Currently, Vietnam does not have a mandatory market for carbon credits. Therefore, the transfer of emission reduction results is carried out through bilateral negotiation agreements between related parties according to the voluntary market. Meanwhile, some ASEAN countries have sold forest carbon credits before Vietnam and established an official market. Many experts have said that Vietnam's carbon credit market, experimental or official, is lagging behind other markets in the region.
Nearly 40 countries have issued carbon taxes
The carbon market originated from the United Nations Kyoto Protocol on climate change, adopted in 1997. Accordingly, countries with excess emission rights are sold to or purchased from countries that emit more or less than their committed targets.

Since then, a new type of commodity has appeared in the world, which is certificates of greenhouse gas emission reduction/absorption. Because carbon is the equivalent of all greenhouse gases, transactions are generally called carbon trading and exchange, forming a carbon market or carbon credit market.
The Department of Forestry (Ministry of Agriculture and Rural Development) said that currently, the world carbon market is basically operated in two ways: Voluntary international carbon market and domestic carbon market (mandatory).
Accordingly, the voluntary international carbon market aims at the need for voluntary carbon credit trading to serve the social responsibility of enterprises and build public image and to create more credit supply for the domestic carbon market. The voluntary carbon market is often based on bilateral or multilateral contracts and cooperation agreements between organizations, companies or countries. Therefore, the selling price of carbon credits is regulated by the market (supply - demand).
Currently, the carbon price in the voluntary market in the world usually fluctuates from 2 to 4 USD/ton of carbon, in which the average carbon price of programs/projects in the Asia region fluctuates over the years 2019, 2020, 2021 respectively 1.8; 1.6; 3.09 USD/ton of carbon. The updated average price at the present time of this market is 1.07 USD/ton of carbon.
Meanwhile, the domestic carbon market (compulsory market) is regulated by the country or territory and is established and operated with the aim of implementing the emission reduction commitments of that country or territory. Organizations and enterprises are assigned emission quotas and if they exceed the assigned quota, they must pay taxes or buy quotas, carbon credits. Therefore, for the domestic carbon market, the carbon selling price will depend on the policy regulations of the country.
According to World Bank statistics as of September 2024, nearly 40 countries and territories in the world have issued carbon taxes, with tax rates ranging from 1 to 137 USD/ton of carbon.

In Vietnam, on January 7, 2022, the Government issued Decree 06/2022/ND-CP regulating the reduction of greenhouse gas emissions and the protection of the ozone layer. This Decree has specific provisions on the development roadmap and the timing of the implementation of the domestic carbon market.
Forming a forest carbon credit market in Vietnam
Currently in Vietnam, the transfer of emission reduction results is carried out through bilateral negotiation agreements between relevant parties.
Piloting a carbon credit trading floor in 2025
According to Decree 06/2022/ND-CP, by the end of 2027, regulations on carbon credit management, greenhouse gas emission quota exchange and carbon credits will be developed; regulations on the operation of the carbon credit trading floor will be developed; Pilot implementation of carbon credit exchange and offset mechanisms in potential sectors and guidance on implementation of domestic and international carbon credit exchange and offset mechanisms in accordance with the provisions of law and international treaties to which Vietnam is a member; establish and organize the pilot operation of a carbon credit trading floor from 2025; implement capacity building activities and raise awareness of carbon market development.

Regarding the forest carbon credit transfer agreement in Vietnam, according to the Department of Forestry, Ministry of Agriculture and Rural Development, up to now, Vietnam has not had a mandatory market for carbon credits. Therefore, the transfer of emission reduction results is carried out through bilateral negotiation agreements between relevant parties according to the voluntary market.
Regarding the forest carbon credit market, the Prime Minister has assigned the Ministry of Agriculture and Rural Development to implement 2 emission reduction result transfer agreements as follows:
The first is the North Central ERPA agreement, signed on October 22, 2020 between the Ministry of Agriculture and Rural Development and the World Bank (WB) as the trustee of the Forest Carbon Partnership Fund (FCPF) to transfer the GPT volume of 10.3 million tons of carbon dioxide in the North Central region in the period of 2018 - 2024, with a unit price of 5 USD/ton of carbon - equivalent to 51.5 million USD. About 95% of the transfer results will be transferred back to Vietnam to contribute to the national commitment on greenhouse gas emission reduction (NDC).
