Vietnam is set to officially launch the pilot phase of its domestic emissions trading scheme (ETS) this August, marking a significant step forward in Southeast Asia’s carbon market development. According to a recent Carbon Pulse report, regulated entities will be allowed to use carbon offsets for up to 30% of their compliance obligations.
The new policy, outlined in regulatory documents released this week, is part of Vietnam’s broader climate strategy under its Nationally Determined Contribution (NDC) and aligns with its goal of achieving net-zero emissions by 2050. The move signals a strong commitment to market-based mechanisms as a core component of the country’s decarbonisation roadmap.
High offset cap could spur market activity
Vietnam’s 30% offset cap is higher than the 10–20% typically permitted in comparable programs, such as South Korea’s K-ETS or the pilot phases of China’s regional ETS initiatives. This approach could stimulate early trading activity and attract investment in domestic and regional offset projects, especially in renewable energy, afforestation, and methane reduction.
By allowing substantial offset use, the Vietnamese government aims to ease compliance costs for companies while also encouraging the development of a robust voluntary carbon market ecosystem. However, observers note that robust Monitoring, Reporting, and Verification (MRV) systems will be essential to ensure environmental integrity and avoid low-quality credits undermining climate goals.
ETS rollout reflects regional momentum
Vietnam joins a growing number of Asian nations implementing carbon pricing frameworks. Indonesia’s carbon trading mechanism went live in February, and Malaysia is preparing its own ETS pilot. These efforts reflect increasing policy alignment with the Paris Agreement and the growing recognition of carbon markets as essential tools for delivering national climate targets.
The upcoming launch will cover large industrial emitters, including those in the energy, cement, and manufacturing sectors. More detailed information on sectoral scope, allocation methodologies, and offset eligibility criteria is expected ahead of the August rollout.
