Vietnam has launched pilot phase of an emissions trading scheme (ETS) to reduce GHG emissions of its steel, cement and thermal power industries. In the first phase of the scheme, expected to last until 2029, those three sectors will be forced to buy allowances to cover their CO2 intensity (CO2 emitted per unit of output). The first emission allowances for 2025-2026 should be allocated by the end of 2025, companies that exceed their allowances will be required to buy credits on the market. They will be allowed to offset as much as 30% of their emissions by buying credits from low-carbon projects at home or overseas.
The measure is expected to cover about 50% of Vietnam's total CO2 emissions over the first phase. The ETS will be expanded to other sectors, including commercial buildings and cargo transportation in a second phase.
Carbon trading is part of Vietnam's strategy to meet a target to achieve "net zero" emissions by 2050. Vietnam's emissions have been rising in recent years, mainly due to a surge in coal-fired power generation (+18% in 2024). Crude steel production in 2024 also soared by 15% in 2024.
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