Decision No. 232/QD-TTg of the Prime Minister on Approval the Scheme for Establishing and Developing a Carbon Market in Vietnam

Article 1. Approval of the “Scheme for establishing and developing a carbon market in Vietnam” with the following contents: I. VIEWPOINTS AND PRINCIPLES 1. Proactively establish and develop the carbon market in Vietnam in accordance with laws and practical conditions, national development orientation, international commitments on GHG mitigation that Vietnam participates in, and global carbon market development trends. 2. Develop the carbon market following a centralized model, operating on market principles under the close management and supervision of the State, ensuring principles of transparency, openness, safety, and efficiency and in line with national conditions and international practices, ensuring national interests, and harmonizing the interests of market entities. II. OBJECTIVES 1. General objectives Develop the carbon market in Vietnam, which contributes to achieving the GHG mitigation target committed in the Nationally Determined Contributions (NDC) with low costs for businesses and society, creating new financial flows for GHG mitigation activities, promoting green transition, developing low-emission technologies, improving the competitive capacity of Vietnamese enterprises in domestic and global markets, developing a low-carbon economy, actively responding to climate change, and aiming to achieve net-zero emissions by 2050. 2. Specific objectives Before June 2025: - Step by step build and complete the legal framework for the exchange of GHG emission quotas, carbon credits and the mechanism for exchanging and offsetting carbon credits, ensuring the legal basis for the pilot implementation of the carbon trading floor. - Build infrastructure to serve the operation of the carbon market. - Meet the requirement regarding the capacity of state regulatory authorities to manage and organize the operation of the carbon market and the capacity and awareness of enterprises, organizations, and individuals to be ready for participating in the carbon market. b) From June 2025 to end of 2028: - Continue to build and complete the infrastructure to serve the operation of the carbon market. - Pilot operation of the domestic carbon trading floor. - Continuously improve the legislative document system to serve the operation of the carbon market. - Further improve the capacity of state regulatory authorities to manage and organize the operation of the carbon market and the capacity and awareness of enterprises, organizations, and individuals to meet the requirements when the carbon market is officially active. c) From 2029 onwards: - Officially put domestic carbon trading floor into operation. - Continue to improve the law and infrastructure for the carbon market; continue to improve the capacity of state regulatory authorities to manage and organize the operation of the carbon market and the capacity and awareness of enterprises, organizations, and individuals to meet the demands of the new period. III. CARBON MARKET IN VIETNAM 1. Commodities in the Carbon Market consist of 2 types: a) GHG emission quotas shall be allocated to facilities listed in the list of sectors and facilities emitting GHGs that must make an inventory of GHGs promulgated by the Prime Minister through free allocation and auction methods. b) Carbon credits certified for trading on the market include: - Carbon credits obtained from programs, projects according to the domestic carbon credit exchanging and offsetting mechanisms in accordance with the law; - Carbon credits obtained from programs, projects according to the international carbon credit exchanging and offsetting mechanisms, including: + Carbon credits from Clean Development Mechanism (CDM). + Carbon credits from Joint Crediting Mechanism (JCM). + Carbon credits according to Article 6 of the Paris Agreement. 2. Participants in the carbon market a) Trading participants: - For GHG emission quota trading: Facilities listed in the list of sectors and facilities emitting GHGs that must make an inventory of GHGs promulgated by the Prime Minister shall be allocated a GHG emission quota. - For carbon credit trading: + Facilities listed in the list of sectors and facilities emitting GHGs that must make an inventory of GHGs promulgated by the Prime Minister shall be allocated a GHG emission quota. + Organizations executing programs, projects according to the domestic/international carbon credit exchanging and offsetting mechanisms according to the law and the international treaties to which the Socialist Republic of Vietnam is a signatory. + Organizations and individuals eligible to participate in investment in and trading of carbon credits. b) Trade support organizations: the number of trade support organizations shall depend on the market scale. 3. National Registration System for GHG emission quotas and carbon credits National Registration System for GHG emission quotas and carbon credits is established to manage, operate, update, and use information on GHG emission quotas and carbon credits; handle activities related to borrowing, return, transfer, and offsetting of GHG emission quotas. The Ministry of Natural Resources and Environment shall take charge and cooperate with relevant agencies in building, managing, and operating the National Registration System for GHG emission quotas and carbon credits. 