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Official name of scheme

Vietnam

ETS Status

in force

Jurisdictions

Viet Nam

Sectoral coverage

Industry

Power

Allocation

Free Allocation: Output-based Benchmarking

Offsets and credits

Domestic and international offset credits, with quantitative limits

Cap or total emissions limit

268.4 MtCO₂e (2026)

General Information

Vietnam’s national ETS is established under the “Law on Environmental Protection” and “Decree 06/2022/ND-CP”, which provide the national framework for GHG mitigation, carbon markets, and monitoring, reporting, and verification. This framework was clarified and operationalized by Decree 119/2025/NĐ-CP, effective from August 2025, which defines the design of the ETS and institutional responsibilities. According to the legal framework, the national ETS is a key component of the country’s strategy to meet its NDC for 2030 and achieve net-zero GHG emissions by 2050.

The ETS is designed to begin with a pilot phase running from 2025 to 2028, during which allowances are allocated for free, and the regulatory framework is reviewed and evaluated. The system applies an intensity-based approach, with allowances allocated using sector-specific benchmarks and verified output, while compliance obligations are determined ex post based on verified emissions.

Decree 119 also establishes flexibility provisions, allowing covered entities to bank unused allowances through 2030, borrow up to 15% of allowances from future periods, and use offset credits for up to 30% of their compliance obligation. Eligible offset credits must be generated after January 2021 and originate from mechanisms aligned with Article 6 of the Paris Agreement, including transitioned Clean Development Mechanism activities under Article 6.4, the Joint Crediting Mechanism, and other approved bilateral arrangements.

The pilot phase initially covers 110 facilities, including thermal power plants, iron and steel facilities, and cement producers. In February 2026, Decision 263/QĐ-TTg approved aggregate allowance budgets for the first pilot period: 243.1 MtCO₂e for 2025 and 268.4 MtCO₂e for 2026. Based on these budgets, installation-level allocation will be finalized by MAE. From 2029, the ETS will gradually introduce allowance auctioning, expand sectoral coverage, and explore linkages with international carbon markets under Article 6 cooperation.

In August 2025, Decree 119/2025/NĐ-CP entered into force, significantly advancing Vietnam’s ETS by operationalizing its design, clarifying rules for allowance allocation and compliance, and introducing flexibility provisions, including banking, borrowing, and the use of offset credits. In January 2026, Vietnam issued Decree 29/2026/NĐ-CP on the domestic carbon trading platform. The decree designates the Vietnam Stock Exchange as the authority responsible for administering trading activities, strengthens provisions on market manipulation and sanctions, and limits trading to spot, on-exchange transactions. In February 2026, Decision 263/QĐ-TTg approved aggregate GHG emission allowance budgets for the first pilot period, establishing annual ceilings on the volume of allowances that may be allocated to covered installations.

With Decree 29/2026, Vietnam’s domestic carbon trading platform is expected to become operational by the end of 2026. Installation-level allocation for the 2025–2026 pilot period is expected to be finalized by MAE based on the approved aggregate GHG emission budgets. Further reviews under Decree 119/2025/NĐ-CP will inform pilot evaluation, future allocation cycles, and the transition from the pilot phase to full ETS operation after 2028.

Industry

Power

Emissions & Targets

316.7 MtCO₂e (2016)

By 2030: 43.5% reduction compared to BAU levels (“National Strategy for Addressing Climate Change through 2050 [Decision No. 896/QD-TTg]”)

By 2050: Net-zero GHG emissions (National Strategy for Addressing Climate Change through 2050 [Decision No. 896/QD-TTg])

Size & Phases

PHASE 1 (Pilot Phase): Two years (2025 to 2026)

PHASE 2 (Pilot Phase): Two years (2027 to 2028)

PHASE 3: Two years (2029 to 2030)

The total emissions limit under the Vietnam Pilot ETS changes as a function of production (output) and is the sum of the bottom-up output-based emissions limits for all individual covered entities. The bottom-up emissions limits do not represent an absolute cap.

Allowance budget (2025): 243.1 MtCO₂e
Allowance budget (2026): 268.4 MtCO₂e

PHASE 1: Thermal power plants, iron and steel production, cement production.

