As Viet Nam prepares to launch its domestic carbon exchange, authorities are moving quickly to establish robust monitoring and reporting safeguards, aiming to eliminate the risk of “paper carbon” and ensure full market transparency.
The challenge of “paper carbon”
The global carbon market is a vast financial ecosystem, but one that carries significant risks when institutional safeguards are weak. History has shown that poorly regulated carbon markets can give rise to “paper carbon” - carbon credits generated from inflated or inaccurate data that do not reflect actual emissions reductions. Such practices undermine investor confidence and jeopardize broader climate ambitions.
As Viet Nam's domestic carbon exchange approaches operation, transparency has emerged as a critical prerequisite. For the market to function effectively, all tradable assets - including emissions allowances and carbon credits - must be measured accurately, leaving no room for ambiguity or data manipulation.
Accurate emissions accounting is considered the most important safeguard against “paper carbon” in the carbon market. Experts agree that emissions accounting and information disclosure represent the most important safeguards against environmental financial fraud. Associate Professor Dr. Nguyen The Chinh, Vice Chairman of the Viet Nam Association of Environmental Economics, emphasized that while the term “safeguard” may encompass many regulatory elements, the core issue remains the accurate determination and public disclosure of companies’ actual emissions.
“If transparency and accurate emissions inventories are not ensured from the outset, every transaction that follows will be distorted. A company that actually emits 100 units but reports only 80 in order to sell the remaining 20 creates serious risks. Standardized measurement and monitoring systems are therefore the most effective safeguards for ensuring fairness and preventing misinformation from distorting the market,” he said.
Sharing this view, Associate Professor Dr. Nguyen Dinh Tho, Deputy Director of the Institute of Strategy and Policy on Agriculture and Environment, highlighted the technical dimension of the issue. According to him, the level of uncertainty in carbon accounting depends heavily on available technologies and emissions factors.
At present, Viet Nam’s pilot carbon market focuses on Scope 1 and Scope 2 emissions — direct emissions from facilities and indirect emissions from purchased electricity and heat. These categories are relatively manageable, provided companies report honestly.
“As long as businesses accurately disclose fuel consumption and electricity use, emissions estimates will closely reflect reality. However, the challenge will become far greater if the system expands to Scope 3 emissions, which cover entire supply chains, or to forest carbon accounting, where uncertainty levels can reach up to 40%,” he noted.
Integrated digital governance systems are expected to strengthen transparency and credibility in Viet Nam’s emerging carbon market.Integrating technology infrastructure with national governance
To ensure transparency, Viet Nam is not relying solely on voluntary compliance. Instead, the country is building an interconnected digital governance framework.
At the center of this framework is the National Registry System for Greenhouse Gas Emissions Allowances and Carbon Credits, operated by the Ministry of Agriculture and Environment under Circular No. 11/2026/TT-BNNMT. The registry serves as the primary data repository, recording the entire lifecycle of emissions allowances and carbon credits.
The national registry will be directly integrated with the trading platform operated by the Hanoi Stock Exchange (HNX) and the Viet Nam Securities Depository and Clearing Corporation (VSDC). This interconnected system is designed to uphold one of the market’s most important principles: preventing double accounting while ensuring transparency throughout the reporting and verification process.
To address the high reporting costs faced by small and medium-sized enterprises, Dr. Tho suggested that government agencies and industry associations work together to develop user-friendly data reporting software. He also recommended the application of blockchain technology to create immutable emissions records that cannot be altered or erased retroactively.
“Only by doing so can Vietnamese carbon credits build lasting credibility in international markets,” he said.
Ultimately, the success or failure of Viet Nam’s carbon market will depend on whether trust can be built on reliable and transparent data. Strengthening emissions accounting safeguards through digital governance and advanced technologies remains the most effective way to eliminate the risk of “paper carbon,” protect environmental integrity, and enhance the international value of Vietnamese carbon credits.