Vietnam's Emerging Carbon Market
By William Grice - MKE Carbon Market Research Consultant
26 January 2025
Lessons from Global Challenges and How Mekong Economics Can Provide Integrity
In Hue City, central Vietnam, energy-efficient LED lights quietly hum, transforming public spaces, cutting emissions and, importantly, slashing energy bills.
Meanwhile, in the lush highlands of the North of the country, $51.5 million from the World Bank are flowing into government coffers, funding sustainable forest management projects.
These encouraging initiatives are just the prelude, however, to a far greater transformation underway to mitigate climate change: harnessing carbon credits—environmental commodities funding greenhouse gas reduction / removal projects.
Vietnam has big plans, namely, to launch a compliance carbon market by 2028, instigated by under Decree No. 06/2022/ND-CP, in support of the country’s nationally determined contributions under the Paris Agreement.
Transformative Projects and Private Sector Engagement
The agricultural sector is leading the way with the ‘One Million Hectares of Low-Emission High-Quality Rice Project’ in the Mekong Delta.
Notably, relevant government ministers are eyeing carbon credits to fund this project as it revolutionises rice farming and slashes CO2 emissions.
More concretely, Vietnam’s Department of Forestry has partnered with carbon finance intermediary Emergent to sell 40 million carbon credits, potentially generating $200 million annually by 2026.
Private sector engagement is key across the board, with organisations exploring carbon credit generation, trading, and investment opportunities to align with Vietnam’s sustainability goals.
Many enterprises are already capitalising off Vietnam's voluntary carbon market, whereby businesses boost their green credentials by purchasing voluntary credits.
The launch of CT Group's Carbon Credit Trading Platform (CCTP) and Bamboo Capital's Bamboo Eco, for instance, indicate that large Vietnamese conglomerates are now getting behind carbon trading and afforestation, respectively.
The Importance of Ensuring Integrity in Vietnam’s Emerging Carbon Market
Vietnam’s push for a carbon market supports its Paris Agreement target of reducing emissions by 9–27% by 2030.
However, the real challenge lies in ensuring transparency and credibility in the monitoring, verification, and trading of carbon credits, avoiding market leakage and overcoming structural and technical barriers.
Such issues have plagued carbon markets across Asia, particularly in neighbouring China, where widespread commercial fraud has compromised market integrity.
Scandals, like that involving Beijing Karbon and two German auditing firms, highlight the risks of manipulation and misrepresentation, as uncovered by DW and ZDF.
To safeguard its own market, Vietnam must address several key challenges to ensure its credibility then:
Accurately quantifying emissions reductions / additionality at the project level.
Ensuring transparent, standardised data collection.
Preventing double counting of credits and / or market leakage.
Establishing a trusted system for credit registration, transfer, and retirement.
Weaknesses in these areas could erode investor confidence and undermine the very purpose of carbon credits, making it crucial for policymakers to address them effectively.
Where Does Mekong Economics Fit In?
Founded over 20 years ago by Dr Adam McCarty, MKE is now positioning itself as an intermediary in Vietnam’s carbon market in the coming months and years.
Not only has MKE’s Hanoi team recently conducted an institutional capacity review of Vietnam's forest protection and development funds for Emergent, but MKE has also provided technical support for the measurement, reporting, and verification of greenhouse gas reductions in Hue’s LED lighting project, funded by the Luxembourg Development Cooperation Agency.
These projects exemplify MKE’s establishment in the due diligence of Vietnam’s environmental initiatives and suggest its potential in facilitating tangible, on-the-ground solutions in the country’s burgeoning carbon markets, whether in feasibility, due diligence, or advisory services.
Parting Thoughts: What are the Next Deliverables in Vietnam's Carbon Market?
From 2026, the Vietnamese government will look beyond agriculture and forestry, launching pilot compliance initiatives in power, iron and steel, and cement sectors.
This paves the way for a compliance carbon market by 2028, enhancing Vietnam’s export competitiveness—especially to the EU, where the Carbon Border Adjustment Mechanism tax takes effect in 2026.
However, these ambitious timelines demand swift government action to drive progress, tackle challenges head-on, and prioritise transparency and equitable benefit-sharing.
In reaching Vietnam’s carbon deliverables, MKE is uniquely positioned to provide answers and guide solutions in shaping the region’s carbon initiatives.
Overcoming the challenges will define the credibility of Vietnam’s carbon market, leaving a lasting impact on the ASEAN region’s fight against climate change.