Vietnam has officially commenced the pilot phase of its greenhouse gas emissions trading system (ETS), targeting CO2 emissions reduction in the steel, cement, and thermal power sectors. Companies in these industries will now need to acquire carbon emission permits based on their CO2 intensity per unit of output.

This first phase, running until 2029, will cover approximately 50% of Vietnam's total emissions, with future expansion planned for other industries, such as freight transportation and commercial real estate. Companies will receive their first permits for 2025-2026 by year-end. Exceeding limits will need additional credits, with up to 30% offset through low-carbon projects from both domestic and foreign markets.

Immediate, significant emission reductions aren't expected due to initial free permit allocation, but the ETS is still important for educating businesses on new regulations. This system is a key step towards Vietnam's 2050 net-zero emissions goal, addressing rapid emission growth driven by increased coal-fired electricity generation and steel production.