According to the Emission Reduction Results Report for the first phase (2018 - 2019) confirmed by the WB, the emission reduction results in the North Central region reached 16.21 million tons of carbon. Vietnam completed the transfer of 10.3 million tons of carbon to the WB and received 51.5 million USD. For the remaining 5.91 million tons of carbon, the WB agreed to purchase an additional 1 million tons of carbon. The remaining credits of 4.91 million tons, the Ministry of Agriculture and Rural Development has reported to the Prime Minister for consideration and decision. At the same time, continue to coordinate with the WB to measure and confirm the credits of the second phase (2020 - 2022); Phase 3 (2023 - 2024), looking for partners who are interested in receiving the project to negotiate the transfer, ensuring national interests and mobilizing additional resources for forest protection and development in the North Central region.
The second is the ERPA agreement for the South Central and Central Highlands. On October 31, 2021, at COP26, witnessed by Prime Minister Pham Minh Chinh, Minister of Agriculture and Rural Development Le Minh Hoan signed a Letter of Intent with the Enhanced Forest Finance Organization (Emergent) - the agency entrusted by the Alliance for Reducing Emissions through Forest Finance (LEAF).
Accordingly, Vietnam will transfer to LEAF/Emergent 5.15 million tons of carbon emissions reduction from forests in the South Central and Central Highlands regions in the period of 2022 - 2026. LEAF/Emergent will pay for this service at a minimum price of 10 USD/1 ton of carbon with a total value of 51.5 million USD. The registered area of commercial forest for emission reduction services is 4.26 million hectares, of which 3.24 million hectares are natural forests and 1.02 million hectares are planted forests.
The Ministry of Agriculture and Rural Development said that the orientation from 2028 will organize the operation of an official carbon credit trading floor; regulate activities to connect and exchange domestic carbon credits with regional and world carbon markets.
Carbon credit markets in ASEAN countries
Indonesia and Cambodia sold forest carbon credits before Vietnam. Indonesia, Thailand, Singapore and Malaysia have all established official markets earlier, from 2022 to now.
It is not wrong to say that Vietnam's carbon credit market is slower than other markets in the ASEAN region. However, when comparing the figures of the carbon credit market in the pilot preparation phase from 2025-2027 in Vietnam with the official ASEAN markets that were established earlier and many years ahead, we can see the advantages of Vietnam. Besides, there are big challenges.
Is Indonesia "slowing down"?
IDXCarbon, Indonesia's first carbon credit trading market, opened at the end of September 2023. This market is connected to the country's IDX stock exchange.
n IDXCarbon’s first trading session, only 13 credits were traded, at a selling price of 69,600 rupiah ($4.45) per tonne. This was a fraction of the 460,000 tonnes of CO2 equivalent that coal and geothermal power company PT Pertamina Geotheormal Energy was supposed to buy. The second transaction took nearly three months.
The Jakarta Globe quoted Elen Setiadi, deputy director general of the State Enterprise Development and Innovation Agency at the Coordinating Ministry of Economic Affairs, as saying that by the end of July, the carbon credit trading market had reached a total value of 36.7 billion rupiah ($2.26 million). The trading volume was 608,000 tonnes of CO2 equivalent.
It seems that businesses in the archipelago are very relaxed, or “taking it easy” in the face of new environmental pressures, as well as new opportunities, due to Indonesia’s commitments to the international community. At COP26 in Glasgow, Indonesia said it could only achieve its Net Zero target by 2060 or sooner, with international financial support. China also “postponed” its Net Zero target until 2060.
