In order to accelerate the implementation of environmental protection commitments, on 09 June 2025, the Government promulgated Decree No. 119/2025/ND-CP (“Decree 119”) amending and supplementing a number of articles of Decree No. 06/2022/ND-CP (“Decree 06”) on greenhouse gas (GHG) emission reduction and ozone layer protection. The main contents of Decree 119 are as follows:
1. Implementation of greenhouse gas emission quota allocation starting in 2025
Decree 06 set out a roadmap for GHG inventory, issuance of total GHG emission quotas, and allocation of GHG emission quotas to certain facilities from 2026. However, Decree 119 revises this to allow quota allocation to begin in 2025, specifically:
a) In 2025 and 2026, thermal power plants, iron and steel manufacturing facilities, and cement production facilities that are listed as GHG-emitting facilities and required to carry out a GHG inventory shall be allocated GHG emission quotas. This allocation is implemented on a pilot basis at the plant level and may proceed prior to the Prime Minister's approval of total GHG quotas by phase and by year.
b) From 2027 to 2030, additional facilities and their annual GHG emission quotas may be proposed for allocation.
During the period from 2025 to the end of 2030, facilities allocated GHG emission quotas are responsible for developing and implementing mitigation measures in line with their assigned quotas. Facilities that have not yet been allocated quotas must prepare and implement GHG mitigation plans in accordance with regulations.
2. Establishment of the National Registry for GHG Emission Quotas and Carbon Credits ("National Registry")
Analogous to the function of securities depositories supporting securities trading on exchanges, Decree 119 introduces the establishment of the National Registry to support the trading of GHG emission quotas and carbon credits on the carbon exchange.
The National Registry will manage, operate, update, and provide data on the ownership of GHG emission quotas and carbon credits, as well as handle transactions including borrowing, repayment, transfer, and offsetting of quotas. This centralized registry is expected to ensure effective management and facilitate carbon market operations.
3. Adjustment of the domestic carbon market development roadmap
3.1. Postponement of the carbon exchange’s operation timeline
Decree 06 had set the goal of launching a pilot domestic carbon exchange from 2025. However, due to current limitations, this timeline is no longer feasible.
Decree 119 revises the roadmap with the following milestones:
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By the end of 2028:
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Complete the establishment of the National Registry;
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Operate the domestic carbon exchange on a pilot basis;
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Implement mechanisms for domestic carbon credit exchange and offsetting;
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From 2029 onward:
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Implement GHG emission quota auction mechanisms;
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Officially operate the domestic carbon market and participate in international carbon markets.
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4. Organizations and individuals may propose methods for generating carbon credits under domestic offsetting mechanisms
a) Types of carbon credit generation methods include:
(i) Methods regulated, recognized, and published by sectoral ministries on the National Registry and their official websites;
(ii) Methods recognized under the UNFCCC framework for projects under Article 6.4 of the Paris Agreement, reviewed, selected, and published by sectoral ministries;
(iii) Methods proposed by organizations or individuals other than the above, and recognized by sectoral ministries.
b) Proposing recognition of carbon credit generation methods
From 01 January 2028, organizations and individuals may submit proposals to the relevant sectoral ministry for consideration of recognition.
The evaluation will be conducted by an appraisal council, assessing suitability with mitigation goals, GHG calculation methods, technical compliance with measurement, reporting, verification (MRV), scalability, and potential for broader application.
If approved and published in the National Registry, the proposing party may collect royalties from enterprises using the method, in accordance with intellectual property laws and other applicable regulations.
c) Registering selected carbon credit generation methods for domestic offset projects
From the effective date of Decree 119, organizations and individuals may submit applications to the relevant sectoral ministry to register selected carbon credit generation methods for use in domestic offset projects.
Sectoral ministries will assess applications based on mitigation measures, credit generation methods, and monitoring parameters. Once approved, the project will be listed in the National Registry.
5. Supplementation of the legal framework for domestic trading of GHG quotas and carbon credits
a) Exchange-based transactions
Decree 119 clearly defines the subjects and methods for trading GHG emission quotas and carbon credits:
(i) Transactions are to be conducted on the carbon exchange;
(ii) Tradable instruments include:
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GHG emission quotas allocated to facilities;
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Carbon credits issued for verified GHG emission reductions since 01 January 2021 under both domestic and international offset mechanisms.
b) Quota repayment mechanism
Allocated facilities must repay GHG emission quotas to the State. The volume of repaid quotas must be at least equal to the inventoried direct emissions during the allocation period, minus the amount offset with carbon credits.
Facilities may utilize trading, borrowing, transferring quotas, and applying carbon credits for offsetting to meet their repayment obligations.
Non-compliance may result in administrative penalties under environmental law and a deduction from the facility’s quota in the subsequent allocation period.
c) Quota borrowing mechanism
Until the end of 2030, a facility may borrow up to 15% of its quota from the next allocation period to fulfill its current quota repayment obligation. Borrowed quotas may not be traded.
d) Quota transferring mechanism
Until 2030, facilities may transfer unused quotas remaining after repayment to the next period. Transferred quotas may be traded.
e) Quota offsetting with carbon credits
Facilities may use carbon credits from offset projects to offset up to 30% of their allocated GHG emission quota.
Decree 119/2025/ND-CP takes effect from 01 August 2025.
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