4. Trading System a) Carbon trading floor GHG emission quotas, carbon credits shall be traded on the domestic carbon trading floor. The Hanoi Stock Exchange (HNX) shall build and provide carbon trading floors in accordance with requirements regarding market organization, surveillance, and technical standards set by the Ministry of Natural Resources and Environment in cooperation with the Ministry of Finance and relevant ministries, central authorities, and agencies. b) Trading methods and registration, depository, settlement for transactions Trading activities on the carbon market are centralized on the carbon trading floor. Greenhouse gas emission quotas and carbon credits certified by the Ministry of Natural Resources and Environment for trading on the trading floor will be issued one-of-a-kind domestic codes for trading. Participants in the carbon market in Vietnam must have depository accounts for trading GHG emission quotas or carbon credits. Registration, code issuance for GHG emission quotas and carbon credits are conducted centrally to ensure uniform, synchronized data and meet management and monitoring requirements. Vietnam Securities Depository and Clearing Corporation (VSDC) shall provide depository, transaction settlement services in accordance with requirements regarding market organization, surveillance, and technical standards set by the Ministry of Natural Resources and Environment in cooperation with the Ministry of Finance and relevant ministries, central authorities, and agencies. Transaction settlements will be automatically processed based on trading results sent by HNX, ensuring that the transfer of goods occurs simultaneously with payment at the settlement banks. Settlements for transactions on the carbon trading floor shall be handled by commercial banks qualified for providing services of settlement of GHG emission quota and carbon credit transactions. 5. Organization of operation of the carbon market The Ministry of Natural Resources and Environment shall take charge and cooperate with the Ministry of Finance, the Ministry of Agriculture and Rural Development, the Ministry of Construction, the Ministry of Industry and Trade, the Ministry of Transport, and relevant ministries, central authorities, and agencies in organizing the operation of the carbon market, ensuring that it does not develop freely and unplanned, causing loss of State resources and property and affecting national security and social order. State management responsibilities to the carbon market of the Ministry of Natural Resources and Environment, Ministry of Finance, and relevant ministries, central authorities, and agencies shall be specified in legislative documents. 6. Carbon market roadmap a) Pilot period from 2025 to the end of 2028 - The carbon market shall be piloted nationwide. The transfer of carbon credits and results of GHG mitigation to foreign partners are researched, specified in legislative documents, and subject to review and decisions by the competent authorities. - All of the GHG emission quotas are researched and allocated to large facilities emitting GHGs in certain sectors for free. - Carbon credits certified for trading on the carbon trading floor, including those obtained from: (i) Programs, projects under the domestic carbon credit exchanging and offsetting mechanisms; (ii) Clean Development Mechanism (CDM); (iii) Joint Crediting Mechanism (JCM); (iv) Article 6 of the Paris Agreement. - The ratio of carbon credits used for offsetting GHG emissions on the total allocated GHG emission quotas regulated by the Government. - Trading participants on the carbon trading floor include: (i) large facilities emitting GHGs listed in the list of sectors and facilities emitting GHGs that must make an inventory of GHGs promulgated by the Prime Minister and allocated GHG emission quotas; (ii) organizations and individuals qualified to participate trading carbon credits on the carbon trading floor. b) Official period from 2029 onwards - The carbon market shall be officially active nationwide. - Sectors and facilities allocated GHG emission quotas shall be studied and considered for expansion according to the roadmap. - GHG emission quotas shall be studied and considered for free allocation and allocation though auction. Detailed ratios for free allocation and auction of GHG emission quotas will be proposed during the pilot period and after having sufficient information and data on GHG emission quotas to be allocated and trading volume. - Additional types of carbon credits shall be considered for certification for trading on the carbon trading floor. - The ratio of carbon credits used for offsetting emissions on the total allocated GHG emission quotas for facilities shall be regulated by the Government. - More subjects shall be considered to be eligible for participating in carbon credit trading on the carbon trading floor (adjusting the conditions for organizations and individuals to participate in trading on the carbon trading floor). - Based on the results of review and assessment of the process of piloting the domestic carbon market, assessment of the socio-economic impacts of the carbon market, and the official development direction of the carbon market, researching the potential for connecting the domestic carbon market