Deputy PM requests to accelerate the establishment of domestic carbon market

Chairing a meeting on the draft Decree on establishing a domestic carbon exchange, Deputy Prime Minister (Deputy PM) Tran Hong Ha highlighted that as the world accelerates commitments to cut emissions and achieve net-zero greenhouse gas (GHG) emissions by 2050, many countries have already set up both mandatory and voluntary carbon credit markets. Those who prepare well will seize opportunities and maximize their benefits; those who lag behind will be passive and may even face disadvantages.

However, for the carbon market to operate effectively, a synchronous policy framework is needed, from quota allocation and implementation monitoring to the use of economic tools such as tax to create demand. "For years, we have focused on technical and legal preparations, but the key is to establish a market with real supply and demand, where businesses can clearly see their benefits from investing in technological and governance innovation to reduce emissions," the Deputy PM said.

The issuance of this decree will create an important pilot step to assess Vietnamese enterprises' readiness and response to international GHG emission reduction mechanisms. For management agencies, the Deputy PM requests that state management be clearly separated from exchange operations, ensuring "clear functions, clear authority, clear responsibilities, and clear mandates to avoid overlaps."

An important pilot step

At the meeting, Deputy Minister of Finance Ho Sy Hung reported that commodities on the carbon exchange would include GHG emission quotas and carbon credits, as stipulated in Decree No. 119/2025/ND-CP, which amends and supplements certain provisions of Decree No. 06/2022/ND-CP on mitigation of GHG emissions and protection of the ozone layer.

Participants in the market will include facilities allocated emission quotas, organizations holding carbon credits within Vietnam, and financial service-supplying organizations. Securities companies may join as intermediaries for order matching and settlement but are prohibited from direct trading to curb speculation. The draft decree also clearly defines prohibited acts, including price manipulation, collusion, spreading false information, and exploiting technological vulnerability to appropriate quotas or carbon credits.

A key highlight of the draft decree is its clear definition of the rights and obligations of the Vietnam Securities Depository and Clearing Corporation (VSDC), the Vietnam Exchange (VNX), and the Hanoi Stock Exchange (HNX) in operating the carbon exchange. Leveraging existing stock market infrastructure will reduce costs, ensure transaction security, and minimize risks. In the initial phase, securities companies will act as intermediaries to monitor account balances and prevent orders without sufficient funds or available goods.

Regarding payment, the draft allows the selection of commercial banks that meet essential requirements to serve as settlement banks. During the pilot phase, service providers will not charge fees, with fee collection expected to begin in 2029.

Regarding the monitoring mechanism, the Ministry of Agriculture and Environment will be the lead agency, holding full responsibility for traded commodities, quota allocation, and carbon credit management. The State Securities Commission of Vietnam (SSC) will coordinate inspections. The VNX will supervise the HNX, which will monitor its members' trading activities. The VSDC will monitor depository members, while trading members will supervise their clients' accounts and transactions. This allocation of responsibilities follows the principle of "one task assigned to one lead agency," ensuring clarity and transparency.

Two issues remain under discussion, including the responsibility for managing and supervising the carbon exchange and the mechanism for selecting settlement banks.

According to Deputy Minister Ho Sy Hung, the decree will provide the necessary legal corridor for forming and operating the domestic carbon market while preparing for Vietnam’s deeper participation in international carbon credit exchange mechanisms in the coming time. Leaders of the State Bank of Vietnam, the Ministry of Justice, and the State Securities Commission agreed on the need to clearly delineate management responsibility between the Ministry of Agriculture and Environment (MAE) and the Ministry of Finance (MOF).

Accordingly, the MAE will ensure that enterprises are legally allocated quotas and credits and that traded commodities meet eligibility requirements. The MOF will manage and supervise market operations and handle violations.

Deputy Minister of Agriculture and Environment Le Cong Thanh stated that the Ministry is developing a carbon credit registration system closely coordinating with securities experts to ensure interoperability between the two platforms. Enterprises holding carbon credits will have them recorded in the registration system and transferred to the depository agency. Entities wishing to trade will work with the depository agency and the stock exchange, while transaction data will be fed back into the registration system to support measurement, compliance monitoring, and international reporting.

In addition, experts recommended technical revisions to regulations on the selection of settlement banks, dispute resolution, and prohibited acts to ensure transparency, feasibility, and legal compliance. They also suggested expanding market participants, particularly for carbon credits, to improve market efficiency, with careful calculation to avoid affecting Vietnam’s international commitments.

A market with real supply and demand is essential

Deputy Prime Minister Tran Hong Ha underscored four key issues that the MOF must receive and incorporate into the draft decree.

First, regarding the division of responsibilities between the MAE, the MOF, and the SSC, the Deputy PM agreed with the Ministry of Justice's assessment and the analysis of other Ministries. Operational and procedural matters related to the carbon exchange should fall under the unified management of the MOF and the SSC. Meanwhile, regulations on commodities traded, their quality, and related legal matters are the responsibility of the MAE, which must also coordinate with the MOF on inspections to ensure transparency, supply–demand balance, and market efficiency.

Second, the MAE must comprehensively monitor policies and mechanisms related to carbon credits, both domestically and internationally. This includes regulating supply and demand to create a dynamic for effective market operation, avoiding oversupply that could lower prices or undersupply that could drive prices high. In the early stage, demand must be stimulated to ensure market operation and generate real transactions.

Third, regarding banks providing settlement services, the Deputy PM stressed that at least one bank should be designated by the SSC, meeting all technical and legal requirements and having active trading clients. Once they fully meet these conditions, other banks may participate.

Fourth, on regulations for dispute resolution, complaints, compensation, and prohibited acts, the Deputy PM stated that the decree should focus on outlining principles, serving as a reference framework for relevant laws such as securities, civil, and commercial regulations.

Emphasizing that early issuance of the Decree on a domestic carbon exchange is an essential step to ensure feasibility, effective operation, and transparency and consistency in carbon credit market management, the Deputy Prime Minister noted that the market operation management agency must meet international standards, ensuring accurate measurement, reporting, and verification of credits to build a transparent and trustworthy trading mechanism from the outset.