VINACHEM

Experts warn a lack of a unified legal framework could reduce Vietnam’s carbon market to a formality with limited global competitiveness.

Vietnam is entering a pivotal stage in launching a domestic carbon market. Yet without a transparent, unified legal framework, this effort risks becoming symbolic - lacking real value and competitiveness on the global stage.

For over a decade, carbon credits - each representing one metric ton of CO₂ reduced or absorbed - have become a key tool in global emissions reduction efforts. Two mechanisms now coexist: the voluntary carbon market (VCM) and the compliance carbon market.

In voluntary markets, companies invest in carbon-absorbing projects like reforestation or energy transition, and sell credits on international platforms. In 2023, average carbon credit prices hovered around USD 6–7 per ton of CO₂ (tCO₂e), according to Ecosystem Marketplace by Forest Trends. Lower-quality projects, however, traded for under USD 3, raising concerns about transparency and actual impact.

Compliance markets - like the EU Emissions Trading System (EU ETS) and South Korea’s K-ETS - are state-regulated, with emissions caps and penalties. Credits here often fetch prices between USD 60–100 per tCO₂, and offer clearer reductions. According to the World Bank’s State and Trends of Carbon Pricing, these systems now generate over USD 100 billion annually, fueling energy transition efforts.

Vietnam’s untapped carbon credit potential

Estimates from the Ministry of Natural Resources and Environment suggest Vietnam exported more than 15 million carbon credits by the end of 2024, mainly under Verified Carbon Standard (VCS) and Gold Standard (GS). Prices ranged between USD 5–7 per credit. However, Forest Trends’ 2023 reports revealed many voluntary projects in Southeast Asia lack transparency, leading to a glut of low-value or “junk credits.”

Dr. Nguyen Thi Quynh Anh (Academy of Policy and Development) noted Vietnam ranks fifth in ASEAN for carbon credit potential with an annual output of 11.2 million credits. Yet only 15% meet international standards, dragging the average price to just one-third of the global rate.

Domestic firms still rely on foreign consultants for project design and verification, adding 20–30% to costs. At a June 17 seminar on carbon credit policy, Associate Professor Dr. Do Anh Tai (Vice President, Institute of Economics and Development) emphasized the urgent need for a transparent MRV (Measurement, Reporting, Verification) system, backed by independent audits and legal recognition of ownership rights, issuance, and auction mechanisms.

Moving from policy to enforcement

Vietnam’s 2020 Environmental Protection Law marked the first legal recognition of carbon credits and tasked the government with establishing a domestic market under Article 139. Initial progress came via Decree 06/2022/ND-CP, outlining greenhouse gas inventory, emissions quota allocation, and a pilot carbon exchange for 2025–2027.

However, this decree remained largely directional.

On June 9, 2025, Decree 119/2025/ND-CP amended Decree 06 with concrete regulations: decentralized verification authority, a quota allocation timeline for major emitters, and detailed rules for credit registration, transfers, and offsetting via a national carbon exchange tied to an integrated digital registry.

Legal expert Tran Anh Tuan (Institute for International Economics and Law) welcomed this shift from “having regulations” to “having tools.” Yet, he warned that without a Carbon Market Law, the system lacks the backbone for effective enforcement, ownership clarity, auction integrity, and international linkages.

Racing against time for global integration

Many international experts echoed these concerns. Dr. Ta Thi Doan (Ho Chi Minh National Academy of Politics) urged Vietnam to integrate carbon taxes with transparent quota mechanisms, citing the EU ETS model. Dr. Dang Hoang Ha (Trade Union University) called for SME support on MRV and green financing, while Dr. Quynh Anh warned of continued “junk credits” without independent oversight.

The lack of a clear legal framework could leave Vietnam unprepared for global requirements such as the EU’s Carbon Border Adjustment Mechanism (CBAM). From 2026, non-compliant exporters face carbon tariffs of EUR 70–90 per tCO₂ unless they submit equivalent carbon credits.

At the “Carbon Market Law Building” roundtable, UNDP expert Dr. Nguyen Van Hai stressed: “You can’t manage a market worth hundreds of millions of dollars on decrees alone. We need a law like the Securities Law did for Vietnam’s financial market.”

Key legal proposals from experts:

A comprehensive carbon market law should clarify carbon credit ownership, standardize allocation and MRV, mandate independent audits, and integrate with Article 6.2 and 6.4 of the Paris Agreement. It must define legal concepts such as emissions quotas and carbon assets, while introducing enforceable penalties and dispute resolution frameworks.

According to the World Bank (2023), over 40 countries have implemented carbon taxes ranging from USD 1–130/tCO₂e, and the global carbon market has surpassed USD 900 billion in value. Vietnam cannot afford to lag behind.

A foundation for green competitiveness

Associate Professor Dr. Truong Manh Tien, Secretary General of the Vietnam Association of Environmental Economics, concluded: “Nations with clear, transparent, and reliable laws will attract the most carbon capital. Law turns carbon credits into real assets - not just paper promises.”

He highlighted key global lessons:

EU ETS has auctioned quotas since 2013 with a legal framework that enhances transparency and prevents fraud.

South Korea transitioned from free to auctioned quotas by 2021, following a gradual roadmap to ease business impact.

China started with the power sector to simplify monitoring and ensure compliance.

Carbon markets are indispensable to achieving Vietnam’s Net Zero 2050 target. But without a robust and transparent law, this market risks becoming hollow. It’s time for Vietnam to adopt a real Carbon Market Law - one that ensures transparency, drives real emissions reduction, and secures Vietnam’s place in the global green economy.