(Dân trí) – More than 511 million tonnes of CO₂ emission allowances have been allocated to the first 110 facilities. While these allowances represent a new type of asset, businesses must manage their surrender obligations carefully to avoid penalties and reductions in future allocations.
The Ministry of Agriculture and Environment’s issuance of Decision No. 699, which provides for the pilot allocation of emission allowances to 110 facilities operated by 92 businesses in the thermal power, iron and steel, and cement sectors, has moved Vietnam’s carbon market into the implementation phase.
Based on the total allocation of more than 511 million tonnes of CO₂ equivalent approved by the Prime Minister for 2025–2026, emissions have officially become a quantifiable commodity with unique identifiers that can be traded on a centralised exchange. However, holding emission allowances is not simply a matter of acquiring an additional asset; it also entails stringent obligations to account for emission flows.
Vietnam’s carbon market has entered the implementation phase (Photo: GEO).
An “Allowance Reserve with an Expiry Date” and the Rules for Surrendering Allowances
Many businesses mistakenly assume that allocated allowances can be retained indefinitely as a “nest egg.” Current regulations, however, establish very clear technical boundaries. The key issue for businesses is the allowance surrender mechanism.
By 31 December of the year following an allocation period, each facility must surrender through the National Registry System a quantity of allowances at least equal to its actual direct emissions.
To provide some flexibility, businesses have two options. They may borrow up to 15% of their own allowances from the following allocation period, although borrowed allowances cannot be sold. Alternatively, they may use eligible carbon credits to offset their obligations, provided that these credits do not exceed 30% of the allowances allocated to them.
If process optimisation enables a facility to keep its emissions below its allocated cap, the surplus allowances may be carried forward to subsequent periods, up to the end of 2030, or sold for cash on the carbon exchange.
Nevertheless, this mechanism does not create a permanent allowance reserve. Thirty days after the surrender deadline, all unused allowances from the previous period that have neither been surrendered nor carried forward will be completely cancelled by the regulatory authority.
Conversely, if a facility has an allowance shortfall and fails to cover it on time, it will face both administrative penalties for environmental violations and a corresponding deduction from its allowance allocation for the following two-year period.
Beyond Afforestation: Opportunities from the Circular Economy
According to Dr Bùi Thị Thanh Hương, an expert in environmental education and communication at the VNU School of Interdisciplinary Sciences and Arts, emissions should not be viewed solely as a compliance cost. Instead, they should be regarded as a tool for measuring operational efficiency. The list of facilities required to conduct greenhouse gas inventories has now expanded to more than 2,400, indicating that a substantial number of businesses will be affected in the near future.
Dr Hương noted that businesses not yet subject to mandatory allowance allocations still have significant opportunities to commercialise carbon reductions if they examine their internal production chains more closely.
For many years, the market has largely assumed that carbon credits must originate from afforestation and forest restoration projects. In reality, circular-economy initiatives and on-site emission reductions represent an untapped source of valuable assets.
For example, a factory that invests in a waste recirculation and treatment system, reduces methane emissions from landfills, or makes full use of by-products as production inputs may be able to register the resulting emission reductions as carbon credits, provided that they are measured in accordance with recognised standards.
“Data on waste flows are also data on wasted raw materials and unnecessary costs. Viewing waste streams through a carbon lens enables businesses to reduce production losses while creating an additional source of high-value carbon credits,” she explained.
A “Green Passport” for Supply Chains and the Carbon Exchange
The pilot operation of Vietnam’s domestic carbon exchange from late June 2026, pursuant to Government Decree No. 29/2026, is creating direct commercial incentives. Emission allowances are the exchange’s principal commodity, but the market is also open to high-quality carbon credits.
Under Government Decree No. 119/2025, not every type of carbon credit may be traded on the exchange and used to offset compliance obligations. Eligible credits must have been generated on or after 1 January 2021 and must originate from one of three strictly regulated groups of mechanisms: the mechanism under Article 6.2 of the Paris Agreement, the mechanism under Article 6.4 of the Paris Agreement, or domestic carbon-credit mechanisms.
These requirements prevent the double counting of emission reductions while helping to ensure that traded credits have genuine value and liquidity.
The pressure to pursue greener production is consequently spreading to export-oriented and contract-manufacturing industries. The textile and garment sector is a notable example. Although textile and garment businesses are not included among the first 110 facilities receiving allowances in the thermal power, steel, and cement industries, many are already required to adopt clean energy and rooftop solar power at the request of international brands in order to retain orders.
Vietnam’s carbon exchange officially opens on 29 June (Photo: JD).
The domestic carbon market also provides a mechanism through which individuals, cooperatives, and forest owners can participate indirectly via representative organisations and intermediary businesses, thereby optimising transaction costs.
By quantifying emission flows throughout raw-material supply chains, greenhouse gas inventories are gradually evolving from a reporting obligation into a critical measure of business competitiveness.
The Operational Roadmap and the Integration Challenges Businesses Need to Understand
The 2025–2028 period will serve as the pilot phase for operating the carbon exchange and testing allowance allocations for major emitting sectors. From 2029, Vietnam’s domestic carbon market is expected to become fully operational nationwide, with allowance allocations extended to additional industrial sectors.
In addition to complying with domestic regulations, exporters—particularly those in the iron and steel and cement industries—are directly affected by the European Union’s Carbon Border Adjustment Mechanism (CBAM).
Establishing transparent emissions-inventory data and participating in the domestic allowance market at an early stage will provide businesses with a “shield,” enabling them to reconcile their emissions data and minimise carbon-related costs when exporting goods.
The list of facilities required to conduct greenhouse gas inventories has now expanded to more than 2,400 entities and continues to be reviewed periodically. Businesses outside the first group of 110 pilot facilities should proactively establish internal measurement, reporting, and verification (MRV) systems now to avoid being caught unprepared when the regulations become applicable to them.
Rather than viewing emissions inventories as an additional expense, businesses should regard them as an opportunity to restructure their energy and raw-material consumption chains. Companies that invest early in technological optimisation and achieve genuine emission reductions will gain a dual advantage: lower operating costs and an additional revenue stream from selling surplus allowances on the carbon exchange.