Local carbon market is moving in the right direction

Building an appropriate legal framework

According to Nguyen Thanh Cong, Deputy Head of the Carbon Market Division at the Department of Climate Change, Viet Nam's developing and implementing its carbon credit processes transparently and rigorously, consistent with both domestic law and international practice.

This is essential to ensuring credit quality, limiting the risk of double-counting emission reductions, and strengthening Viet Nam's standing in the international carbon market. When requirements, procedures, and each party's responsibilities are clearly defined, businesses also have a stronger basis for developing projects, registering credits, and participating in cross-border trading.

Under international cooperation pursuant to Article 6.2 of the Paris Agreement, Viet Nam has signed agreements with several partners and continues to refine implementation steps. This mechanism allows countries to cooperate bilaterally or multilaterally in transferring greenhouse gas mitigation results, while requiring transparency, avoidance of double-counting, and corresponding adjustments.

Cong said that to put these agreements into practice, the Department of Climate Change is working with international partners to develop detailed forms, guidance, and procedures that will align Vietnamese legal requirements with international regulations and standards.

Standardizing these procedures matters directly to businesses. Rather than having to navigate multiple different requirement systems on their own, businesses will have a clear basis for preparing documentation, choosing crediting methodologies, and carrying out measurement, reporting, assessment, and transfer requests. This can shorten processing times, keep compliance costs under control, and reduce legal risk in international transactions.

Recognizing early progress in the carbon market

Assessing Viet Nam's advantages and the areas that still need work, Neeraj Joshi, Chief Climate Change Specialist at the International Finance Corporation's (IFC) East Asia and Pacific Economic Reform and Research Advisory division, said each country follows a different development path and timeline in building its carbon market. Viet Nam therefore shouldn't be measured solely against markets that have operated for many years, but rather assessed on the progress and results achieved at each stage.

Joshi said Viet Nam has made notable progress in a relatively short time. The market's legal foundation began with the Law on Environmental Protection, later given further shape through regulations on greenhouse gas mitigation, carbon market development, trading platform organization, and international exchange of emission-reduction results and carbon credits.

Alongside building this legal framework, Viet Nam has gradually refined regulations on market operation, oversight, and monitoring. Recently issued documents and guidance have created a basis for identifying credits, managing transactions, and defining the responsibilities of regulatory agencies, project developers, and other participants.

"But building a carbon market isn't just about issuing documents. It's also a process of learning, testing, and adjusting for everyone involved. So the need to build capacity applies not only to state management agencies but also to businesses, financial institutions, assessment bodies, project developers, and advisory organizations," Joshi noted.

Businesses need to understand clearly that carbon credits don't automatically arise from an activity simply labeled "green." A project must demonstrate that its emission reductions are genuine and additional, measured and assessed using recognized methodologies. At the same time, results transferred internationally must align with Viet Nam's own emission-reduction targets and comply with corresponding adjustment requirements.

Regarding Article 6.2, Viet Nam has established a legal framework and is now working out cooperation procedures with individual partners. Regarding Article 6.4, although the mechanism is centrally managed by the United Nations, Viet Nam has also built the necessary processes to review, approve, and support domestic projects seeking to participate.

According to Joshi, these results show Viet Nam is on the right track. The next step is applying these regulations consistently in practice, shortening processing times, ensuring credit quality, and improving businesses' access to information.

An effective carbon market isn't measured by how many credits are issued in a short period, but by its ability to generate genuine emission-reduction results, attract green finance and technology, and protect national interests. As the legal framework, implementation capacity, and oversight mechanisms are all refined together, Viet Nam will be better positioned to engage more deeply in the international carbon market and turn its carbon resources into a driver of green transformation.