Strengthening carbon market regulations to bolster worldwide efforts against climate change
Vietnam is set to join the global carbon credit market, with the government working on a draft decree to regulate international exchanges of greenhouse gas emission reductions and carbon credits. The decree is expected to be submitted to the government for approval later this year.
The Ministry of Agriculture and Rural Development, through its Institute for Strategy and Policy on Agriculture and Rural Development (ISPAE) under the Department of Climate Change, is coordinating the development and operation of a platform for carbon credit trading. This move is a significant step towards Vietnam's commitment to reducing greenhouse gas emissions and achieving its Nationally Determined Contributions (NDC) under the Paris Agreement.
A comprehensive legal framework for carbon credit trading activities was established with the issuance of Decree No.06/2022/ND-CP and Decree No.119/2025/ND-CP. These decrees clarify rules on corresponding adjustments, which means that when a transferring party provides emission reduction results to a partner to meet climate commitments, it must deduct the transferred amount from its national NDC implementation report.
The government agency's emphasis on strict oversight in cross-border carbon crediting mechanisms is aimed at safeguarding the environmental integrity of the country's NDC. This ensures that mitigation outcomes are counted only once to avoid double counting.
The potential for Vietnam to exploit carbon credits from forestry has been discussed by Carina van Weelden, implementation manager at the German Development Agency. Vietnam has abundant opportunities for low-cost emission reductions, with many mitigation options available at relatively low marginal costs, suggesting a substantial potential for generating carbon credits for export.
The study conducted by GreenCIC's Carbon Credit Trading Impact Assessment project indicates that if Vietnam adopts the S20 scenario, allowing only 20 mitigation measures under the conditional NDC target to participate in trading with a maximum trading limit of 90%, the economy could gain an average of 0.43% of GDP annually between 2025 and 2030, equivalent to billions of USD.
However, if Vietnam reduces the retention rate to 30%, the contribution to unconditional NDC targets would fall to around 37%, compared with 62% under the 50% retention level. This could potentially impact the country's ability to meet its climate targets.
The new carbon credits market in Thailand is also set to launch this year, aiming to address weak demand and low prices. This development could stimulate investment, consumption, and job creation, as suggested by the S56 scenario, with a 50% retention rate.
Vietnamese businesses participating in the carbon credit market will need to adhere to the requirements of green production models in both domestic and international markets. This will ensure that the carbon credits generated are legitimate and contribute to genuine emission reductions.
The roadmap for developing the carbon trading platform is divided into two phases: a pilot phase running until the end of 2028, and an official operation phase starting in 2029. During the pilot phase, the focus will be on building capacity, testing mechanisms, and ensuring compliance with international standards.
Carbon credits are gradually evolving into a unique financial derivative, intersecting nature, finance, national assets, and knowledge, creating a challenging but unique market. As Vietnam steps into this market, it opens up opportunities for sustainable development and climate finance, while also contributing to global efforts to combat climate change.
Nguyen Hong Loan, head of GreenCIC's Carbon Credit Trading Impact Assessment project, explained the implications of these scenarios, emphasizing the potential benefits and challenges that Vietnam may face in the carbon credit market. The study by GreenCIC modelled nine different scenarios, focusing on the portfolio of mitigation measures eligible for transfer and the percentage of credits retained to meet national targets.
In conclusion, Vietnam's entry into the global carbon credit market is a significant step towards sustainable development and climate action. With the right policies, regulations, and strategies in place, Vietnam can leverage its abundant opportunities for low-cost emission reductions to generate carbon credits for export, while also contributing to its own climate targets and global efforts to combat climate change.
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