VCI Legal – 21 November, 2025

Vietnam is accelerating the establishment of its domestic carbon market with a suite of new regulatory instruments, including amendments to climate legislation and a draft decree governing internationally transferred mitigation outcomes (ITMOs). These measures form a critical part of the country’s pathway toward its 2050 net-zero commitment and are designed to ensure that all carbon market activities—domestic or international—primarily advance Vietnam’s Nationally Determined Contribution (NDC).

Under the emerging framework, Vietnam will operate a centralized carbon credit exchange managed by the Hanoi Stock Exchange, supported by a national carbon registry responsible for tracking emission allowances, domestically generated credits, and internationally recognized carbon units. The registry is intended to provide full transparency, prevent double counting, and ensure alignment between national climate targets and market activity. Revenue generated from international carbon credit transactions will be subject to existing national financial regulations, signalling the Government’s intention to maintain strict oversight over financial flows associated with carbon trading.

The draft ITMO decree provides detailed criteria for mitigation outcomes eligible for international transfer. Carbon units—whether issued under domestic standards, independent international programs, or Article 6.4 mechanisms—are defined as the right to emit one tonne of CO₂ or CO₂-equivalent. International transfers will only be approved if they contribute to sustainable development, conform to national climate priorities, and do not compromise Vietnam’s progress toward achieving its NDC.

A central feature of the new rules is the corresponding adjustment mechanism, which requires Vietnam to make equivalent deductions from its national emissions inventory upon transferring mitigation outcomes to another country. Likewise, mitigation outcomes acquired from abroad must be added to Vietnam’s accounting. This system ensures environmental integrity and prevents double claiming across Parties to the Paris Agreement.

To determine the permissible scale of international transfers, Vietnamese authorities—working with international technical partners—conducted scenario-based modelling. Two main scenarios were evaluated:

a narrow scenario involving 20 mitigation actions closely tied to core NDC commitments, and

a broad scenario covering 56 mitigation actions across multiple sectors.

Depending on the scenario, potential caps on transferable mitigation outcomes range from 50% to 90%. Technical experts recommend adopting a conservative initial cap of around 50% to safeguard domestic mitigation needs, with flexibility to expand as institutional capacity matures. Economic assessments indicate that increased participation in international carbon markets could boost annual GDP growth by approximately 0.4% during 2025–2030.

The draft framework also contemplates a transaction fee, potentially around 2%, for international carbon transfers. Fee revenues could be reinvested into sectors with high abatement costs—such as agriculture and forestry—and used to scale up low-risk sectors, including renewable energy. The Government further signals an intention to prioritize mitigation activities with lower risk profiles for international transfer, balancing market stability with opportunities to attract climate finance.

The involvement of international technical support programs throughout the regulatory design process reflects Vietnam’s commitment to developing a science-based, internationally aligned carbon market. These programs have supported modelling, impact assessments, and scenario analysis to ensure that the regulatory framework integrates economic considerations without compromising environmental integrity or national climate objectives.

Overall, Vietnam’s evolving regulatory architecture demonstrates a cautious yet forward-leaning approach to carbon market development. By embedding robust safeguards for national climate targets while enabling participation in Article 6 mechanisms, Vietnam is positioning itself as a credible, rule-based participant in global carbon markets. This balanced strategy is expected to mobilize green finance, enhance corporate climate accountability, and advance Vietnam’s long-term transition toward a low-carbon economy.

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