ETS Pilot Targets Steel, Cement & Power: Vietnam’s pilot emissions trading scheme (ETS) covers ~50% of national CO₂ emissions through 2029.
First Permits Allocated by Year-End: Emission allowances for 2025–2026 to be issued by end of 2025; excess emitters must buy credits.
Net Zero 2050 Strategy Underway: ETS is a foundational step toward Vietnam’s net zero target, amid a coal and steel production surge.
Vietnam has formally launched the first phase of its emissions trading scheme (ETS), targeting three carbon-heavy industries—steel, cement, and thermal power—in a bid to bring down its rising carbon footprint.
Under the government decree, these industries must purchase emissions allowances based on carbon intensity—CO₂ emitted per unit of output. The scheme’s pilot phase, running through 2029, will cover around 50% of the nation’s total emissions, with plans to expand into transport and commercial buildings.
“The priority is first to help entities adapt to the system, rules and regulations, rather than delivering immediate environmental impacts,” said Mai Duong, analyst at carbon market data provider Veyt.
Companies will receive their first batch of permits for 2025–2026 by the end of this year. If emissions exceed allocations, firms must buy credits on the carbon market. They’ll also be able to offset up to 30% of emissions via credits from low-carbon projects, domestically or internationally.
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Despite initial free allowances, the ETS marks a pivotal shift. It is a key mechanism in Vietnam’s roadmap to achieve net zero emissions by 2050, amid soaring CO₂ output from fossil fuels.
Vietnam’s emissions trajectory is steep: coal-fired power rose nearly 18% last year, while crude steel production jumped 15% in 2024.
By embedding market-based incentives for emissions reduction, the government aims to steer its industrial base toward greener operations while gradually aligning with global carbon markets.
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