Vietnam has launched its first carbon trading exchange, quickly establishing an operational framework and piloting a greenhouse gas (GHG) quota allocation for 2025–2026. The country’s implementation of the carbon market carries strategic implications for businesses operating in emissions-intensive sectors.
Vietnam has shifted from climate commitments to enforceable carbon market infrastructure. Decree No. 29/2026/ND-CP (“Decree 29”) establishes the country’s first operational domestic carbon trading exchange framework, integrating emission quota trading into Vietnam’s securities market infrastructure and providing the legal framework for its operation.
This move both supports Vietnam’s national goals and fulfils its international commitments. At COP26, the country pledged to reach net-zero emissions by 2050 and reduce methane emissions by 30 percent by 2030 compared to 2020 levels. Under its updated 2022 Nationally Determined Contribution (NDC), Vietnam commits to reducing greenhouse gas emissions by 15.8 percent unconditionally and up to 43.5 percent with international support by 2030, relative to the business-as-usual scenario.
Building on the framework established under Decree No. 6/2022/ND-CP (“Decree 6”), which is amended by Decree No. 119/2025/ND-CP (“Decree 119”), Decree 29 operationalizes these principles by embedding emission quotas and carbon credits within a regulated exchange system.
The decree transforms carbon pricing from policy commitment into regulated market practice. It now anchors it in the financial market infrastructure.
Overview of Decree 29
Decree 29 consists of six chapters and 35 articles regulating registration, domestic coding, ownership transfer, custody, trading, and settlement of GHG emission quotas and eligible carbon credits.
The decree integrates environmental regulation with securities market governance. It applies to certain entities, including:
- Vietnam Exchange (VNX);
- Hanoi Stock Exchange (HNX);
- Vietnam Securities Depository and Clearing Corporation (VSDC);
- Securities companies acting as trading and depository members; and
- Entities participating in carbon transactions.
Essential market mechanisms include:
- The national GHG registration system: All tradable quotas and carbon credits must adhere to Decree 6 (amended by Decree 119). The Ministry of Agriculture and Environment (MAE) needs to register each quota or credit in this system before it can be traded or exchanged.
- Unified domestic coding system: Each quota or credit is assigned a unique, non-replicable ID before it is deposited or traded. This approach helps prevent double-counting and improves traceability.
The regulation also defines reporting obligations, disclosure standards, and enforcement authority. It formalizes carbon allowances as tradable instruments within Vietnam’s regulated exchange system.
Market structure and institutional roles
Vietnam has adopted a multi-layered institutional design that mirrors the architecture of its securities market, structuring its carbon market around a coordinated institutional framework:
- The MAE administers the national registry, verifies ownership data, and assigns domestic codes that enable market participation.
- The HNX provides the trading infrastructure, facilitating order matching and transaction execution.
- The Vietnam Securities Depository and Clearing Corporation oversees custody and settlement, finalizing ownership transfers and coordinating payment through a designated settlement bank.
- Securities companies act as both trading and depository members, and market participants must maintain segregated accounts dedicated specifically to carbon transactions.
Decree 29 requires clear segregation between carbon assets and conventional securities holdings. During the pilot phase, regulators will designate a single settlement bank. From January 1, 2029, authorities may expand the number of settlement banks depending on market scale.
This structure integrates environmental compliance with securities supervision, reducing regulatory fragmentation.
Trading mechanism and compliance workflow
The trading process follows a defined sequence:
- Step 1: Entities must register quotas and credits with the national registration system. The Ministry verifies ownership and assigns domestic codes.
- Step 2: Entities must deposit the registered instruments with the VSDC before placing orders. No trading can occur without prior custody.
- Step 3: Participants place buy or sell orders through licensed trading members. The HNX system matches transactions.
- Step 4: Settlement occurs on a same-day, transaction-by-transaction basis under a delivery-versus-payment principle. Payment and quota transfer occur simultaneously.
Key compliance requirements and restrictions under Decree 29:
- Restricted off-platform transfers: Ownership transfers outside the trading system remain limited to specific circumstances defined by the MAE and require prior withdrawal from the depository system.
