Decree No.112/2026/NĐ-CP, issued in April, is the first instrument to operationalise – in concrete legal terms – how emission reduction results and carbon credits generated in Vietnam, including internationally transferred mitigation outcomes, may be accounted for and transferred across borders. While it gives effect to Article 6 of the Paris Agreement, its significance lies in how those mechanisms are embedded within domestic law.
Rather than treating carbon trading as a purely market-driven or externally governed activity, the decree integrates it into a framework of regulatory approvals, national emissions accounting, and sectoral oversight. In doing so, it reshapes the legal character of carbon assets. These are no longer merely project-based outputs capable of commercialisation, but regulated units whose transferability, timing, and value are conditioned by compliance requirements and alignment with national climate commitments.
How the decree works
The decree establishes a unified framework for participation in international carbon markets through three principal channels: cooperative approaches under Article 6.2, the centralised mechanism under Article 6.4, and projects implemented under independent carbon standards. Its scope also extends to transactions outside formal Article 6 mechanisms, ensuring that both compliance and voluntary carbon market activities fall within its regulatory perimeter.
This breadth is accompanied by a clear allocation of regulatory authority. The decree does not replace international rules; instead, it positions Vietnamese law as the governing interface through which such mechanisms operate domestically. Participation in global carbon markets is therefore contingent on compliance with Vietnamese procedures, rather than determined solely by contractual arrangements or external standards.
A central feature of the decree is its distinction between transfers requiring prior approval and those subject to post-transaction notification.
Transfers involving corresponding adjustment require prior approval from the Ministry of Agriculture and Environment (MoAE) and must be recorded in the national registry system. Transfers without corresponding adjustment do not require prior approval, but must be notified to the ministry within a prescribed timeframe. In all cases, registry recording is mandatory.
This creates a tiered regulatory model. Transactions affecting Vietnam’s national emissions accounting are subject to ex ante control, while others are governed through ex post transparency and reporting.
Vietnam is not adopting a purely market-driven carbon trading model. Instead, it is embedding carbon transactions within a framework of national accounting, regulatory approval and policy alignment.
What this means in practice is that carbon credits cannot be analysed in isolation as financial instruments. Their value, transferability and timing are directly linked to regulatory processes and Vietnam’s Nationally Determined Contribution (NDC) trajectory. For investors, the key shift is that execution risk moves upstream – project structuring, documentation and regulatory alignment will determine bankability as much as the underlying asset.
The decree incorporates corresponding adjustment as a binding domestic requirement. Where emission reductions or carbon credits are transferred internationally with corresponding adjustment, Vietnam must add back an equivalent volume of emissions to its national inventory, ensuring that those reductions are counted exclusively towards the acquiring party’s targets.
Responsibility for implementing this adjustment lies with the MoAE, creating a direct legal link between project-level transactions and Vietnam’s NDC. Corresponding adjustment is therefore no longer a technical accounting concept – it is a regulatory constraint with material implications for transaction structuring.
The decree introduces quantitative limits on international transfers. For transactions involving corresponding adjustment, up to 90 per cent of credits may be transferred for certain mitigation activities and 50 per cent for others, as specified in Annex I. For transfers without corresponding adjustment, a 90 per cent cap applies.
The remaining portion must be retained domestically and may be used within Vietnam’s emerging carbon market. These limits function as policy tools, ensuring that part of the carbon value supports domestic climate objectives and market development.
For Article 6.2 projects, the decree establishes a sequenced lifecycle: project concept registration, submission and approval of project documentation, monitoring and reporting of emission reductions, and issuance or recognition of credits. Only after completion of these stages may international transfer be pursued.
Each phase is governed by defined procedures and timelines, with involvement from relevant sectoral authorities. The framework emphasises procedural standardisation and shifts the burden towards upfront compliance. Project developers are expected to demonstrate completeness and internal consistency in their submissions, reducing reliance on iterative regulatory engagement.
For Article 6.4 projects, the decree largely defers to the international framework established under the Paris Agreement, while retaining domestic oversight over participation, reporting, and transfer.
For projects under independent carbon standards, participation is permitted subject to minimum criteria, including governance, transparency, methodological clarity, additionality, and data-sharing capability. Where corresponding adjustment is involved, only methodologies recognised by competent Vietnamese authorities may be applied.
This approach allows engagement with voluntary carbon markets while ensuring consistency with Vietnam’s regulatory and accounting framework.
The decree clarifies the treatment of carbon assets generated from public investment and public-private partnership (PPP) projects.
For public ventures, proceeds from carbon transactions are treated as state budget revenue and managed in accordance with public finance laws, with decisions to monetise subject to inter-agency consultation. For PPP projects, carbon revenue forms part of project income and is governed by the applicable PPP framework, with flexibility to adjust contractual arrangements.
These provisions integrate carbon value into existing fiscal and contractual systems rather than creating a standalone regime.
The national registry system is a central element of the decree. All projects, emission reductions, carbon credits, and international transfers must be recorded as a matter of legal compliance.
The registry supports regulatory oversight, national emissions accounting, and international reporting obligations. Over time, it is expected to underpin the development of Vietnam’s domestic carbon market, providing transparency and institutional coherence.
Taken together, decree 112 establishes a carbon market that is accessible but regulated. Participation in international carbon trading is permitted, but subject to approval requirements, transfer limits, and alignment with national climate commitments.
The decree does not restrict participation – it defines the conditions under which participation occurs. For investors and project developers, this creates a clearer, but more structured, operating environment requiring careful navigation of procedural and regulatory requirements.
Decree 112 establishes the core legal infrastructure for Vietnam’s participation in international carbon markets in a manner that is both enabling and controlled. It embeds carbon trading within national climate governance while creating a credible pathway for market engagement.
For investors, the implication is not constraint but precision. Opportunities remain – but they must be approached with a clear understanding of approval pathways, transfer limits, and accounting consequences.
The shift is not towards restriction, but towards clarity. And in that clarity lies both the opportunity – and the discipline – that will define Vietnam’s carbon market in the years ahead.