In the context of climate change emerging as one of the greatest challenges
to the sustainable development of humanity, many countries and territories have
implemented emission reduction policies, with a carbon market considered an important
and effective tool.

In Vietnam, Prime Minister Pham Minh Chinh approved the Carbon Market Development
Project on January 24, 2025. From now to 2028, Vietnam will conduct trial market
operations, and by 2029 will officially launch and connect with the global carbon
market. Participation in the carbon credit market will allow local enterprises
to curb their environmental impact and bolster their reputation and global competitiveness.

Opportunities for businesses

The carbon market is a unique financial market where carbon credits can be
bought and sold, in two main forms: mandatory and voluntary. According to Dr. Bui
Duy Tung, Lecturer at RMIT University Vietnam, the carbon credit trading floor provides
businesses with a transparent and efficient platform, enabling them to easily buy
and sell carbon credits to comply with greenhouse gas emission regulations. Active
participation in this market also demonstrates a company’s commitment to environmental
protection, thereby enhancing its reputation and brand image in the eyes of customers
and partners.

At the same time, compliance with international emission standards will create
favorable conditions for businesses when exporting goods, especially in the context
of many countries applying carbon tax measures on imported products.

A typical example is the Carbon Border Adjustment Mechanism (CBAM) – a policy
of the European Commission to impose carbon taxes on imported goods from other countries.
The EU officially began piloting CBAM during a transitional period starting from
October 1, 2023, with full implementation scheduled for 2026. Analysts note that
if a business exports 1 ton of steel, it will need to purchase carbon certificates
equivalent to the emissions generated in producing that volume. Without emission
reduction measures, CBAM costs could amount to 20-35 per cent of the value of goods.
This creates a strong incentive for Vietnamese businesses to invest in environmental
initiatives, which can also bring significant financial benefits.

In addition, carbon credits are essentially licenses or quotas that allow the
holder to emit a certain amount of carbon or other greenhouse gases, usually equivalent
to one ton, into the atmosphere.

According to Dr. Nguyen Thanh Cong, Deputy Head of the Carbon Market Department
within the Department of Climate Change at the Ministry of Agriculture and Environment,
the carbon market will open up a range of new business opportunities, such as investing
in projects and selling credits to polluting facilities that exceed their allocated
quotas. For instance, under Decree No. 119 on emission quota allocations, thermal
power, cement, and steel enterprises are allowed to purchase up to 30 per cent of
their allocated quota in carbon credits for offsetting. “This is a relatively high
and flexible limit for enterprises participating in the market to comply with greenhouse
gas emission quotas,” he said.

Through the trading floor, enterprises can choose between investing in clean
technology to reduce emissions or purchasing carbon credits from other entities.
This encourages businesses to optimize costs while driving technological innovation
in an environmentally-friendly direction.

Clearing bottlenecks

The International Finance Corporation (IFC) recently conducted a survey on
the readiness of Vietnamese enterprises to participate in the voluntary carbon market.
The survey covered 240 enterprises across four sectors: rice production, food and
beverage manufacturing, livestock farming, and waste management.

Most survey responses came from large enterprises earning high revenue, with
private and foreign companies accounting for a significant share. The results showed
that readiness was generally low due to limitations in resources and finance. There
were also notable knowledge gaps, such as a lack of awareness about carbon credit
standards and mechanisms, as well as difficulties in understanding standard conditions,
data requirements, and project registration procedures.

Ms. Vo Hoang Nga, Director of ESG (environmental, social, and governance) at
TTC AgriS (the Thanh Thanh Cong – Bien Hoa Joint Stock Company), told the recent
Vietnam Carbon Market Forum 2025 that businesses face significant challenges in
getting projects approved and implemented, with the registration process for carbon
credit issuance typically taking two to three years and in some cases up to four
years.

Meanwhile, a sugarcane production enterprise in north-central Thanh Hoa province
has engaged in carbon credit transactions directly between enterprises. However,
the process encountered obstacles due to a lack of clear regulations and legal guidelines
for the model. When the company applied for a license to implement its project,
authorities were unsure how to proceed due to the absence of a specific legal framework
in the field.

Dr. Nguyen Phuong Nam, Climate Change expert and CEO of Klinova, said one key
bottleneck in Vietnam’s legal regulations on new commodities such as carbon credits
is the lack of clarity on who invests the funds to create carbon credits during
the design, construction, and operation of a “green project” or greenhouse gas reduction
project. Furthermore, the law has not clearly defined which individual or legal
entity holds ownership rights and is entitled to profits from the sale of carbon
credits once they are issued by international organizations such as Verra or Gold
Standard.

Vietnam currently has no organization with both the professional capacity and
legal authority to issue carbon credits generated by domestic mitigation projects.
Without clear legal definitions of ownership, or prior agreements between stakeholders,
conflicts could arise between the initial project investor, the operating unit,
and individuals or organizations using the project’s infrastructure, vehicles, and
machinery. In the event of a dispute, these assets would be difficult to protect
under the law. Such uncertainty about carbon rights poses a significant risk for
investment decisions.

Dr. Nam noted that Vietnam is still in the process of finalizing its legal
framework for the carbon market. While it is important to launch the domestic carbon
market quickly, it is even more crucial to have clear regulations on how carbon
credits are created in the country.

Vietnam has introduced regulations such as Decree No. 119/2025/ND-CP, which
amends and supplements certain provisions of Decree No. 06/2022/ND-CP on greenhouse
gas emission reductions and ozone layer protection. Under the planned roadmap, the
pilot phase for the greenhouse gas emission quota and carbon credit trading market
will run from June 2025 to the end of 2028.

However, legal regulations remain vague on the process of creating such commodities.
Carbon credit projects also face practical barriers, as there is currently no organization
to guide the process or methodology for obtaining credits issued by either domestic
or international bodies, let alone to oversee trading activities.

Therefore, Dr. Nam recommended introducing policies to encourage the development
of carbon credit projects certified by international organizations while Vietnam
works to establish competent domestic issuers. Domestic carbon credit standards
should align with internationally-recognized benchmarks to avoid risks in future
cross-border transactions of this new type of commodity. “This is also to protect
the legitimate interests of pioneering enterprises investing in emission reduction
projects and creating new commodities such as carbon credits,” he emphasized.

At a more transformative level, particularly to support private enterprises
seeking a green transition, Dr. Nam suggested that, in the spirit of fostering innovation,
the State could introduce preferential tax, credit, and financial policies to encourage
investment in clean technology. Additionally, competent authorities should soon
issue guidelines to promote the registration and creation of voluntary carbon credits
(VCM) for pioneering enterprises in Vietnam.



“When the interests and roles of the State and the private sector are clearly defined in the area of climate finance, it will create incentives for both parties to fully realize the potential of green projects that generate carbon credits.”

Dr. Nguyen Phuong Nam, Climate Change Expert and CEO ofKlinova