VIETNAM ISSUES DECREE NO. 112/2026/ND-CP ON INTERNATIONAL EXCHANGE OF GREENHOUSE GAS EMISSION REDUCTION RESULTS AND CARBON CREDITS

The government has recently issued Decree No. 112/2026/ND-CP on the international exchange of greenhouse gas emission reduction results and carbon credits, marking a significant step in perfecting the legal framework for the carbon market in Vietnam. This document not only lays the foundation for participation in the international carbon market but also contributes to realizing emission reduction commitments under the Paris Agreement, thereby promoting the transition to a sustainable and integrated low-carbon economy.

A key new feature of the Decree is the establishment, for the first time, of a comprehensive, synchronized, and highly operational regulatory system for the transfer of emission reduction results. The contents, from licensing and project registration to measurement, reporting, and verification (MRV) and credit recognition and transfer, are clearly standardized. This helps the Vietnamese carbon market transition from a pilot phase to official operation, while minimizing legal risks and increasing confidence among participants, especially businesses and international investors.

Another significant breakthrough is the direct domestication of international cooperation mechanisms under Article 6 of the Paris Agreement (6.2 and 6.4). Through this, Vietnam can flexibly conduct transactions in both directions: exporting carbon credits to the international market and importing credits when necessary to meet national emission reduction targets. This approach not only enhances integration but also optimizes the cost of fulfilling climate commitments, aligning with the operational trends of the global carbon market.

The Decree marks a significant technical step forward by officially domesticating the “corresponding adjustment” mechanism – a core requirement in international carbon market governance. This mechanism aims to ensure transparency and prevent the “double counting” of emission reduction results between countries during the transfer of carbon credits. The inclusion of this regulation in the legal system not only demonstrates a higher level of compliance with international standards but also contributes to enhancing the environmental integrity and reliability of carbon credits issued by Vietnam in the global market. Furthermore, the new policy significantly expands market participation by recognizing independent international carbon standards. This regulation allows domestic projects to access diverse credit generation methods and flexibly choose partners, thereby increasing their ability to mobilize climate finance and technology transfer. This is a new development with high practical significance, especially in the context of the increasing demand for investment in emission reduction solutions in Vietnam.

Another noteworthy point is the policy approach that balances international integration with safeguarding national interests. The regulation of carbon credit transfer rates (maximum 90% or 50% depending on the sector) demonstrates the State's proactive control of carbon resources while maintaining room for achieving domestic emission reduction targets. Simultaneously, the Decree clarifies the financial mechanism for carbon credits, particularly in public investment projects and public-private partnerships (PPP), thereby increasing transparency and creating clear economic incentives for participating entities. Decree No. 112/2026/ND-CP represents a breakthrough in three aspects: institutional improvement, promotion of international integration, and activation of market dynamics. Beyond its role as a management tool, the Decree opens up new policy space to attract climate finance, promote green technology innovation, and enhance Vietnam's position in the global carbon value chain.

Read the full text of the Decree at: https://vanban.chinhphu.vn/?pageid=27160&docid=217414