INCLUSION THRESHOLDS: Vietnam does not apply a numerical emissions or fuel-use threshold. Facilities are included if they appear in the approved list of major GHG emitting facilities required to conduct inventories (per Article 5 and Annexes of Decree 06/2022 and Decree 119/2025).

Point source

Phase 1 (2025 to 2026) will cover 34 thermal power plants, 25 iron and steel facilities, and 51 cement facilities.

Allowance Allocation & Revenue

PHASE 1:

Auctioning:

• No auctioning in the pilot phase.

Free allocation:

• Output-based benchmarking, reflecting emission intensity per unit of product, production plans, mitigation potential, and technical and financial capacity

• Free allocation share: 100%.

Flexibility & Linking

Banking is allowed: facilities may transfer unused allowances to the next phase.

Borrowing is allowed: facilities may borrow up to 15% of their next-phase allocation (non-tradable) until 2030.

The use of offset credits is allowed. Covered facilities may use domestic and international carbon credits for compliance alongside allowances.

QUALITATIVE LIMITS: Eligible offset credits are domestic carbon credits issued under the national carbon credit exchange and offset mechanism, and international credits from mechanisms implemented under Articles 6.2 and 6.4 of the Paris Agreement, for emission reductions achieved from January 1, 2021 onwards, and registered in the National Registry System.

QUANTITATIVE LIMITS: Facilities may use offset credits to cover up to 30% of their surrender obligation for each allocation period.

Domestic offsetting mechanisms: Domestic Carbon Credit Exchange and Offset Mechanism (Cơ chế trao đổi, bù trừ tín chỉ các-bon trong nước) under Decree 06/2022 and Decree 119/2025.

Compliance

Two years.

Covered entities must surrender allowances (and eligible offset credits) by December 31 of the year following the end of each allocation period.

FRAMEWORK: MRV requirements are established under Decree 06/2022/NĐ-CP and Decree 119/2025/NĐ-CP, which set out national rules for GHG monitoring, reporting, and verification for both ETS and non-ETS sectors, as well as the National MRV System.

MONITORING: Facilities listed in the national inventory of major emitters must conduct continuous monitoring of activity data needed for emission calculation.

Monitoring plans are implicitly required through sectoral guidance; facilities must follow methods and emission factors issued by line ministries.

MRV obligations also apply to major emitters in energy, industry, agriculture, waste, and LULUCF, with monitoring required from 2024 onward (facility-level inventories biennially from 2024 or 2025, depending on category).

Facilities allocated quotas (thermal power, iron and steel, cement) must monitor emissions for each allocation period starting 2025.

REPORTING: Biennial inventory reports to be submitted to provincial authorities by March 31 of the year following the end of each reporting period, starting from 2025 for most facilities.

Facilities allocated quotas submit verified inventories annually by December 1, starting from 2027.

VERIFICATION: Third-party verification is required for facility-level GHG inventory results for all installations allocated quotas, annually from 2027 onward

During the pilot phase, compliance with ETS obligations is required; however, no monetary fines or penalties will be applied for non-compliance.

Enforcement during the pilot focuses on administrative oversight, including mandatory MRV and controls through the National Registration System. Decree 119/2025/NĐ-CP refers to the general framework on administrative violations in environmental protection, which may apply to reporting and procedural non-compliance. Penalties and stronger enforcement measures for allowance shortfalls are expected to be defined for post-pilot stages of the ETS.

Market Regulation

MARKET PARTICIPATION: Compliance entities (installations/facilities allocated quotas) may hold and trade allowances. Financial service providers and individuals are not explicitly mentioned in the regulation.

MARKET TYPES:

Primary: There are no auctions during the Pilot Phase; allowances are allocated for free to covered facilities.

Secondary: Until the carbon exchange is operational, no organized secondary market is in place.

LEGAL STATUS OF ALLOWANCES: Allowances are defined as rights to emit one tCO₂e and are tradable on the exchange, but they are not explicitly classified as financial instruments in current regulation.

No formal market stability mechanism under the current regulation.

