Vietnam opens door to international carbon credit trading

The Vietnamese Government has introduced a legal framework allowing the sale and transfer of carbon credits to international markets for the first time, creating a new revenue stream for the state and businesses while supporting emissions reduction commitments.

The government recently issued Decree No. 112/2026 on international exchange of greenhouse gas emission reductions and carbon credits, effective from May 19, 2026.

The decree sets out rules for transferring emission reductions and carbon credits to international partners under the Paris Agreement, part of the United Nations Framework Convention on Climate Change, and aims to help Vietnam meet its national emissions reduction targets.

It applies to agencies and organizations engaged in cross-border carbon credit transactions.

Principles for international transfer

Under the decree, international exchanges must comply with the Paris Agreement and contribute to technology transfer, improved business competitiveness, and the development of a low-carbon economy.

Transactions must prioritize Vietnam’s Nationally Determined Contributions (NDCs), safeguard national interests, balance stakeholder benefits, and support sustainable development in local communities.

All transactions must be recorded and disclosed on the national registry system. The Ministry of Agriculture and Environment will issue approvals for transfers once emission reductions and carbon credits are certified.

Credits that have been revoked or expired are not eligible for international transfer.

Corresponding adjustments for internationally transferred mitigation outcomes (ITMOs) will be implemented in line with Paris Agreement rules.

Caps on transfer volumes

The decree introduces caps on the proportion of credits that can be transferred internationally.

Priority projects - including large-scale, high-tech and high-impact initiatives - may transfer up to 90% of their carbon credits, including:

- Energy: geothermal, offshore wind, small-scale solar in disadvantaged areas, green hydrogen, energy storage systems, application of energy-saving technologies;

- Transportation: transition to clean energy vehicles, development of low-emission transportation, and electric vehicle charging stations;

- Industry: carbon capture and storage technology (CCUS/CCS), which captures CO2 directly from the air, applies best practice technology (BAT);

- Waste: waste-to-energy processing, landfill gas recovery, wastewater treatment using new technologies, removal of greenhouse gases with high GWP;

- Agriculture: improved rice cultivation, byproduct recycling, biofuel production, improved livestock farming.

A second group of more common and easier-to-deploy activities may transfer up to 50%, including:

- Energy: biomass energy, nearshore wind, legacy CDM projects

- Industry: using cement additives, replacing fossil fuels with biomass;

- Residential and commercial: use of high-efficiency air conditioning and cooling equipment;

- Waste: compost production, non-electricity waste treatment, biogas recovery;

- Agriculture and forestry: livestock waste treatment, aquaculture improvement, REDD+ activities, reforestation, and increased carbon sequestration.

For transfers without corresponding adjustments, the maximum transfer ratio is capped at 90% of total certified emission reductions or carbon credits. Remaining credits after international transfer can be traded domestically.

Mechanism for selling carbon credits

Notably, the decree establishes a formal mechanism for selling carbon credits.

Authorities managing public investment projects are authorized to decide on the sale of emission reductions and carbon credits generated by such projects.

The sale process requires consultation with relevant ministries, including the Ministry of Agriculture and Environment and the Ministry of Public Security, as well as other related regulators, which must respond in writing within 15 working days.

For public-private partnership (PPP) projects, revenue from carbon credit transactions will be treated as project income and managed under PPP investment regulations.

Where PPP contracts or financial plans require adjustments due to carbon credit transactions, stakeholders will revise agreements accordingly.

Revenue from carbon credit sales generated by public investment projects will be classified as state budget income and managed in line with existing regulations.