with regional and global carbon markets, transfer of carbon credits, and GHG mitigation results to foreign partners, a report shall be sent to competent authorities for review and decision. IV. TASKS AND SOLUTIONS 1. Tasks and solutions regarding commodities in the carbon market - Develop a plan for reducing GHG emissions; - Establish total GHG emission quotas for each period and annually. - Organize the allocation of GHG emission quotas by period and annually for facilities listed list of facilities that must make an inventory of GHGs; - Develop regulations on management of carbon credits; - Research, report to competent authorities on the regulation of the transfer of carbon credits, GHG mitigation results to foreign partners during the pilot period of the carbon market; - Develop regulations and organize the assessment and recognition of programs, projects under the domestic and international carbon credit exchanging and offsetting mechanisms; - Certify GHG emission quotas and carbon credits for trading on the domestic carbon credit trading floor. - Review, develop regulations on auctioning GHG emission quotas. 2. Tasks and solutions regarding participants in carbon market - Update and adjust the list of sectors and facilities emitting GHGs that must make an inventory of GHGs; - Specify regulations on facilities allocated GHG emission quotas; - Specify conditions for organizations and individuals eligible to participate in investment in and trading of carbon credits, trade support organizations in the carbon market. 3. Tasks and solutions regarding the national registration system and carbon trading floor - Establish, manage, and operate the national registration system for GHG emission quotas and carbon credits. - Develop legal framework for the domestic carbon trading floor. - Organize the development of trading systems and systems for depository and settlement of GHG emission quotas and carbon credits. - Research, propose amendments, or issue new legislative documents on the connection of the domestic carbon trading floor with regional and global carbon credit markets and the transfer of carbon credits and GHG mitigation results to foreign partners during the official period of the carbon market based on the opinions of competent authorities. 4. Tasks and solutions regarding the operation of the carbon market - Review the Law on environmental protection, regulations on the functions, tasks of ministries, central authorities, agencies to assign suitable tasks related to managing, inspecting, supervising, and handling complaints, petitions, and denunciations of violations related to the carbon market; - Develop regulations on organizing the operation of the carbon market. - Research and review cooperative agreements, programs on carbon exchange and offsetting mechanisms, transfer GHG mitigation results bilaterally, multilaterally, and internationally that have been signed in accordance with the law to ensure the implementation of objectives and commitments to reduce emissions according to NDC and national interests. - Develop the process for assessing results of grassroots-level, sector-level inventory of GHGs, assessing GHG mitigation; organize the management of GHG mitigation activities; - Develop technical regulations on measurement, reporting, and assessment of GHG mitigation and GHG inventory in sectors that must make a GHG inventory; - Develop regulations on trading, transferring, borrowing, returning, and repossessing GHG emission quotas; - Review, research, propose amendments to regulations on taxes, fees, charges, and service charges related to the carbon market and study the management and use of proceeds from GHG emission quota auctions. - Add regulations on violations, administrative handling measures related to the carbon market; - Assess and review the pilot period of the domestic carbon market, assess the socio- economic impacts of the carbon market; - Review, propose amendments, or issue new legislative documents to create a legal framework for the official operation of the carbon market. 5. Tasks and solutions for raising awareness, improving capacity - Build an electronic portal/website about the domestic carbon market; - Disseminate information and raise awareness about the carbon market for officials and public employees at all levels, the enterprise communities, and local communities; - Provide training, disseminate knowledge about the domestic and international carbon markets to journalists, editors of press agencies; - Provide information about the carbon market to press agencies; disseminate information about the carbon market on mass media. - Enhance capacity for officials in charge of developing policies; officials participating in managing the exchange of GHG emission quotas and carbon credits on the domestic and international carbon markets. - Support enterprises in accessing and participating in the carbon market in Vietnam. (Details on the tasks and solutions are specified in the Appendix attached hereto). V. IMPLEMENTATION 1. Ministry of Natural Resources and Environment shall - Take charge and cooperate with relevant ministries, central authorities, and agencies in organizing the operation of the carbon market and participating in the global carbon market; - Take charge and cooperate with ministries, central and local authorities, enterprises, and associations in implementing the Scheme; actively integrate the objectives and tasks of the Scheme with target programs and schemes, tasks of other relevant ministries, central and local authorities. - Consolidate and balance the resource requirements for execution of the Project. - Organize activities for dissemination, training, and guidance on Project-related content; - Monitor, urge, summarize, and organize the review and assessment of the Project's execution at the end of the pilot period and periodically every 5 years during the official period, and report to the Prime Minister. 