Other Information

Ministry of Agriculture and Environment (MAE): Responsible for rulemaking for the carbon credit and ETS markets; organizing the pilot and official operation of the carbon trading floor; allowance allocation, exchange, and surrender; monitoring and supervision of the carbon market. It also administers the national GHG inventory and operates the National Registration System for allowances and carbon credits.

Ministry of Finance (MoF): Responsible for establishing and managing the carbon exchange infrastructure, including financial regulations and market oversight. The MoF coordinates with MAE to develop the financial management framework governing market transactions, fees, and auctioning procedures during the transition to full ETS operation.

Vietnam’s ETS framework includes provisions for periodic review and evaluation during the pilot phase. Under Decree 119/2025/NĐ-CP, MAE is responsible for monitoring implementation, reviewing compliance data, and coordinating assessments of ETS performance in cooperation with relevant line ministries. Evaluation during the pilot phase is intended to inform adjustments to allocation rules, benchmarks, sectoral coverage, and flexibility provisions ahead of full system operation after 2028. Reviews are expected to draw on verified emissions data reported through the national MRV system and recorded in the National Registration System.

Law No. 72/2020/QH14 on Environmental Protection, 133-139’20/OG

Decision No. 896/QD-TTg dated July 26, 2022

Decision 01/2022/QD-TTg

Decree 06/2022/ND-CP

Decision 232/QD-TTg
Decree 119/2025/NĐ-CP

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Official name of scheme

Mexican Emissions Trading System

ETS Status

in force

Jurisdictions

Mexico

Start of operation (year)

2020

Sectoral coverage

Mining and extractives

Industry

Power

Allocation

Free allocation (Grandparenting)

Offsets and credits

Domestic with quantitative limits

Cap or total emissions limit

273.1 MtCO2 (2021)

GHGs covered

CO2

Average secondary market price

MXN 0 (USD 0)

General Information

The Mexico ETS, the first in Latin America, started its pilot phase in January 2020. It covers direct CO2 emissions from fixed sources in the energy and industry sectors emitting at least 100,000 tCO2 per year, representing around 30% of national GHG emissions and 90% of emissions reported in the National Emissions Registry (RENE).* Under the Mexico ETS, covered entities must surrender allowances for all their covered emissions. Allowances are allocated through grandparenting based on historical emissions, which are verified annually. The level of free allocation is expected to be reduced from the first year of the operational phase, anticipated to begin in 2026.

The Mexican ETS started with a Pilot Program with two phases: a pilot phase between 2020 and 2021, and a transition phase in 2022. The Pilot Program aimed to test system design, contribute to the NDC 3.0 and other national mitigation goals, enhance the quality of emissions data, and build capacity in emissions trading, ultimately improving the design of the operational phase.

The regulation of the Pilot Program (“the Agreement on the establishment of the preliminary basis of the Pilot Program of the Emissions Trading System”) remains in force until the regulation for the operational phase is published.

* According to SEMARNAT.

In 2025, the sixth compliance year concluded. 88% of participants presented a positive verification report to the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, or SEMARNAT) for their 2024 emissions, and 86% complied with their surrender obligations. Between March and June 2025, participants verified their 2024 emissions.

In March 2025, SEMARNAT was restructured. This restructure created the Undersecretary for Sustainable Development and Circular Economy (Subsecretaría de Desarrollo Sostenible y Economía Circular), in charge of, among other things, the coordination and operation of the ETS.

In August, the first ordinary meeting of the Consultative Committee of the Emissions Trading System (COCOSCE) took place. The meeting discussed the regulation for the first operational phase of the ETS, as well as allowance allocation, obligations of the electricity sector, offsets and legal aspects.

In September, the government published the 2025 to 2030 Sectoral Program of Environment and Natural Resources. Its line of action 4.1.3 includes putting into operation the first phase of the ETS and guaranteeing the effective operation of the voluntary carbon market, as well as the alignment with other carbon pricing instruments.

In November 2025, the Intersecretarial Commission of Climate Change approved Mexico’s NDC 3.0, which was later presented during COP30. The NDC 3.0 sets an unconditional emissions cap of between 364 MtCO2e and 404 MtCO2e by 2035, and a conditional goal of between 332 MtCO2e and 363 MtCO2e by 2035.

