Vietnam Launches Pilot ETS in 2025 – Legal Opportunities and Challenges for High-Emission Businesses
Vietnam is officially entering the pilot phase of its Emissions Trading Scheme (ETS) in 2025, marking a critical step toward its net-zero target by 2050. The program will initially cover carbon-intensive sectors such as steel, cement, and coal-fired power, representing approximately 50% of the country’s total CO₂ emissions. This milestone signals Vietnam’s accelerating green transition – but also places businesses under new legal and strategic pressure.
I. ETS – A Strategic Pathway to a Low-Carbon Economy
- The pilot phase will allocate emissions allowances based on intensity, with most allowances provided free of charge at the outset to ease the transition.
- Businesses can use up to 30% offset credits – domestic or international – to meet compliance obligations. This creates opportunities for cost optimization and carbon market participation.
II. Legal Risks of a Weak ETS Strategy
- Free allocation in the early phase may cause companies to delay developing a real emissions-reduction roadmap.
- Incomplete trading infrastructure – the national carbon registry and exchange are still being developed, posing risks of administrative errors, disputes, and lack of transparency.
- Multi-agency oversight – with multiple ministries (Environment, Industry & Trade, Construction) involved, businesses may face inconsistent processes or regulatory delays.
III. Tran & Co. – Your Strategic Legal Partner for ETS Compliance
We support high-emission businesses by:
- Designing tailored ETS compliance roadmaps, including MRV (Measurement – Reporting – Verification) systems and allowance/offset strategies.
- Structuring legal frameworks to optimize both domestic and international offset usage.
- Implementing transparent governance and internal controls to ensure readiness for future regulatory changes and protect against market misconduct.
Vietnam’s ETS is more than a regulatory tool – it is a strategic lever for sustainable business transformation. Companies that treat ETS as part of their long-term ESG strategy will not only meet compliance requirements but also gain a competitive edge in the green economy. Partnering with a legal advisor who understands the market, masters ESG, and thinks strategically will ensure you are ready not just to comply – but to lead.
