Vietnam Carbon Exchange Launch: HPG, BID Face Emission Quota Trading from June 29

Overview

Vietnam’s Department of Climate Change has registered greenhouse gas emission quotas for 2025-2026, totaling 511 million tons of CO2e for the thermal power, steel, and cement sectors. Trading on the national carbon exchange will begin on June 29, with 92 enterprises including Hoa Phat Group (HPG), Formosa, EVN, and VICEM allowed to participate. The move introduces a compliance mechanism that will affect the cost structure of major listed emitters such as HPG and BIDV (BID).

Key Facts

• Total emission quota for 2025-2026 is 511 million tons CO2e, split into 243 million tons for 2025 and 268 million tons for 2026.
• Trading on the carbon exchange starts June 29, 2026, with the final trading day on December 24, 2027.
• 92 enterprises are authorized to trade quotas, including Hoa Phat (HPG), Formosa, EVN, and VICEM.
• Firms exceeding their quota must purchase allowances from under-emitters or buy carbon credits to offset up to 30% of their emissions.
• The carbon exchange will operate on a pilot basis until 2028, with full commercial operation expected from 2029.
• Service fees for trading are waived during the pilot phase.
• The exchange infrastructure involves VNX, VSDC, HNX, and BIDV as the settlement bank.

What Happened

On June 22, the Department of Climate Change (Ministry of Agriculture and Environment) registered the national greenhouse gas emission quotas for 2025-2026 on the National Registration System for Quotas and Carbon Credits. The total quota of 511 million tons CO2e was allocated to three sectors: thermal power, iron and steel, and cement. This follows the Prime Minister’s approval in February of the overall quota for these most polluting industries.

The first trading session is scheduled for June 29, with a final deadline of December 24, 2027. The Department also signed cooperation agreements with the Vietnam Stock Exchange (VNX), the Vietnam Securities Depository and Clearing Corporation (VSDC), and the Hanoi Stock Exchange (HNX) to operate the domestic carbon exchange. VSDC additionally signed with HNX and BIDV to provide settlement services.

Market Context

HPG closed at VND 23,300 on June 23, down 1.27% on volume of 29 million shares, while BID closed at VND 42,650, up 0.47% on volume of 8.4 million shares. HPG, listed on HOSE, is Vietnam’s largest steel producer and a major emitter, making it directly exposed to carbon costs. BID, also on HOSE, is the settlement bank for the exchange, positioning it to benefit from transaction flows. The launch of the carbon market adds a regulatory layer that could pressure margins for steel and power companies while creating new revenue opportunities for financial intermediaries.

Strategic Significance

For HPG, the carbon quota system introduces a direct cost on emissions above the allocated limit. As a large-scale steel producer, HPG may need to invest in emission-reduction technology or purchase credits, potentially increasing operating expenses. However, if HPG can reduce emissions below its quota, it could sell surplus allowances, creating a new revenue stream. For BID, acting as the settlement bank for the carbon exchange provides fee income and strengthens its role in Vietnam’s green finance ecosystem. The pilot phase, with waived fees, may limit near-term financial impact, but full operation from 2029 could scale the market significantly.

What to Watch

• HPG’s first-quarter 2026 emissions data and whether it stays within its allocated quota.
• Announcement of specific quota allocations for individual enterprises, expected before June 29.
• Trading volume and price discovery on the carbon exchange in the first weeks of operation.
• BID’s disclosure of carbon exchange-related fee income in its quarterly reports.
• Regulatory updates on the transition from pilot to full operation, including potential inclusion of additional sectors.