Vietnam's carbon market—the outlook and opportunities

The window for early-mover advantage is open 8 min read

Vietnam recently launched its domestic carbon exchange, setting prices for the first time, and marking a decisive shift from policy ambition to market reality. Concurrently, proposed amendments to the Petroleum Law are creating its first dedicated regulatory pathway for carbon capture and storage (CCS) and carbon capture utilisation and storage (CCUS) projects. Together, these developments signal real emerging commercial opportunities for investors, emitters and project developers alike.

This Insight gives an overview of the current environment, and identifies where opportunities lie, what the constraints are, and what you should be doing now.

Key takeaways

• Vietnam has officially launched a domestic carbon exchange, marking an important step towards local carbon trading and a more structured compliance market.
• It is possible to trade carbon credits internationally, but this is subject to strict approval, notification and volume-control requirements.
• CCS/CCUS is emerging as a new investment area, particularly in the oil and gas sector, with proposed Petroleum Law amendments expected to provide a clearer regulatory pathway.
• Early engagement will be critical for investors and emitters seeking to manage regulatory risk, and position themselves ahead of further market developments.

Vietnam's own carbon market

Vietnam officially launched a domestic carbon trading platform at the Hanoi Stock Exchange (HNX) on 29 June 2026. While still nascent, policy and regulatory developments provide strong support for ongoing development of the market, underpinning opportunities for multiple stakeholders, as explained below.

Recognition of carbon credits and emission quotas as tradable assets

Vietnam officially recognises carbon credits and emission quotas as lawful assets,¹ giving holders a clear legal basis to own and trade these instruments. A carbon credit is a certificate entitling the holder to emit 1 tonne of carbon dioxide (CO₂) or an equivalent amount of greenhouse gases (GHG). An emission quota is the amount of GHG that a country, organisation or individual is permitted to emit within a set period, also measured in tonnes of CO₂ or its equivalent.

Key platforms to facilitate domestic transactions 

Vietnam has established two main market platforms to support and oversee local trading of carbon credits and emission quotas:

• National Registry System: a national registry of carbon credits and emission quotas, managed by the Ministry of Agriculture and Environment (the MOAE) for record keeping and government oversight. Before carbon credits and emission quotas can be traded, they must be registered via this system and issued with an identification code in order to be placed in custody, managed by the Vietnam Securities Depository and Clearing Corporation for subsequent trading on the domestic carbon exchange.
• Domestic Carbon Exchange: a centralised carbon trading platform, operated by the HNX, to enable local trading of carbon credits and emission quotas. This exchange has been operating on a pilot basis from 29 June 2026, to 31 December 2028, with the intention that it will commence full operations in 2029.

The Government issued a series of legal instruments governing the establishment and management of these two platforms in early 2026.² Further guidance is expected to be issued to ensure that the platforms can operate in practice as scheduled.

International sale of carbon credits

A new decree regulating the international trading of carbon credits³ covers not only credits generated under the mechanisms of the Paris Agreement, but also credits issued under voluntary standards (eg Gold Standard and Verra). In general, international sales and purchases of carbon credits are subject to strict requirements—including capped sale volume, or obligations to notify or obtain prior approval from the MOAE—depending on the type of underlying project and the intended use of the credits. These strict requirements reflect Vietnam’s effort to balance carbon credit holders' economic interests with its international commitments on carbon emissions.

Incentive and supporting mechanisms

To encourage carbon credit trading, Vietnamese law provides a corporate income tax exemption for income earned on the first transfer of carbon credits (this is likely to be applicable to both domestic and international trades). Additionally, in the renewable energy sector, power generators and electricity consumers participating in a so-called virtual direct power purchase agreement (DPPA) may agree to transfer carbon credits, together with the sale of electricity.⁴

Allocation of emission quotas

Vietnam has approved the total emission quotas for 2025–2026,⁵ and allocated them to 34 thermal power facilities, 25 iron and steel production facilities, and 51 cement production facilities.⁶ Certain major emitting facilities, including a number of thermal power plants, were omitted by local authorities and therefore have not yet been allocated quotas, but are likely to be proposed for inclusion in subsequent allocation periods. By law, entities allocated emission quotas may offset their carbon credits against up to 30% of their emission quotas, creating greater demand for the domestic carbon market. Another option for these entities is to purchase emission quotas via the new domestic carbon exchange, as explained above.

Opportunities for trading carbon credits generated in Vietnam

Investment in projects that generate carbon credits in Vietnam is increasing for reasons including:

• demand for carbon credits is rising as the domestic compliance market gradually takes shape; and
• Vietnam’s geographic and natural advantages allow it to develop a wide range of carbon credit projects (eg forestry, renewable energy, industrial efficiency, agriculture and CCS/CCUS).

