The Carbon Rulebook Gets Teeth: Decree 119/2025 and the Road to Auctions in 2029
Decree 119/2025/ND-CP is the amendment that turned Vietnam's carbon market from a distant promise into a dated programme. Signed on 9 June 2025 and effective from 1 August 2025, it rewrites core parts of Decree 06/2022, the framework decree on greenhouse gas mitigation, pulling the first allowance allocations forward to 2025 and fixing the year, 2029, when the market stops being a pilot and starts auctioning allowances.
Document facts
Issuing body: Government of Vietnam
Document number: Decree 119/2025/ND-CP, amending and supplementing Decree 06/2022/ND-CP on greenhouse gas mitigation and ozone layer protection
Signed: 9 June 2025
Effective: 1 August 2025
Status: In force; the consolidated framework has been amended again since, most recently in 2026
Unofficial English summary for reference only. Not a legal translation and not legal advice. The Vietnamese text linked at the end of this page is authoritative.
What the document does
Decree 119/2025 rewrites the market roadmap inside Decree 06/2022. For the period to the end of 2028, the state commits to building the National Registration System for greenhouse gases, allowances and credits, pilot operating the domestic carbon exchange, running mechanisms for the exchange and offsetting of domestic credits, and building the capacity of regulators, organisations and individuals to take part. From 2029, the roadmap completes the market's legal framework, introduces auctions of emission allowances, and organises the market for connection with regional and international carbon markets.
The amendment also brings the compliance calendar forward. Facilities on the national greenhouse gas inventory list, beginning with thermal power plants, steel works and cement plants, receive pilot allowance allocations for the 2025 to 2026 period, with allocation expanding across 2027 to 2030 under sector roadmaps. Allocation uses historical emissions and product benchmarks, and it is free of charge during the pilot.
What changes in practice
Covered facilities now hold a real asset with rules attached. Allowances sit on the national registry, where ownership, borrowing, surrender, transfer and offsetting are recorded. A facility that emits more than its allocation has three regulated ways to close the gap: buy allowances, surrender carbon credits, or borrow from its own future. Credits may offset at most 30 percent of the excess, a ceiling that keeps most of the pressure on allowances and on the facility's own abatement. Borrowing is capped at 15 percent of the following period's allocation and must be repaid within that period's compliance cycle.
The measurement system underneath tightens in parallel. Facilities must prepare annual greenhouse gas mitigation reports and send them to their provincial People's Committee before 31 March each year, starting from the 2027 reporting cycle, with provinces consolidating results to the Ministry of Agriculture and Environment. One carbon credit represents one tonne of carbon dioxide equivalent, and the registry is the single record of who owns what.
The machinery has already started to move. Allocations for the pilot period have been issued to the first group of power, steel and cement facilities, and pilot trading on the exchange, whose operating rules sit in Decree 29/2026, began in 2026.
Who is affected
The first circle is heavy industry: thermal power, steel and cement facilities on the inventory list, which must now run emissions accounting, registry accounts and compliance planning as routine functions. The second circle is every other facility on the national inventory list across energy, industry, transport, construction, agriculture and waste, which should expect allocation to reach them in the expansion to 2030. The third circle is the supply side of the market: credit project developers, verifiers, consultants and the banks that finance abatement against a future allowance price.
Notes for investors and operators
The single most important planning fact is the 2029 step change. Free allocation and a quiet pilot give way to auctions, which convert carbon from an administrative topic into a cash cost with a market price. Capital expenditure approved today for plants in covered sectors should be tested against a paid allowance world, not the free pilot.
Second, the 30 percent offset ceiling shapes the credit market. Demand for credits is real but capped, so credit projects should be underwritten on conservative volumes and prices, with the offset limit treated as a structural feature rather than a detail. Third, data quality is the foundation everything else sits on: inventories and mitigation reports that cannot survive verification will undermine allocation, borrowing and surrender alike. Companies that invest early in measurement, reporting and verification are buying compliance insurance at the cheapest point in the cycle.
Sources and the official text
Official full text: Full text of Decree 119/2025/ND-CP (Thu Vien Phap Luat, Vietnamese)
Government of Vietnam, Decree 06/2022/ND-CP on greenhouse gas mitigation and ozone layer protection, as amended, for the consolidated market framework.
Government of Vietnam, Decree 29/2026/ND-CP on the domestic carbon exchange, for the operating rules that implement the roadmap.
About this explainer: this page is an unofficial English summary prepared by VoltViet from the official Vietnamese text, for reference only. It is not a legal translation and does not constitute legal advice. Only the Vietnamese original is authoritative. For decisions with legal or financial consequences, consult the official text and a qualified Vietnamese lawyer.
Related reading
More explainers from the Policy & Law desk, and reporting from the Green Economy desk. See also our analysis of the exchange in practice: Seven Trades and 1,310 Allowances: Vietnam’s Carbon Exchange Finds Its First Price.