Climate change startups are seen as a strength of Indonesian tech startups. But in reality, these startups are currently “not big enough” to operate. For example, CarbonEthics has projects that will absorb 12,500 tons of CO2 through mangrove projects in Indonesia’s eastern province of Maluku and rice paddies on the island of Java. But consulting on carbon credit markets and profits from reforestation services are the startup’s main revenue sources, according to CarbonEthics’ website. The startup hopes to list its carbon credits on exchanges in Singapore and Japan as early as 2026. But the founders are still worried about whether foreign markets will accept the credits from the Indonesian market.
Singapore small in scale, big in dreams
Singapore is considered a pioneer in the carbon credit business and has ambitions to become a global hub for tackling climate issues. According to The Straits Times, the Singapore Carbon Market Alliance (SCMA), which was established on July 31, 2024, plays a key role in connecting carbon credit projects with potential customers in Singapore and globally. The market size in Singapore reached US$14.5 million last year, according to CarbonCredits.com.
However, Singapore launched the “Green Singapore Plan 2030” in February 2021, drafted and led by five key ministries, including Education, National Development, Sustainable Development and Environment, Trade and Industry, and Transport. The plan sets ambitious targets. Such as planting one million more trees, quadrupling solar power deployment by 2025, and reducing waste sent to landfill by 30% by 2030. These targets are aimed at reducing Singapore’s carbon footprint and enhancing the country’s environmental resilience.

The size of Singapore’s government green bond market is currently at S$6 billion per year. Singapore’s public sector aims to issue S$35 billion in green bonds by 2030, accounting for more than 50% of ASEAN’s green bond issuance. Singapore’s banks have begun to “step back” from climate change-related projects. From 2021, DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. – the three largest banks in Singapore and also in ASEAN by assets – have pledged to stop financing new coal-fired power projects, remaining true to previous commitments.
Singapore was the first Southeast Asian country to introduce a carbon tax, which came into effect on January 1, 2019. The tax rate at that time was S$5 per tonne of CO2 equivalent (tCO2e). The tax rate is set to rise to S$25 this year in 2024, S$45 in 2026-2027 and is targeted at S$50-80 by 2030.
Thailand: Southeast Asia's "old" market
In mid-February 2024, the Thai Bank for Agriculture and Agricultural Cooperatives (BAAC) spent 120 million baht to buy 400 carbon credits at a price of 3,000 baht per tonne of emissions, or more than US$83.5 at the exchange rate at that time. This was the first forest carbon credit initiative in Thailand and also the highest price in the country for such a project, according to Carbon Herald.
Thaiand's voluntary emission reduction (T-VER) program began in 2014, with large corporations and companies taking the lead. Thailand's carbon credit market was established in September 2022. On January 16, 2023, the official online platform for carbon and clean energy credit trading (FTIX) was launched in Thailand, with the cooperation of the Federation of Thai Industries (FTI) and the Thai Greenhouse Gas Management Organization (TGO). In the first 11 months of the current fiscal year (October 2023 to August 2024), according to TGO, the number of carbon credits traded on the T-VER market was more than 84 million baht, about 670,000 tons of CO2 equivalent, with an average price of 125.78 baht/ton of emissions. Meanwhile, the TFIX floor recorded the trading of 1,798 carbon credits, worth more than 110,000 baht, about 61.35 baht/ton.
The Thai carbon credit market is considered more mature in the region, but the market size is relatively modest. In June 2023, Thailand announced that it would levy a 200 baht ($5.60) tax on each ton of CO2 equivalent on diesel and gasoline products from next year. This is the second country in ASEAN to implement this tax.
In a report released in April 2024 by Siam Commercial Bank (SCB), SCB analysts said that Thailand's voluntary carbon credit market is developing, investors will face risks in transactions, such as supply and demand balance, price and transaction channels.
Demand risk is the uncertainty of the new market, because of its voluntary nature, it is not the first choice of potential buyers and this group of customers prioritizes and focuses more on their own carbon reduction initiatives. Supply risk is that this market is more suitable for large-scale investors, not retail investors. Another major risk is price as there is no clear regulation or system to maintain stability between supply and demand.
Source: Government Electronic Newspaper, Saigon Economic Review and World Bank