By Francesca Nardini, UNDP Deputy Resident Representative in Viet Nam
The launch of Viet Nam’s domestic carbon trading platform in June 2026 marks an important shift in the country’s climate transition: from establishing targets and regulatory frameworks to putting in place an economic mechanism that can influence investment and production decisions.
By putting a price on greenhouse gas emissions, carbon markets can create incentives for businesses to reduce emissions, invest in cleaner technologies and improve efficiency. For a rapidly growing economy like Viet Nam, an effective carbon market can therefore become an important instrument for aligning continued economic growth and competitiveness with the country’s commitment to achieving Net Zero emissions by 2050.
Viet Nam’s Pathway to Carbon Market
Grounded in the Law on Environmental Protection (2020), Viet Nam has developed its domestic carbon market through a phased approach, progressively putting in place the regulatory, institutional and technical foundations required for emissions trading.
During the pilot period, 110 major emitters in the thermal power, iron and steel, and cement sectors have been allocated greenhouse gas emission quotas for 2025–2026. The domestic carbon trading platform will operate on a pilot basis through 2028. From 2029, the market is expected to enter a new phase, with expanded participation and the introduction of allowance auctions. Over time, Viet Nam also aims to strengthen its participation in international carbon markets under Article 6 of the Paris Agreement, creating opportunities to mobilize climate finance, technology and investment.
The establishment of a domestic carbon market is not only an environmental policy, but also an instrument for economic transformation. The real test, however, begins now. A trading platform provides the infrastructure for a carbon market, but it cannot by itself create an effective carbon price. This will depend on credible emissions data, robust allocation of allowances, sufficient market liquidity, effective compliance and oversight, and confidence among participating enterprises that the rules are transparent and predictable.
Building the Foundations of a Credible Carbon Market
Developing a carbon market requires more than a trading platform. It depends on credible institutions, reliable digital infrastructure, clear regulations, robust environmental integrity standards, and the capacity of both government agencies and participating enterprises to operate effectively within the market.
As a trusted partner of the Ministry of Agriculture and Environment, and with strong support from the Climate Promise initiative and the Government of Japan, UNDP has provided technical assistance to establish a credible, transparent, and internationally aligned carbon trading system. This support spans three key areas:
Building the market Infrastructure: UNDP supported the development of the National Carbon Registry of Emission Allowances and Carbon Credits (VCRS), its integration with the Ha Noi Stock Exchange and the Viet Nam Securities Depository and Clearing Corporation. Together with the development of the public portal and reporting tools, this forms the digital backbone of the carbon trading platform.
Ensuring High-Integrity Carbon Markets: Since 2023, UNDP has worked with the Department of Climate Change to align Viet Nam’s carbon market framework with Article 6 of the Paris Agreement, strengthening the country's readiness for international carbon trading. UNDP also supported the development of the National Standard (TCVN) on General Requirement for Forest-based Carbon Credits, providing a framework for high-integrity carbon credit generation.
Building Institutional and Enterprise Readiness: For market decentralization, UNDP has supported the development of operational guidelines for provincial authorities. On the demand side, UNDP delivered a national training programme for 110 enterprises participating in the emissions trading system (ETS), covering emissions trading, carbon markets, and hands-on use of the registry system. Together, these interventions are helping strengthen the institutional, technical and regulatory foundations needed for a credible and effective carbon market.
What Comes Next?
The launch of the trading platform is an important beginning rather than the end of the journey. The next phase will determine whether the carbon market can translate its institutional and digital architecture into a credible price signal that influences investment and production decisions.
Three priorities will be particularly important. First, building sufficient market liquidity and progressively strengthening allowance allocation so that carbon prices provide meaningful incentives for emissions reduction. Second, safeguarding environmental integrity through robust measurement, reporting and verification (MRV), transparent market oversight, effective compliance mechanisms, and a reliable supply of high-quality domestic carbon credits. Third, operationalizing Viet Nam’s framework for international transfers under Article 6 in a way that can attract international climate finance while supporting the country’s own NDC and Net Zero objectives.
In this next phase, UNDP will remain a strategic partner to the Government of Viet Nam in strengthening market governance, expanding digital market infrastructure, advancing Article 6 implementation, and developing high-integrity carbon credit methodologies, particularly for nature-based solutions, circular economy initiatives, and emerging low-carbon technologies. These efforts will help position Viet Nam’s carbon market as a credible, efficient, and internationally connected mechanism capable of attracting climate finance while accelerating the country's green transition.
Lessons for Other Countries
Viet Nam’s experience offers valuable lessons for other developing countries seeking to establish domestic carbon markets. Three features of its approach are particularly noteworthy:
A Focused Approach: Rather than attempting to regulate the entire economy at once, Viet Nam targeted 110 major emitters for its pilot. This allows the government to test institutional arrangements, build technical capacity, and iron out operational challenges before scaling up.
Stepwise Infrastructure and Market Integration: The VCRS is being established in phases, alongside the progressive development of Viet Nam’s carbon market. The initial phase establishes the national digital registry and its integration with domestic trading infrastructure, providing the foundations for transparent and effective market operation. Future phases will strengthen interoperability with relevant international mechanisms and carbon-crediting standards, supporting Viet Nam’s participation in international carbon trading under Article 6 of the Paris Agreement.
Strong Government Ownership: The government has maintained full ownership over the design, development, and operation of the VCRS. This ensures that market aligns with national priorities, strengthening both institutional capacity and long-term credibility and sustainability of the carbon market.