Vietnam is moving closer to finalising the rules for its upcoming emissions trading scheme (ETS), and early signals suggest the government is leaning toward increased flexibility for participating companies. Entities covered under the scheme may be allowed to offset up to 30% of their emissions targets using carbon credits—triple the previously suggested cap of 10%.
Misty tropical forest landscape of Cát Tiên National Park, Vietnam. AI generated picture.
The update came during a recent carbon market event, where Tang The Cuong, Director of Vietnam’s Department of Climate Change, outlined the proposed revisions. Speaking to attendees, Cuong noted, ‘This proposal is to prevent businesses from being pressured to reduce emissions excessively, and to use credits from afforestation or other emission reduction activities to compensate.’
This policy adjustment is expected to feature in the draft regulations for the ETS’s initial implementation phase, which will run from 2025 to 2026. The pilot phase of the scheme is scheduled to begin in June 2025, with the final rules anticipated by the end of April.
Vietnam’s ETS will initially apply to around 150 facilities, including major emitters in the thermal power, iron and steel, and cement industries. Collectively, these sectors represent approximately 40% of the country’s total greenhouse gas emissions.
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The broader context for the scheme is Vietnam’s commitment under the Paris Agreement to reduce emissions by 9% by 2030 compared to 2014 levels, with a more ambitious target of net-zero emissions by 2050. The use of carbon credits—especially from forestry and other verified reduction activities—is being positioned as a key compliance mechanism within that pathway.
By increasing the offset limit, Vietnam aims to provide businesses with greater operational leeway while still moving toward long-term decarbonisation goals. As the country builds its carbon market framework, the finalised rules will be watched closely by both domestic emitters and international observers looking to engage with Southeast Asia’s evolving carbon market landscape.
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Vietnam’s move to expand carbon credit use in its ETS signals a growing reliance on credible offsets as countries navigate environmental targets without overburdening key industries. As demand for verifiable, nature-based carbon credits rises—particularly in sectors like forestry and ecosystem restoration—supply will become increasingly competitive. At DGB Group, we create large-scale, high-integrity restoration projects that generate carbon units aligned with these evolving compliance markets. For businesses and investors looking to lead in this transition, the time to act is now. Discover how you can future-proof your business and support nature.