Mining and extractives

Industry

Power

Emissions & Targets

756.7 MtCO₂e (2024 preliminary)

By 2030: Unconditional 35% below BAU GHG emissions baseline (NDC 2.0)

By 2035: Unconditional emissions cap of between 364 MtCO₂e and 404 MtCO₂e. Conditional goal of between 332 MtCO₂e and 363 MtCO₂e. Both options reflect an approximate 583 MtCO₂e reduction from current levels. (NDC 3.0)

By 2050: Net zero emissions (NDC 3.0)

Size & Phases

CO2

PILOT PHASE: Two years (2020 and 2021)

TRANSITIONAL PHASE: One year (2022)

OPERATIONALPHASE: From 2025 onwards

An absolute cap limits the total emissions allowed in the system and is fixed ex-ante.

PILOT:

2020: 271.3 MtCO₂

2021: 273.1 MtCO₂*

Three reserves are filled each year with allowances additional to the cap:

auctions reserve (equivalent to 5% of the cap, for regular auctions, which have not yet happened);
new entrants’ reserve (equivalent to 10% of the cap, for new entrants as well as increases in production among existing regulated entities); and
general reserve (equivalent to 5% of the cap, for ex-post adjustment allocation for entities with higher emissions relative to their baselines).

The reserves function as safeguards to avoid economic impacts on regulated entities during the Pilot phase, as required by the 2018 “General Law on Climate Change”.

* The increase in the cap between 2020 and 2021 is due to an extension in the sectoral allocation for regulated entities categorized as “others”.

PILOT PROGRAM: The Pilot ETS covered the energy and industrial sectors. The energy sector encompasses electricity generation, transmission, and distribution, as well as fossil fuel extraction, production, transport, and distribution.

The industrial sector includes automobile manufacturing, cement, lime, chemicals, food and beverages, glass, iron and steel, metals, mining, petrochemicals, and pulp and paper, as well as other industrial sub-sectors generating direct CO₂ emissions from stationary sources at or above the threshold.

Inclusion thresholds: The Pilot ETS covers installations with annual direct emissions from stationary sources amounting to at least 100,000 tCO₂.

OPERATIONALPHASE: Sectors and thresholds are not expected to change during the operational phase

Point source (all sectors)

~300 (2025)*

* According to SEMARNAT.

Allowance Allocation & Revenue

PILOT PROGRAM: The Pilot featured free allocation with the following specifications:

Initial allocation: Entities receive free allowances equivalent to 100% of their most recent verified emissions. New entrants receive free allowances based on their verified emissions in the year in which they first crossed the 100,000 tCO₂ threshold. For participants that have not yet verified their emissions, initial allocation is done based on their historical emissions as reported to RENE.

Ex-post adjustment: An adjustment allocation is carried out from the general reserve for those participants that did not receive a quantity of free allowances equivalent to their verified emissions.

Participants may request additional allowances when an expansion in their production results in additional direct CO₂ emissions from stationary sources.

Plant closures: When an installation closes permanently, it may have to surrender the allowances that it has for the compliance period of the year before its closure. As well, it should return the free allowances received for the compliance period in which it closes. Whether the installation must only surrender allowances, return allowances, or both, depends on the date of the year in which it closes. SEMARNAT then cancels these allowances.

Auctions: SEMARNAT may auction allowances from the auction reserve. As of December 2025, no auctions have taken place.

OPERATIONALPHASE: Free allocation is expected to be reduced from the beginning of the operational phase. SEMARNAT is in the process of developing the auctioning mechanism.

SEMARNAT is developing institutional arrangements to manage revenues during the operational phase.

Flexibility & Linking

Allowances allocated during the Pilot will not be eligible for banking into the operational phase. For the operational phase, banking will be allowed between phases and compliance years.

Although the possibility of borrowing is not explicitly stated, surrender of allowances for a given compliance period is done after allocation of allowances for the subsequent compliance period takes place.

The use of offset credits will be allowed in the operational phase.

QUALITATIVE LIMITS: Two types of flexibility instruments are foreseen, both of which will generate offset credits eligible for use under the ETS: offset credits and early action.

