesia has unveiled its new national energy plan, projecting an increase of 69.5 GW in electricity capacity over ten years, largely funded by independent producers, to address rapidly rising domestic demand.
French Minister Agnès Pannier-Runacher condemns the parliamentary moratorium on new renewable energy installations, warning of the potential loss of 150,000 industrial jobs and increased energy dependence on foreign countries.