Once carbon credits have been generated, holders may monetise them in several ways:

• Sale through the domestic carbon exchange: The new centralised exchange is expected to improve liquidity and simplify trading in general. As noted above, however, further regulations are being developed, and Vietnam’s carbon exchange will need more time to become fully operational and trusted by investors.
• Sale through overseas markets: International sales of carbon credits may represent an important commercial opportunity, but remain subject to strict controls, including capped sale volumes, and requirements for notification to or prior approval from MOAE. Domestic buyers may also purchase international carbon credits, but only if they participate in the project generating those credits. Vietnamese law does not yet define 'participation' for this purpose, although we expect it to include providing equity or other funding to the relevant project.
• Sale under the DPPA mechanism: this option is available only for renewable energy projects participating in the virtual DPPA mechanism; this is a contractual arrangement enabling large power users to contract directly with renewable energy generators for clean energy via the national power grid. As of the date of this Insight, one project in Vietnam has successfully registered under this mechanism—TTC Duc Hue 2 Solar Power Plant, with Samsung Electronics Vietnam as the electricity buyer, commissioned 1 June 2026.⁷

CCS/CCUS regulations and market practice

The concept of CCS and CCUS is relatively new in Vietnam, and there is currently no dedicated policy or legal regime in place for such projects. That said, Vietnam is making meaningful efforts to address these regulatory gaps. The clearest example is a draft new Petroleum Law, published April 2026, which introduces a dedicated chapter on the development of CCS/CCUS projects. Given the complexity of developing these projects—particularly in the absence of a comprehensive regulatory environment—very few are currently operating, with Vietnamese State-owned enterprises taking the lead (see below).

New oil and gas regulation governing CCS/CCUS

The oil and gas industry is currently at the forefront of CCS/CCUS deployment in Vietnam, with the draft Petroleum Law introducing important provisions governing such projects. It creates a clear and direct legal basis for petroleum contractors to undertake CCS within the oil and gas production sharing contract (PSC) framework. This includes as to contractors' rights to amend existing PSCs to incorporate CCS activities, provided that CCS implementation does not interfere with ongoing oil and gas operations. According to the latest draft, CCS project costs are classified as petroleum operation costs, which are recoverable under the existing petroleum contract's cost recovery mechanism. Contractors implementing CCS also have a statutory right to own and trade carbon credits generated from their activities. However, the contractors should note that revenue from selling carbon credits will respectively reduce their cost recovery. Additionally, under the draft, no sea-area use fees will be charged for CCS construction works and CO2 transport pipeline systems. 

The Government submitted the draft to the Standing Committee of the National Assembly in July 2026 for comments, and the National Assembly is expected to vote on it at its August 2026 session. If passed, the law is anticipated to take effect on 1 March 2027. 

Current status of CCS/CCUS in Vietnam

PetroVietnam (PVN) has emerged as the leading actor in CCS/CCUS development in the oil and gas sector, leveraging depleted oil fields for CO₂ storage. In the near term, it is focusing on research activities and stakeholder collaborations. Looking ahead, PVN has established a roadmap for CCS/CCUS project development to 2030 as follows.

Alongside PVN, PetroVietnam Exploration Production Corporation (PVEP) has established a CCS/CCUS development roadmap. This includes a pilot project at the PM3-CAA site in partnership with Hibiscus, with a target of first injection in 2028. In addition, PVEP is progressively conducting research with the aim of providing CCS/CCUS and related services by 2045, supported by international partners such as SKEO, Perenco and Schlumberger.

Opportunities for CCS/CCUS development

Oil and gas industry: Petroleum contractors will benefit from a clearer legal framework, and financial incentives to integrate CCS/CCUS into their ongoing oil and gas operations, if current CCS/CCUS provisions are retained in the final Petroleum Law. Depleted oil fields may be repurposed for CO2 storage, offering a cost-effective solution that leverages existing infrastructure.

Hydrogen production: CCS/CCUS is essential for producing 'blue hydrogen', which plays a central role in Vietnam’s hydrogen development strategy to 2050.⁸ Under this strategy, it aims to deploy blue and green hydrogen across three key sectors: electricity production, transportation and heavy industry. Demand for CCS/CCUS technology in blue hydrogen production is expected to grow significantly in the coming years.

Carbon credits: By capturing and storing CO₂, a CCS/CCUS project can generate carbon credits, providing an additional revenue stream for the project owner.

Carbon border adjustment mechanism (CBAM): In the context of the CBAM the European Union has introduced and the potential implementation of other carbon taxes, CCS/CCUS may offer Vietnamese exporters, particularly in the iron and steel, aluminium and cement sectors—means to reduce emissions and mitigate financial exposures when exporting to the EU.

Actions you can take now

• Closely track regulatory updates, including amendments to major laws and forthcoming decrees shaping Vietnam’s CCS/CCUS landscape. These include the draft Petroleum Law.
• Build early relationships with authorities and policymakers to gain insight into the upcoming pilot domestic carbon exchange's operation, as well as guidance on forthcoming compliance requirements and procedures for international transfers of carbon credits.
• Deploy a dedicated local team to actively engage with stakeholders, ensuring your organisation remains agile and well positioned in Vietnam’s rapidly evolving regulatory environment.

Please feel free to connect with us if you have any questions.