- Prohibitions on price manipulation, rumor-based trading, and system abuse: Violations may trigger administrative penalties or criminal liability under environmental and securities laws. The framework prioritizes traceability and immediate settlement to limit counterparty exposure.
Pilot greenhouse gas quota allocation (2025–2026)
Under Decision No. 263/QD-TTg issued February 9, 2026, the government has authorized pilot GHG emission quotas for 2025–2026, covering 34 thermal power plants, 25 iron and steel facilities, and 51 cement plants. The total pilot quota is set at:
- 243,082,392 tons of CO2 equivalent (CO₂e) for 2025; and
- 68,391,454 tons of CO₂e for 2026.
The sector selection targets emissions-intensive industries that account for a substantial share of industrial carbon output. Power generation, steel, and cement represent high-intensity industries with measurable output data and established monitoring frameworks.
The pilot allows regulators to test allocation methodology, registry performance, and trading dynamics before expanding coverage. It also signals a strengthening of the transition from emissions reporting to enforceable quota-based management.
Future phases may expand coverage to additional industrial segments and potentially introduce tighter caps in line with NDC trajectories.
Governance, supervision, and reporting obligations
Decree 29 adopts a dual-regulatory model that integrates environmental oversight with securities market supervision, reflecting the hybrid nature of Vietnam’s emerging carbon market.
Institutional responsibilities
Under the framework:
- The MAE is responsible for quota eligibility, registry integrity, and environmental compliance.
- The State Securities Commission of Vietnam (SSC) supervises trading conduct and exchange operations.
- The Ministry of Finance provides guidance on transaction monitoring and broader financial oversight.
This allocation of responsibilities separates environmental governance from market conduct supervision while maintaining coordination across agencies.
Reporting and disclosure requirements
Trading members and depository members are required to submit both periodic and ad hoc reports to competent authorities. Exchanges must disclose transaction data and membership status within defined timelines to ensure transparency during the pilot phase.
Suspension and risk-control mechanisms
Decree 29 also introduces clear suspension mechanisms. Authorities may temporarily halt trading or settlement in cases of system failures, extreme market volatility, or ongoing regulatory investigations.
Together, these safeguards are designed to enhance market credibility, mitigate systemic risk, and reduce regulatory uncertainty for market participants as Vietnam operationalizes its carbon trading framework.
Business implications and strategic preparation
Decree 29 introduces measurable compliance costs for covered industries and signals a structural shift in how carbon is treated within corporate planning. For regulated entities, emission allowances will function as both balance sheet liabilities and, where a surplus exists, potential tradable assets.
Compliance and operational adjustments
Companies operating in pilot sectors will be required to implement robust monitoring, reporting, and verification (MRV) systems. The accuracy of emissions data will directly determine quota sufficiency and exposure to additional allowance purchases. Weak internal controls may therefore translate into financial and regulatory risk.
Capital allocation and carbon strategy
Management teams will need to assess two primary strategic pathways:
- Investing in emissions reduction technologies to lower long-term compliance costs; or
- Acquiring additional allowances through the exchange.
As the market develops, carbon pricing assumptions are likely to become embedded in capital budgeting, investment appraisals, and supply chain decisions. Early engagement with licensed trading and depository members will also be critical to understand account setup requirements, liquidity conditions, and transaction procedures.
Implications for foreign-invested enterprises
Foreign-invested enterprises (FIEs) should integrate Vietnam’s domestic carbon framework into their global compliance architecture. As carbon border adjustment measures expand in key export markets, alignment between domestic emissions accounting and international disclosure standards will be essential to safeguard market access and competitiveness.
Strategic positioning beyond the pilot phase
Regulators may expand sectoral coverage and refine market mechanisms after 2028. Businesses that treat the pilot phase as a procedural compliance exercise rather than a strategic transition point risk incurring higher adjustment costs in subsequent phases.
With the regulatory architecture now in place, companies that proactively incorporate carbon pricing into operational, financial, and long-term capital planning are likely to secure a strategic advantage as Vietnam’s carbon market matures.
For further information on how Vietnam is accelerating the green transition in its industrial parks, please read:
- Green Transition in Vietnam’s Industrial Parks – Part 1: Policy Foundations
- Green Transition in Vietnam’s Industrial Parks – Part 2: Implementation
