The Vietnamese government has officially launched a pilot phase for allocating greenhouse gas emission quotas to major industrial sectors, marking an important shift from climate commitments to concrete action in the national emissions reduction roadmap.

Under a newly issued decision signed by Deputy Prime Minister Trần Hồng Hà, total pilot emission quotas for the 2025–2026 period will be distributed to 110 facilities across three high-emitting industries: thermal power generation, iron and steel production, and cement manufacturing. These sectors form the backbone of the economy but also rank among the largest sources of carbon dioxide equivalent emissions.

The total quota for 2025 is set at more than 243 million tons of CO2 equivalent. For 2026, the figure rises to over 268 million tons of CO2 equivalent. This allocation reflects a cautious regulatory approach that aims to control emissions while avoiding excessive disruption to industrial production.

The pilot program covers 34 thermal power plants, 25 iron and steel facilities, and 51 cement plants. These sectors were selected not only because of their emissions scale but also to test management mechanisms in industries with different production structures, technologies, and levels of readiness for low-carbon transition. The experience gained is expected to inform expansion to the wider economy in later phases.

The lead agency responsible for implementation is the Bộ Nông nghiệp và Môi trường, working in coordination with the Bộ Công Thương and the Bộ Xây dựng. These ministries will develop detailed allocation plans for each facility, provide implementation guidance, and organize monitoring, evaluation, and overall review of the pilot. The results will serve as a key basis for refining legal regulations on greenhouse gas inventories and quota allocation mechanisms in the future.

During preparatory meetings before the decision was issued, government leaders emphasized that this is the first time Vietnam has implemented emission quota allocation at the national level. Although still a pilot, the process must be carried out seriously, with a clear legal framework and credible calculation methods. The goal is not merely to divide a fixed volume of quotas but to build a comprehensive system covering measurement, inventory, reporting, verification, and data recognition.

A central focus of this phase is the standardization of methodologies. Emissions measurement and reporting procedures must be grounded in solid scientific principles and aligned with international practices. This approach not only enhances domestic transparency but also ensures that Vietnam’s emissions data can be internationally recognized, in line with its commitments under the Nationally Determined Contribution.

Another key requirement is fairness and objectivity in quota allocation. Participating enterprises will be responsible for calculating their own emissions, hiring qualified consultants, and using independent entities to measure and certify reported data. This process is intended to help establish a carbon market that operates on reliable data rather than administrative estimates.

Looking further ahead, the period through 2027 is defined as a time for piloting and institutional refinement. From 2028 onward, emission quota management is expected to be officially and mandatorily implemented nationwide for all sectors and enterprises subject to greenhouse gas inventory requirements. As a result, the outcomes of the upcoming pilot years will play a decisive role in shaping Vietnam’s future carbon market.

The legal foundation for quota allocation is embedded in updated regulations on greenhouse gas mitigation. Quotas for each facility are not assigned arbitrarily but are based on multiple factors, including emissions per unit of product, sectoral growth targets, business production plans, mitigation potential, and each enterprise’s technological and financial capacity to reduce emissions. This approach is designed to encourage technological improvement rather than simply restricting output.

In subsequent phases beyond 2026, sectoral ministries will continue proposing lists of facilities and annual quota levels for each period, submitting them to the lead ministry for consolidation and reporting to the Prime Minister for approval. This process indicates that quota allocation will remain flexible, adapting to economic development realities and technological progress instead of being fixed long term.

Notably, facilities receiving quotas will be allowed to trade emission allowances and carbon credits on a carbon exchange according to the prescribed roadmap. This opens the door to a market-based mechanism for emissions management, where enterprises that reduce emissions more effectively can sell surplus allowances to those facing greater challenges, thereby optimizing mitigation costs across the economy.

The pilot allocation of emission quotas is therefore more than an administrative decision. It is a foundational step toward establishing a market-based emissions management system in Vietnam. If implemented seriously and transparently, it could become a crucial tool for balancing economic growth with the transition to a low-carbon economy in the decades ahead.

Source: Vneconomy