2. Ministry of Finance shall - Take charge and cooperate with the Ministry of Natural Resources and Environment, relevant ministries, sectors, and agencies to establish the domestic carbon market; - Take charge in requesting competent authorities to allocate the recurrent expenditures for ministries and central agencies for execution of the contents of the Scheme approved by competent authorities. 3. Ministries of: Industry and Trade, Transport, Agriculture and Rural Development, Construction shall - Take charge and cooperate with relevant ministries, central authorities in performing tasks assigned in the Scheme; - Continue implementing the tasks specified in legislative documents and target programs, schemes in fields related to GHG mitigation and the development of the carbon market approved by competent authorities; - Based on the tasks in the Scheme, review related programs, plans, and schemes approved by competent authorities; plan specific annual and periodic tasks to develop the carbon market within the jurisdiction; develop long-term and annual state budget requirements to execute the Scheme; and submit them to the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment, and the Ministry of Finance for making a consolidated report; - Proactively develop and issue technical conditions, legislation, and guidelines for participants in the carbon market in the management sector for execution of the Scheme; - Research and propose priority solutions to encourage and support key export products, sectors, and strategies of Vietnam to improve the competitive capabilities in the market. 4. Ministries of: Public Security, Planning and Investment, Information and Communications, and the State Bank of Vietnam shall - Take charge and cooperate with the Ministry of Natural Resources and Environment and relevant ministries, central authorities in performing tasks assigned in the Scheme; - The Ministry of Planning and Investment shall cooperate with ministries, departments, central authorities, and agencies in submitting a consolidated report to competent authorities for balancing resources to execute the Scheme as per applicable regulations; - The Ministry of Information and Communication shall direct grassroots-level information systems and press agencies to carry out communication for organizations, enterprises, and individuals participating in the carbon market. 5. People's Committees of provinces and centrally affiliated cities shall - Take charge and cooperate with the Ministry of Natural Resources and Environment and relevant ministries, central authorities in performing tasks assigned in the Scheme; - Request the People’s Councils to allocate funds for execution of the Scheme in accordance with the Law on State Budget. 6. Vietnam Chamber of Commerce and Industry, Associations and enterprises - The Vietnam Chamber of Commerce and Industry shall take charge and cooperate with relevant ministries, central authorities, and agencies in disseminating and providing training and refresher training for organizations, enterprises, communities, and individuals to enable access to and participation in the carbon market. - Cooperate with ministries, central authorities in executing the Scheme and policies supporting enterprises to improve capacity and be ready to participate in activities on the carbon market; - Proactively improve capacity to implement the carbon credit exchanging and offsetting mechanisms and participate in the carbon market; grasp market information and related regulations. 7. If the ministries, central authorities, and agencies mentioned in this Scheme are merged, consolidated, or cease operations, the ministries, central authorities, and agencies receiving tasks assigned to such entities will continue to carry out the tasks assigned in this Decision. VI. IMPLEMENTATION FUNDS Implementation funds for the scheme are allocated by the state budget capital in accordance with the state budget management hierarchy, private capital, and other legitimate sources in accordance with law.

Article 2. This Decision comes into force from the date on which it is signed.

Article 3. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of People’s Committees of provinces and centrally affiliated cities, and relevant organizations and individuals are responsible for the implementation of this Decision./. PP. PRIME MINISTER DEPUTY PRIME MINISTER Tran Hong Ha ------------------------------------------------------------------------------------------------------ This translation is made by THƯ VIỆN PHÁP LUẬT, Ho Chi Minh City, Vietnam and for reference purposes only. Its copyright is owned by THƯ VIỆN PHÁP LUẬT and protected under Clause 2, Article 14 of the Law on Intellectual Property.Your comments are always welcomed