On June 9, 2025, the Government of Vietnam issued Decree 119/2025/NĐ-CP to amend and supplement several provisions of Decree 06/2022/NĐ-CP on greenhouse gas (GHG) emissions reduction and ozone layer protection. The revisions reflect Vietnam’s growing commitment to developing a robust domestic carbon market and enhancing engagement with international carbon credit mechanisms under the Paris Agreement. This article summarizes the most significant updates introduced by Decree 119 in two major domains: the domestic carbon market and international carbon market mechanisms.
In terms of the domestic carbon market, Decree 119 introduces structural and procedural enhancements to support the development of Vietnam’s emissions trading system (ETS). Firstly, the scope of participation is clarified: while Decree 06 previously allowed all entities obligated to report GHG emissions to join the market, Decree 119 now specifies that only facilities allocated with GHG emission allowances are eligible to trade on the market. Secondly, Decree 119 replaces the previous provision on certification of credits and allowances with a detailed mandate to establish a national registry system to ensure transparency and traceability in all carbon market activities.
Furthermore, the implementation timeline has been revised, delaying the start of the full carbon market operation by one year. By the end of 2028, the national registry system and pilot carbon trading exchange are to be established, with full auctioning and legal improvements starting from 2029. The allowance allocation process is also refined, now being divided into three periods: the pilot period (2025–2026) covering the thermal power, cement, and steel sectors with the announcement deadline is by 31 December 2025; and the 2027–2028 and 2029–2030 periods, where line ministries propose facility lists and allowances while the Ministry of Agriculture and Environment (MAE) makes the final announcement before 31 October of the first year in the periods.
The Decree enhances the Monitoring, Reporting, and Verification (MRV) framework by assigning more specific roles to sector ministries and provincial People’s Committees. Provincial authorities are now responsible for reviewing and consolidating facility-level GHG mitigation results, a duty not previously mandated under Decree 06. Validation procedures for sectoral and national-level GHG mitigation efforts are also elaborated. Additionally, the allowable carbon credit offsetting rate is significantly increased from 10% to 30%, and a new borrowing threshold of up to 15% of the allocated quotas is introduced, thereby providing more flexibility for regulated entities.
Regarding the international carbon market, Decree 119 marks a clear shift towards operationalizing Vietnam’s engagement with mechanisms under Article 6 of the Paris Agreement. It introduces official definitions and procedures for both Article 6.2 (bilateral cooperation) and Article 6.4 (UNFCCC-supervised crediting), laying the legal groundwork for future international carbon transactions. Specific procedures are established for project approval under Article 6.4, transitioning CDM projects, and authorizing international carbon credit transfers to ensure compliance with international standards.
Institutional oversight is restructured to align with government reforms. Decree 119 transfers the primary carbon market management and oversight responsibilities from the Ministry of Natural Resources and Environment (MONRE) to the newly formed MAE, reflecting the merger of MONRE and MARD. This reallocation aims to enhance cross-sectoral coordination and simplify governance structures.
Finally, supporting tools and appendices are updated. Decree 119 replaces the appendix listing sectoral GHG reduction targets with a new appendix providing templates for allowance allocation and the national registry system. It also includes a list of mitigation activities prioritized for international carbon transfer. These additions ensure that regulatory implementation is both standardized and aligned with international practices.
In conclusion, Decree 119/2025/NĐ-CP represents a significant advancement in Vietnam’s carbon market readiness. By clarifying eligibility rules, refining MRV systems, establishing a national registry, and aligning with Article 6 mechanisms, Vietnam is laying the groundwork for both an effective domestic carbon market and meaningful participation in global emissions trading systems.
Loan Nguyen
greencic@greencic.vn
