On June 9, 2025, the Government issued Decree No. 119/2025/NĐ-CP, amending and supplementing certain articles of Decree No. 06/2022/NĐ-CP. This important legal update aims to address practical challenges, enhance feasibility and transparency, and establish a more complete legal framework for GHG mitigation activities, laying the groundwork for operating a carbon market in the coming period. The new Decree introduces strategic adjustments in four core areas: (1) GHG Inventory Reporting; (2) Emissions Quota Allocation, Carbon credit exchange, and National registry system; (3) GHG Mitigation Planning; and (4) GHG Mitigation Reporting.
Part 1 focuses on the first two areas.
1. GHG Inventory reporting
One of the most notable changes is the clear definition of the GHG inventory reporting process. Under the new structure, facilities will report to their respective provincial People’s Committees, which will then compile and forward the data to relevant ministries. This clear hierarchy strengthens vertical oversight and creates a unified data system to support more effective quota allocation and policy planning.
For the first time, the Decree also introduces a set of criteria for reviewing GHG inventory reports. These include completeness, identification of emission sources and methodologies, and the accuracy and reliability of the results. This is a technical milestone, helping ensure future reports meet international quality standards.
2. Emission Quota Allocation, Carbon credit exchange, and National Registry system
Another significant development is the introduction of a phased roadmap for emissions quota allocation: Pilot phase (2025-2026); Second phase (2027-2028); and Third phase (2029-2030). Setting clear timelines demonstrates the Government’s strong commitment and gives emitting facilities a concrete basis to prepare.
Additionally, for the first time, the method for allocating quotas is quantified using a formula provided in Appendix I of the Decree. This quantitative approach improves transparency and supports a market-based mechanism tailored to each sector’s characteristics.
The Decree also introduces new rules on public disclosure and the obligation to return unused quotas via the national registry system. These measures enhance transparency, accountability, and readiness for the upcoming carbon credit market.
Several flexible mechanisms have also been updated to better support businesses in the early stages: (1) Borrowing of quotas is now clearly defined, with a limit of 15% of total allocated quotas per phase; and (2) The cap on using carbon credits for offsetting emissions has been increased from 10% to 30%, allowing more room for offsite mitigation activities and encouraging the growth of the voluntary carbon market.
The 15% borrowing cap adds flexibility for enterprises while maintaining market discipline - an essential balance in the absence of an official trading platform. Raising the offset limit to 30% could stimulate credit trading and incentivize broader emission reductions, though it also requires a strong monitoring system to prevent abuse and ensure transparency.
With these updates on GHG inventory reporting and emission allowance allocation, Decree No. 119/2025/NĐ-CP clarifies roles, responsibilities, and implementation mechanisms across national, provincial, and facility levels. This forms a critical foundation for transparent, synchronized, and effective GHG management - central to Vietnam’s roadmap toward a low-carbon economy and carbon market operation.
Coming in
Part 2: Key updates on GHG mitigation planning and reporting – two essential tools to help enterprises not only comply but proactively adapt and thrive in the accelerating green transition.
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