Decoding Decree No. 119/2025/ND-CP: A Practical Gateway to Vietnam’s Carbon Market

Decoding Decree No. 119/2025/ND-CP: A Practical Gateway to Vietnam’s Carbon Market

To accelerate the implementation of Viet Nam’s national climate commitments and strengthen environmental protection, on 09 June 2025, the Government officially issued Decree No. 119/2025/ND-CP (“Decree 119”).

Decree 119 amends and supplements several provisions of Decree No. 06/2022/ND-CP on greenhouse gas (GHG) emissions mitigation and ozone layer protection, thereby further completing the legal framework for the operation of Viet Nam’s carbon market.

Effective from 01 August 2025, Decree 119 introduces a number of provisions that businesses—especially energy-intensive and high-emitting sectors such as industry, construction, energy, and transport—should closely follow.

Below are the key points that businesses should understand to prepare for market participation:

1. Earlier allocation of GHG emission allowances—starting in 2025

Under Decree 06, the roadmap envisioned GHG inventory implementation, issuance of total GHG emission allowances, and allowance allocation for certain facilities from 2026 onward. Decree 119 revises this approach by moving allowance allocation forward to 2025.

Accordingly:

• During 2025–2026, facilities included in the mandatory GHG inventory list—specifically thermal power plants, iron and steel production facilities, and cement production facilities—will be allocated GHG emission allowances. This allocation is implemented on a pilot basis at the level of each plant/facility, enabling early execution even before the submission to the Prime Minister for approval of total national allowances by phase and by year.

• From 2027 to 2030, competent authorities will continue proposing additional facilities to be covered and determining annual allowance allocations for each facility.

• For the period 2025 through 2030:

  • Facilities receiving allowances must develop and implement GHG mitigation measures consistent with their allocated allowances.

  • Facilities not yet allocated allowances must develop and implement a facility-level GHG emissions mitigation plan as required by regulations.

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2. Establishment of a National Registry System for allowances and carbon credits

Decree 119 adds a new component: the National Registry System for GHG emission allowances and carbon credits (the “National Registry System”), designed to support trading on Viet Nam’s domestic carbon exchange—similar in concept to how a securities depository supports transactions on a stock exchange.

The National Registry System is responsible for:

• managing and operating the registry infrastructure,

• updating and enabling access to ownership information of allowances and carbon credits, and

• processing transactions and compliance-related activities such as borrowing, surrendering, transferring, and offsetting/clearing GHG emission allowances.

A centralized registry is expected to strengthen transaction governance, improve market oversight, and facilitate smoother operation of the domestic carbon exchange.

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3. Revised roadmap for domestic carbon market development

3.1. Adjusted timeline for operating the domestic carbon exchange

While Decree 06 anticipated launching and piloting the domestic carbon exchange from 2025, Decree 119 adjusts the implementation timeline to reflect current readiness conditions.

The revised milestones are:

By the end of 2028:

• Complete the establishment of the National Registry System;

• Pilot the domestic carbon exchange;

• Implement the mechanism for domestic carbon credit exchange and offsetting/clearing.

From 2029:

• Introduce the auction mechanism for GHG emission allowances;

• Officially operate the domestic carbon market and participate in the global carbon market.

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4. Flexibility in selecting carbon crediting methodologies for domestic exchange/offset projects

4.1. Eligible types of carbon crediting methodologies

For projects participating in Viet Nam’s domestic carbon credit exchange and offset mechanism, Decree 119 allows organizations and individuals to use one of the following methodology categories:

1. Methodologies prescribed, recognized, and published by the relevant sectoral ministry on the National Registry System and the ministry’s official website;

2. UNFCCC-recognized methodologies applicable to projects under the Article 6.4 mechanism of the Paris Agreement, which are reviewed, selected, and published by relevant sectoral ministries on the National Registry System and the ministry’s official website;

3. Methodologies proposed by organizations/individuals (outside the above cases), provided they are recognized by the relevant sectoral ministry.

