Vietnam has officially launched the first phase of its emissions trading system (ETS) scheme to reduce greenhouse gas emissions, with the country's three main carbon-intensive sectors - steel, cement and thermal power - now obliged to buy emission permits.
In line with the decree issued by the government, companies in these sectors will have to obtain permits determined according to their carbon intensity per production output. The pilot, which will run until 2029, covers around 50% of Vietnam's total carbon emissions. In the future, the transportation sector and commercial buildings will also be included in the system.
Mai Duong, an analyst at carbon market data provider Veyt, stated that in the first phase of the system, the focus is on the corporate compliance process rather than environmental impacts, “The priority is to help companies adapt to this new system, its rules and regulations.”
Companies are expected to obtain their first emission permits for the 2025-2026 period by the end of this year. Firms whose emissions exceed the allocated amount will be required to purchase additional credits from the carbon market. They will also have the right to offset up to 30% of their total emissions with credits from domestic or international low-carbon projects.
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