Developing a Legal Framework for the Carbon Market: A Strategic Vision

To participate in international carbon trading, the Ministry of Agriculture and Environment is working to develop a legal framework that aligns with global standards.

The Ministry of Natural Resources and Environment is currently drafting a new decree to implement the provisions of Article 139 of the Law on Environmental Protection for submission to the Government.  

The carbon market in Vietnam is being developed with a clear roadmap from the 2020 Law on Environmental Protection, aiming for official operation by 2028, contributing to emission reduction and attracting international investment.  A reporter from the Vietnam Times interviewed Mr. Tang The Cuong, Director of the Department of Climate Change (Ministry of Agriculture and Environment), to clarify the progress in this legal framework.  

Could you please provide an overview of the carbon market development roadmap in Vietnam, including the existing legal basis and the role of the Carbon Market Development Project that has just been approved?

Regarding the carbon market, the important legal basis was established in the 2020 Law on Environmental Protection, in which Article 139 clearly stipulates the organization and development of this market.

To implement the Law, the Government issued Decree No. 06/2022/ND-CP, which details the content and development roadmap of the carbon market, creating an initial legal framework for related activities.

Currently, the Ministry of Agriculture and Environment is working closely with the Ministry of Finance, the Ministry of Industry and Trade, the Ministry of Construction, and other ministries and agencies to actively implement various tasks to bring this market into operation.

An important milestone in this roadmap is the Carbon Market Development Project, approved by the Prime Minister in Decision No. 232 dated January 24, 2025.

This Project plays a foundational role, setting out specific tasks to promote the carbon market, including the completion of the legal framework and the development of necessary technical elements.

In terms of legal aspects, the Ministry of Finance is advising the Government to issue a decree on trading activities on the carbon exchange.

This decree will detail the trading activities of the carbon exchange, with the goal of being issued from now until June 2025, to create a solid foundation for trading activities on the carbon market in the future.

This is an important step to ensure the market operates transparently, efficiently, and in accordance with current practical requirements.

What is Vietnam preparing to participate in international carbon trading, meet global standards, and fulfill its commitments to reduce greenhouse gas emissions?  

To participate in international carbon trading, we are striving to develop a legal framework that meets global standards.

The Ministry of Agriculture and Environment is currently drafting a new decree to implement the provisions of Article 139 of the Law on Environmental Protection for submission to the Government.

This decree will detail the activities of exchanging carbon credits and carbon quotas with international partners, including the results of greenhouse gas emission reductions and the exchange of technology with foreign partners.

Currently, the results of emission reductions and carbon credits are attracting great interest from many international countries, organizations, and businesses towards Vietnam.

These partners wish to invest in greenhouse gas emission reduction projects in Vietnam, using modern technologies to generate high-quality carbon credits that meet international standards.

Regarding international exchange, we have promptly updated the new international guidelines into this amended decree.

At the COP29 conference at the end of 2024, the international community issued specific guidelines for implementing Article 6 of the Paris Agreement.

Accordingly, when exchanging international carbon credits, the amount of emissions or carbon credits will be deducted from the transferring country and added to the receiving country to fulfill the obligations of contributing to the nationally determined contributions, or NDCs.

Emission reduction is a global responsibility, so the international community has established rules and corresponding adjustments between countries when conducting carbon credit transactions, to ensure fairness and transparency.

With efforts to fulfill international commitments on greenhouse gas emission reduction, Vietnam needs to create conditions for businesses to participate in the carbon market.

We are focusing on energy transition and changing production methods, helping businesses generate carbon credits and participate in quota trading on the market.

Decree No. 06/2022/ND-CP is also being submitted to the Government for amendment, expected to be issued by the end of April 2025. This decree details the practical requirements, including strengthening greenhouse gas inventory, measurement, reporting, and verification of greenhouse gas emission reduction results.

If issued, the decree will facilitate the effective operation of the carbon market, from project creation, project registration to issue carbon credits, to trading and international exchange activities.