4.2. Submission for recognition of a carbon crediting methodology

From 01 January 2028, organizations and individuals may submit dossiers to the relevant sectoral ministry for consideration and recognition of a proposed carbon crediting methodology.

The evaluation council will review, among others:

• alignment with implementation objectives,

• calculation approach for GHG emissions,

• capacity to meet technical requirements for measurement, reporting, and validation/verification of mitigation outcomes, and

• scalability and broad applicability to deliver effective GHG reductions.

If recognized and published on the National Registry System, the proposer may collect royalty fees from entities using that methodology, in accordance with intellectual property and related laws.

4.3. Registration of selected methodologies for domestic projects

From the effective date of Decree 119, organizations and individuals may submit dossiers to the relevant sectoral ministry to register the selected methodology for projects under the domestic exchange/offset mechanism.

The sectoral ministry will assess:

• mitigation measures,

• the selected carbon crediting methodology, and

• monitored parameters for project operation.

Once approved, the project will be published on the National Registry System.

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5. Strengthened legal framework for trading and compliance instruments in the domestic market

5.1. Trading (exchange) mechanism

Decree 119 clarifies that trading is conducted via the domestic carbon exchange.

Eligible instruments include:

• GHG emission allowances allocated to facilities; and

• Carbon credits issued for GHG mitigation results from 01 January 2021 onward, generated by programs/projects under domestic and international carbon credit exchange/offset mechanisms.

5.2. Surrender of GHG emission allowances

Facilities allocated allowances must surrender allowances to the State. The minimum surrender amount must be at least equal to the GHG inventory results from direct emission sources during the allocated period, minus the volume of carbon credits used for offsetting.

Facilities may use combinations of:

• trading,

• borrowing,

• transferring allowances, and

• using carbon credits for offsetting,
  to meet surrender obligations.

Failure to fully surrender allowances will result in administrative penalties under environmental protection regulations. In addition, any shortfall will be deducted from the facility’s allowance allocation for the subsequent period.

5.3. Borrowing of GHG emission allowances

Up to the end of 2030, a facility may borrow part of its own allowances from the subsequent period to meet surrender obligations for the current period.

• The borrowed amount must not exceed 15% of the allowances allocated for the relevant period.

• Borrowed allowances may not be traded.

5.4. Transfer (carry-over) of unused allowances

Up to the end of 2030, a facility may transfer unused allowances (after completing its surrender obligation for the current period) to the next period. Transferred allowances may be used for trading.

5.5. Offsetting allowances with carbon credits

A facility may use carbon credits from eligible exchange/offset projects to offset emissions, but the offset volume must not exceed 30% of the facility’s allocated allowances.

→ Full text of Decree 119/2025/ND-CP: see here

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6. What should businesses do now?

To avoid being caught unprepared, ESG Wings Investments recommends several immediate priorities:

Conduct a comprehensive review

• Reassess operations to ensure accurate emissions inventories and identify high-impact mitigation opportunities.

Strengthen internal capabilities

• Train key personnel on GHG inventory methodologies, carbon finance fundamentals, and relevant legal/regulatory requirements.

Develop a clear carbon strategy

• Define a practical pathway: invest in technology upgrades, purchase allowances, or develop carbon credit projects in-house. Select the option that optimizes cost while delivering durable long-term value.

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7. ESG Wings Investments – Supporting businesses on the green transition

As a leading and long-established conformity assessment organization in Viet Nam, ESG Wings Investments delivers an end-to-end service ecosystem—supporting each implementation stage from GHG inventories and mitigation planning to GHG report validation and advisory for developing internationally aligned carbon credit projects.

With strong technical expertise and a deep understanding of the evolving legal framework, ESG Wings Investments stands ready to help businesses achieve sustainability objectives and confidently enter the high-potential carbon market.

→ Explore solutions for your business: here

For service inquiries, please contact Hotline: +84 829 033 336 for dedicated consultation and support.