Policy: Vietnam finalises legal framework for carbon market, effective date August 1

Vietnam’s government has officially issued Decree 119/2025/NĐ-CP, amending a 2022 decree on greenhouse gas emissions and ozone layer protection, solidifying the legal foundation for emissions quotas, carbon credit trading, and both domestic and international offset mechanisms. The new regulations take effect on 1 August 2025.

Key details:

  • Covered sectors: Power, steel, cement, and other large GHG emitters
  • Carbon trading: Defines exchange rules for carbon credits and GHG quotas; introduces domestic exchange and registry.
  • International alignment: Incorporates Paris Agreement mechanisms (Articles 6.2 and 6.4) for bilateral and multilateral credit transfer.
  • Registry system: Mandates national digital tracking of quotas, offsets, and emissions reports.
  • Compliance timeline: Quota allocation begins 2025–2026; mandatory reporting expands in 2027–2028; full carbon market launch by 2029.

Analysis

This decree formally commits Vietnam to carbon pricing and emissions control through legally binding market mechanisms.

It positions the country for international carbon trade, supports access to green finance, and signals a structural shift in how emissions-intensive industries operate within Vietnam’s climate obligations.

However, the effectiveness of the decree will depend heavily on enforcement capacity, data transparency, and the readiness of market infrastructure. Vietnam still faces challenges with institutional coordination, limited monitoring systems, and industrial resistance.

While the policy is ambitious and well-structured on paper, its success will hinge on whether government agencies can close the gap between regulation and real-world compliance.

See also: Vietnam’s Emissions Trading Scheme 2025: Unpacked

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