Vietnam Carbon Exchange Launch: 511M Tons CO2e Quota for Steel, Power, Cement

Overview

Vietnam’s Department of Climate Change registered greenhouse gas emission quotas totaling 511 million tons CO2e for the thermal power, steel, and cement sectors for the 2025-2026 period, with the first trading session scheduled for June 29 on the national carbon exchange operated by the Hanoi Stock Exchange (HNX). The move establishes a cap-and-trade mechanism that will directly impact major emitters such as Hoa Phat Group (HPG) and create new revenue opportunities for banks like BIDV (BID) acting as settlement agents.

Key Facts

• Total emission quota for 2025-2026: 511 million tons CO2e (243 million tons in 2025, 268 million tons in 2026).
• First trading day: June 29, 2026; final trading day: December 24, 2027.
• 92 enterprises are eligible to trade quotas, including Hoa Phat, Formosa, EVN, PV Power, and VICEM.
• Companies exceeding their allocated quota must purchase allowances from lower emitters or buy carbon credits to offset up to 30% of their emissions.
• The carbon exchange will pilot until 2028, with official operations starting in 2029; trading fees are waived during the pilot phase.
• The Department of Climate Change signed cooperation agreements with VNX, VSDC, and HNX on June 22 to operate the exchange; VSDC also signed with BIDV for settlement services.

What Happened

On June 22, the Department of Climate Change (Ministry of Agriculture and Environment) registered the national emission quota system for 2025-2026, covering the three most polluting industries: thermal power, steel, and cement. The total quota of 511 million tons CO2e was approved by the Prime Minister in February 2026. The first trading session will occur on June 29 on the exchange operated by HNX.

Under the cap-and-trade mechanism, each of the 92 listed enterprises receives a maximum emission allowance. Firms that emit less than their quota can sell surplus allowances; those exceeding their limit must purchase allowances or buy carbon credits (up to 30% of their quota). The system is designed to incentivize emission reductions and create a market for carbon credits.

Market Context

HPG closed at VND 23,600 on June 22, unchanged from the previous session, with volume of 10.7 million shares. BID closed at VND 42,450, up 1.56% on volume of 4.9 million shares. The carbon exchange launch adds a new regulatory layer for HPG, Vietnam’s largest steelmaker, which is a major CO2 emitter. For BID, its role as a settlement bank under the VSDC agreement positions it to benefit from transaction flows. The broader market has been watching policy developments on carbon pricing as part of Vietnam’s net-zero commitment by 2050.

Strategic Significance

The carbon exchange introduces a direct cost of emissions for HPG and other heavy industries, potentially raising production costs if the company cannot reduce its carbon intensity. Conversely, firms with lower emissions can generate revenue by selling surplus quotas. For BID, the settlement mandate with VSDC creates a fee-based income stream and strengthens its relationship with state-owned financial infrastructure. The pilot phase (through 2028) allows companies to adapt before full enforcement, but the long-term trend is toward tighter caps and higher compliance costs.

What to Watch

• HPG’s Q2 2026 earnings release for any disclosure of carbon-related costs or provisions.
• Announcement of specific quota allocations to individual enterprises, especially HPG and Formosa.
• Volume and price data from the first carbon trading sessions on June 29.
• Any adjustments to the quota system or expansion to additional sectors before 2029.
• BID’s financial reports for revenue from carbon exchange settlement services.