1. Policy landscape
Vietnam is simultaneously strengthening domestic climate change mitigation policies and building the institutional foundation for a national carbon market. This dual transition increases the demand for effective international cooperation mechanisms that both support the mobilization of finance and low-carbon technology and ensure alignment with Vietnam's emission reduction goals.
This orientation is reflected in the 2022 updated NDC, with sectoral mitigation roadmarks and recognition of the role of international support, and is further concretized through the carbon market development roadmap in Decision No. 232/QD-TTg. Internationally, this process is linked to cooperation mechanisms under Article 6.2 of the Paris Agreement, which allows for the international transfer of mitigation outcomes but with strict requirements for authorization, transparency, tracking, and corresponding adjustments to avoid double counting toward NDCs. Therefore, for Vietnam, designing international cooperation mechanisms is not just a technical issue but also a strategic choice.
2. JCM Design & Portfolio
The Vietnam-Japan Joint Crediting Mechanism (JCM) operates under a clearly defined governance structure centered on a Joint Committee. The Joint Committee oversees key decisions throughout the project cycle, while responsibilities are distributed among project participants, designated third parties, and the registration system. Implementation follows a standardized sequence, including methodology approval, project validation and registration, monitoring and verification, and notification of credit issuance.
The implementation of JCM in Vietnam has been concentrated within a limited timeframe rather than developing as a continuous cycle. As of February 2, 2026, the JCM project cycle search results list 20 projects in Vietnam: 14 registered projects and 6 projects under validation. Most registrations took place between August 2015 and May 2019, and no additional projects have been registered since May 28, 2019; however, several projects have entered the validation/registration request phase.
The portfolio of registered projects primarily aims at improving energy efficiency and industrial technology. Some projects aim to reduce grid losses through the installation of amorphous high-efficiency transformers. Other projects focus on upgrading industrial processes and equipment, as well as improving energy efficiency in buildings and facilities.
According to aggregated data as of February 2, 2026, registered JCM projects achieve an average annual emission reduction of about 15,996 tCO₂e, indicating that the mechanism is capable of generating real and measurable emission reduction outcomes. However, this contribution remains relatively small due to the limited number of projects and narrow scope of application. Concurrently, projects currently under validation show significant expansion potential, exemplified by project VN017, which has an expected emission reduction scale of about 48,237 tCO₂e per year. Therefore, it can be assessed that JCM operates effectively as a policy testing model, but to become a more meaningful tool for Vietnam's NDC, the mechanism needs to be expanded towards larger-scale and highly replicable projects.
3. Efficacy diagnosis: Constraints
A prominent limitation of the JCM in Vietnam is the time inefficiency in the credit issuance cycle. Many projects have to wait for a very long time from the end of the monitoring phase until the notification of credit issuance; for example, project VN014 took about 5 years and 4 months, VN011 took about 5 years and 3 months, and VN013 took about 3 years and 10 months. Notably, 35,313 credits from 13 projects were announced in the same batch on October 31, 2024, indicating that the credit issuance process has not taken place regularly according to a predictable cycle. This situation not only increases revenue uncertainty for project participants but also impairs the ability to track credit inventory and NDC contributions in real-time.
Second, the JCM in Vietnam faces barriers to scaling up and a decline in incentives. The mechanism still relies primarily on individual site-by-site project designs and has not yet applied a Programme of Activities (PoA) approach, requiring each site to repeat the validation and registration steps. This increases transaction costs and extends implementation time, thereby limiting the potential for project replication. At the same time, the level of financial support gradually decreases based on the number of project replications, from 50% for the first project down to 40% for the second and third projects, and only 30% from the fourth project onwards. When combined with additional technical consulting costs of approximately 10% of the support value, the net benefit for local businesses is significantly narrowed. Such an incentive mechanism may have been appropriate for the initial pilot phase, but it weakens the investment drive during the phase where scaling up is needed, especially for businesses with limited financial resources and technical capacity.
Finally, an institutional limitation of the JCM is the low level of interoperability between credit registration systems. There is no automatic data flow between these systems, increasing the administrative burden and making credit tracking more complex. Limitations in interoperability not only complicate data management but also increase the risk of double counting or losing credit tracking trails, especially in the context where Article 6.2 of the Paris Agreement requires strict governance for ITMOs and corresponding adjustments. Therefore, without early integration and standardization of registration systems, it will be difficult for the JCM to fully meet the requirements for transparency, accuracy, and consistency when transitioning from a pilot bilateral cooperation model to a larger-scale carbon mechanism closely linked to the national NDC.
4. Lesson for Article 6.2
- Authorization and Alignment: Transitioning from a project-by-project approval approach to a national authorization framework aligned with NDC priorities. This approach ensures that international cooperation activities do not operate in isolation but are placed within the country's overall emission reduction orientation, thereby increasing consistency between the goals of mobilizing external support and domestic mitigation objectives.
- Accounting and Registry Integration: Developing an integrated national registration system that allows for the connection and integration of JCM data into Vietnam's domestic system, while ensuring that this data is adjusted and recorded compatibly with the UNFCCC system. This is not just a technical requirement but a core condition to avoid double counting, reduce the risk of data discrepancies, and enhance the credibility of the international cooperation mechanism as the domestic carbon market takes shape.
- Scaling Up and Implementation Design: The mechanism should be designed to include a Programme of Activities (PoA) implementation option, allowing projects to be carried out individually or under a PoA depending on scaling needs. The PoA approach helps reduce transaction costs, shorten the time for administrative procedures, and limit the repetition of validation-registration processes for each project. Consequently, the mechanism not only facilitates replication but also increases contributions to the NDC through larger-scale and more systematic emission reduction activities.