In terms of technology and operation, how is the registry system and carbon trading floor being developed, and what is the roadmap until 2028?  

Regarding technology, the Ministry of Agriculture and Environment is developing a registry system to strictly manage emission quotas and carbon credits.   This system will connect with ministries, agencies, and Vietnamese businesses that have emission quotas and carbon credits.   When quotas or credits are generated, units will register, be licensed, and then can trade with each other. This system is also linked to the carbon trading floor and international standard organizations such as Gold Standard or VCS.

If a Vietnamese business’s carbon credits are recognized and registered by these organizations, they will be updated on our system. When conducting international transactions, carbon quotas and credits are also recorded in this system, ensuring tracking of all fluctuations, both domestically and internationally. To complete the carbon market, in addition to the registry system, we need to develop a system for trading quotas and credits on the trading floor.

Currently, the Ministry of Finance is promoting the development of the carbon trading floor, while the Ministry of Agriculture and Environment provides professional requirements to ensure effective operation.  The Ministry of Finance will establish and pilot this trading floor, with the expectation of piloting in 2025.

According to the roadmap from 2025 to 2028, we will conduct pilot operations, while completing the legal framework and technical infrastructure for synchronous implementation, ensuring harmonization of national, business, and organizational interests, and contributing to national emission reduction efforts. We are making efforts to implement the Prime Minister’s Project 232 decisively.

By 2028, we will summarize and evaluate to build a well-structured, official, and large-scale carbon market, similar to leading countries such as China, South Korea, or the European Union. In the next phase, we will connect the Vietnam carbon trading floor with regional and international trading floors, creating a closely linked system.

How are private enterprises preparing to participate in the carbon market, and how to ensure transparency in their emission reports?  

Regarding the participation of private enterprises, the Ministry of Agriculture and Environment has collaborated with the World Bank and the International Finance Corporation (IFC) to survey the readiness to participate in the carbon market.  The results show that the awareness and understanding of enterprises about the carbon market are quite clear. Many businesses have created carbon credits through international standard organizations such as Gold Standard. In a recent workshop, some businesses expressed their desire to establish a domestic mechanism to participate in the carbon market more effectively.

They also want state agencies to provide more detailed guidance on domestic carbon measurement, verification, and standards.  We will complete these issues, support businesses to register standards to create domestic carbon credits, thereby trading with each other voluntarily and sharing – a very important factor in the future.

To promote domestic carbon trading, we want to develop a detailed handbook on participating in the carbon market, helping businesses understand and connect more effectively.  This will create a stronger carbon trading ecosystem.  For example, emission-reducing businesses in the forestry or startup sectors such as Vinamilk and TH can create carbon credits and trade with manufacturing businesses that have emissions exceeding their quotas.

This ecosystem of exchanging carbon credits and quotas will be an important step, contributing to the country’s emission reduction efforts.  With the current pace, along with the commitment and determination of ministries, agencies, and government bodies, I believe that in the coming period, we will move quickly, making the carbon market operate effectively, keeping pace with countries in the region and the world.

Regarding transparency in emission reporting, we have received questions about how to assess and classify businesses participating in the carbon market, especially through emission and waste reports on the ESG system.  According to the draft Decree No. 06, an independent consulting unit is needed to verify these reports. Currently, the verification reports must comply with international regulations, institutionalized in Decree No. 06, abbreviated as MRV – measurement, reporting, and verification.

However, Vietnam lacks independent consulting units to carry out this work.

We are approaching this by using conformity certification bodies according to Decree No. 107 to verify two main contents: greenhouse gas inventory results to determine emission quotas, and emission reduction results to generate carbon credits.

Currently, only a few domestic enterprises meet this standard.

In the future, the Government will develop more of these organizations and assign tasks to independent units to ensure that the verification work complies with international standards, such as the guidelines of the Intergovernmental Panel on Climate Change (IPCC) and the regulations of VCS, to ensure transparency and accuracy in measurement, reporting, and verification.

Thank you, sir!  

Soures: Thời báo Ngân hàng