Strengthening the Vietnamese carbon credit market requires a sturdy institutional structure.
Catchy Title: Unleashing the Potential of Vietnam's Domestic Carbon Credit Market: Overcoming Challenges and Pioneering Green Growth
Vietnam's determined strides towards a net-zero carbon future hit a snag - the underperforming domestic carbon credit market. Experts issue a warning: without a robust, transparent, and coordinated institutional backbone, this market’s growth remains a mere theory.
At a recent workshop, Associate Professor Hoàng Văn Phú, VUSTA's chair, emphasized the carbon credit market as the pivotal economic tool driving greenhouse gas reduction and climate response in the green growth model. Unlike voluntary sustainability efforts, this market operates on the polluter-pays principle, transforming emissions allowances into tradable economic assets.
Vietnam boasts a solid legal foundation: the 2020 Environmental Protection Law acknowledges carbon trading; Decree 06/2022 outlines emissions trading mechanisms; and Decision 232/QĐ-TTg (2025) outlines a developmental roadmap for 2025-2030. Yet, the market remains fragmented, with limited infrastructure and scant cross-industry linkages in key areas like renewables, agriculture, and waste management.
Six key barriers stand in the way: regulatory gaps, technical infrastructure deficiencies, insufficient corporate expertise, a lack of high-quality human resources, low corporate awareness, and poor inter-sectoral coordination. If left unaddressed, these hurdles threaten to consign the carbon trading market to the realm of theory rather than reality.
Addressing these challenges is critical to advancing carbon credit policy. Dr Nguyễn Mạnh Hải, an economic expert, recommends refining the legal framework - covering auctioning, trading, and certification - and ensuring transparent measurement, reporting, and verification systems, along with rigorous enforcement.
He also champions a robust domestic emissions trading system (ETS), seeded initially by pilot industries, fortified by a digital trading platform, and integrating with global carbon markets via international credit mechanisms. This approach would tap into global capital flows and open opportunities beyond Vietnam’s borders.
Vietnam can overcome these hurdles by concentrating on capacity-building. Expanded training for companies, regulators, and certifiers in emissions accounting and carbon trading, supported by awareness campaigns highlighting the economic benefits of engaging with the carbon market, is a must. Furthermore, policy tools such as tax incentives, green credit facilities, and financial backing for early adopters of clean technologies will be indispensable.
Vietnam’s voluntary carbon market can serve as a stepping stone for pioneering firms.
Dr Hồng Công Hoà of the Academy of Policy and Development describes this moment as a strategic juncture for Vietnam. While the legal framework offers a basic push, he stresses the need for a legally integrated, transparent, and globally interoperable emissions system, underscoring the importance of comprehensive legislation, stringent oversight mechanisms, and active participation from private sector players and financial institutions.
Rice production models in Cần Thơ City that help minimise greenhouse gas emissions have significant potential for further development and expansion in the near future. - VNA/VNS Photo
Transparent quota allocation, smart fiscal incentives, and efficient reinvestment of market revenues will ensure long-term growth. On the road ahead, Dr Hoà calls for authorities to review and fine-tune key provisions in Decree 06/2022 and subsequent amendments, clarifying the legal status of carbon as a tradable commodity, auction rules, credit offset mechanisms, penalties for non-compliance, accountability, and international linkages in line with the Paris Agreement's Article 6.
He additionally advocates for a dedicated inter-ministerial coordination body and state-of-the-art data systems to bolster stringent measurement, reporting, and verification processes - key for fostering transparency, enhancing accountability, and attracting green investment, both domestically and abroad.
- The pivotal role of Vietnam's carbon credit market in driving greenhouse gas reduction and climate response cannot be overstated.
- Despite a solid legal foundation, the underperformance of Vietnam's domestic carbon credit market is a significant obstacle to achieving a net-zero carbon future.
- Addressing the six key barriers, such as regulatory gaps and technical infrastructure deficiencies, is critical to advance carbon credit policy in Vietnam.
- Dr Nguyễn Mạnh Hải suggests refining the legal framework, implementing transparent measurement, reporting, and verification systems, and establishing a robust domestic emissions trading system (ETS).
- Vietnam's voluntary carbon market can provide a stepping stone for pioneering firms, while a legally integrated, transparent, and globally interoperable emissions system is a strategic necessity.
- To overcome the hurdles, Vietnam needs to focus on capacity-building through expanded training for companies, regulators, and certifiers, and the implementation of policy tools like tax incentives and green credit facilities.
- transparent quota allocation, smart fiscal incentives, and efficient reinvestment of market revenues are essential for ensuring the long-term growth of the carbon credit market.
- Dr Hoà stresses the need for a dedicated inter-ministerial coordination body, state-of-the-art data systems, and clarification of key provisions in Decree 06/2022 to attract green investment and foster transparency in the carbon market, in line with the Paris Agreement's Article 6.
