Viet Nam’s carbon market has officially entered a landmark pilot phase, transforming greenhouse gas emission allowances into tradable assets with tangible commercial value, while advancing the country’s commitment to achieving Net Zero emissions by 2050.
From climate commitments to green capital flows
The year 2026 marks a significant milestone in Viet Nam’s green economic transition. Emission allowances are no longer a theoretical concept but have become a marketable asset. With the Government issuing Decree No. 29/2026/ND-CP on the domestic carbon exchange and the Prime Minister approving the pilot emissions quota allocation for 2025-2026 under Decision No. 263/QD-TTg, the legal foundation for the carbon market has largely been established.
Under the pilot scheme, 110 major emitters from three sectorsb - thermal power, steel production, and cement manufacturing - have been assigned specific emissions quotas, paving the way for the country’s first carbon trading transactions.
Emission allowances are no longer an abstract concept but have become a valuable tradable asset. The launch of a centralized carbon exchange is more than a climate-control mechanism; it is also a catalyst for mobilizing green investment. Businesses must now adapt to a new reality: those that emit less can generate additional revenue, while those exceeding their allocated quotas will need to purchase additional allowances. At its core, the system uses economic incentives to reshape industrial behavior and encourage long-term investment in cleaner technologies.
The decision to begin with the thermal power, steel, and cement industries has received broad support from experts. From an environmental economics perspective, Associate Professor Dr. Nguyen The Chinh, Vice Chairman of the Viet Nam Association of Environmental Economics, said that Decisions No. 263 and No. 699 have created a relatively comprehensive legal framework for the market.
“Selecting the energy, steel, and cement sectors for the pilot phase is entirely appropriate, as these industries account for the largest share of carbon dioxide and greenhouse gas emissions in the economy. They are the logical starting point for building a well-structured carbon market before full-scale implementation,” he noted.
Yet an important question remains: does being among the first sectors covered by the scheme represent a privilege or a burden?
Offering a policy perspective, Associate Professor Dr. Nguyen Dinh Tho, Deputy Director of the Institute of Strategy and Policy on Agriculture and Environment, argued that the current quota allocation should be viewed more as an opportunity than a challenge. The initial focus is on preparation, including emissions inventories and the development of reduction plans.
“With the quotas currently assigned, this is a privilege rather than a significant pressure. The allocations are based on companies’ actual emissions levels. This creates a valuable opportunity for businesses to invest in cleaner technologies and potentially sell surplus allowances on the exchange, helping recover investment costs,” he explained.
The carbon market is not a cost burden; it is a gateway to a new management and competitiveness model for Vietnamese businesses.A safe trial run before entering the global market
A particularly important feature of the pilot phase is that all emissions allowances are being allocated free of charge by the State. This approach provides businesses with greater certainty and helps avoid sudden financial burdens for energy-intensive industries.
According to Dr. Chinh, free allocation essentially establishes a clear emissions cap that allows businesses to understand and adapt to the system more easily. Companies exceeding their quotas must purchase additional allowances, while those emitting less may sell their surplus through the exchange using their designated identification codes.
“The State is not directly collecting money from emitters. Instead, it is creating a market mechanism through which businesses can trade allowances, allowing a domestic carbon price to emerge naturally. Government revenue will come primarily from taxes on trading activities, similar to those applied in the stock market,” he said.
The period leading up to 2028 is widely regarded as a crucial learning phase for Vietnamese enterprises, enabling them to gain experience with carbon market operations before the country’s planned integration with international carbon markets in 2029.
As global climate-related trade measures, including the European Union’s Carbon Border Adjustment Mechanism (CBAM), become increasingly stringent, mastering the domestic carbon market is seen as essential to preserving the competitiveness of Vietnamese exports in international markets.
Rather than being a cost burden, the carbon market represents a new model of corporate governance and sustainable growth. Viewing emissions quotas as a strategic advantage during this transition period can help Viet Nam’s key industrial sectors accelerate technological innovation and transform decarbonization efforts into a lasting competitive edge as they prepare to compete on the global stage from 2029 onward.