Vietnam Signals Green Light for Higher Carbon Offset Use in ETS

Vietnam is preparing to launch its pilot emissions trading scheme (ETS) in mid-2025—and a significant shift could be on the horizon. Under draft regulations now taking shape, companies participating in the ETS may soon be allowed to cover up to 30% of their emissions targets using carbon credits. That’s a major increase from the 10% limit previously suggested.

Tropical jungle scene with mist and birds in Cát Tiên National Park. AI generated picture.

The proposal was shared by Tang The Cuong, Director of the Department of Climate Change, during a recent event focused on Vietnam’s growing carbon market. ‘This proposal is to prevent businesses from being pressured to reduce emissions excessively, and to use credits from afforestation or other emission reduction activities to compensate,’ Cuong explained.

The increased offset allowance is expected to be included in the draft rules governing the ETS’s initial implementation phase, which will span 2025–2026. Final details are likely to be published by the end of April.

Vietnam’s emissions trading scheme will initially cover around 150 high-emission facilities in sectors like thermal power, cement, and steel—industries that together account for roughly 40% of the country’s total emissions.

This move comes as Vietnam steps up efforts to meet its international environmental goals. The country has pledged to cut greenhouse gas emissions by 9% by 2030 compared to 2014 levels, and is aiming for net zero emissions by 2050. As part of that plan, carbon credits—especially those tied to reforestation and other verified carbon reduction activities—are emerging as key tools to help businesses meet compliance targets.

By raising the carbon credit limit, Vietnam is signalling a more flexible approach to emissions regulation while still staying aligned with its long-term green strategy. The new framework is expected to attract both domestic and international interest as Southeast Asia’s carbon markets continue to evolve.