Offset credits: SEMARNAT will establish a domestic program for the generation of offset credits that can be surrendered for compliance. Domestic projects that have been validated and verified under internationally or domestically recognized protocols will be eligible. Emission reductions related to all GHGs will be eligible, except for those related to direct CO₂ emissions.

Early action: Offset credits generated by mitigation projects operating in Mexico under recognized protocols before the pilot came into force (2020) can be eligible for use in the ETS. SEMARNAT issues offset credits only if a certificate of cancellation is presented and if they were not used for other compliance purposes. These projects will be expected to continue generating offset credits during the operational phase.

QUANTITATIVE LIMITS: Participants can meet up to 10% of their compliance obligations with offset or early action credits.

SEMARNAT is currently working on the regulations to implement the offset and early action provisions in the Pilot ETS. The eligibility rules for the use of offset credits within the ETS are being developed based on a mapping of activities and projects that could be used for this purpose.

Articles 89 and 90 of the General Law of Climate Change provide the general framework for the registry of mitigation outcomes, whereas articles 26 to 29 of the RENE regulation provide additional specifications on the projects that can be registered, such as the procedure for registration and basic information on which certificates from international registries are to be accepted.

The Mexico ETS is not linked with any other system. However, the General Law of Climate Change provides for linkages with other systems.

Carbon tax: National carbon tax

Carbon taxes (state level): Colima, Durango, Guanajuato, Mexico City, Morelos, Querétaro, San Luis Potosí, State of Mexico, Tamaulipas, Yucatán, Zacatecas

Compliance

One calendar year. SEMARNAT is evaluating the surrender date of allowances based on the experience obtained during the pilot.

FRAMEWORK: Articles 87 and 88 of the General Law of Climate Change provide the general framework for GHG reporting to RENE.

Verified annual CO2 emissions are reported both to the RENE (in addition to other obligations that regulated entities must report to the RENE) and to the ETS registry.

A monitoring plan is expected to be required in the operational phase from all regulated entities as a part of their obligations.

MONITORING: Under RENE, emitters with annual emissions of at least 25,000 tCO₂ in the energy, industrial, transport, agricultural, waste, commercial, and services sectors are required to report the six key GHGs identified by UNFCCC, as well as black carbon, chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), halogenated ethers, halocarbons, and their mixes.

REPORTING: Annual self-reporting based on electronic templates prepared by SEMARNAT. Reporting is done electronically through the Annual Operating Statement (Cédula de Operación Anual).

VERIFICATION: Verification by independent accredited verifiers is required by the end of June of the subsequent year.

Reporting and verification should be made according to the criteria and procedures of the RENE*. Verification bodies need to be accredited to the Mexican Accreditation Entity and approved by the Federal Environmental Protection Agency (Procuraduría Federal de Protección al Ambiente). Verification organisms need to comply with the standards ISO 14065 (requirements for organizations conducting verification), ISO 14064-3 (verification and validation of GHG reports) and ISO 14066 (competence requirements for GHG validation teams and verification teams).

* According to SEMARNAT.

The Pilot Program is designed to pose no economic impact on regulated entities; however, non-compliant entities lose the opportunity to bank unused allowances into subsequent compliance periods within the pilot and will receive fewer allowances in the first allocation of the operational phase of the ETS (two fewer allowances for each non-delivered allowance during the pilot).

Sanctions are expected to be implemented in the operational phase of the ETS.

Market Regulation

MARKET PARTICIPATION: Under the pilot rules, market participation is limited to compliance entities and those that provide offset credits. SEMARNAT is designing and developing the process and rules to allow participants without obligations.

MARKET TYPES:

Primary: As of the end of 2025, there had been no auctions in the Mexican ETS pilot. SEMARNAT is preparing institutional arrangements to implement auctions during the operational phase.

Secondary: There is no exchange that trades allowances. As of the end of 2025, transactions can only take place via negotiation between participants.

LEGAL STATUS OF ALLOWANCES: Allowances in the Mexican ETS Pilot are “administrative instruments” and are not considered financial instruments. They are expected to remain as such in the operational phase.

None

Other Information

SEMARNAT: Ministry in charge of implementing the ETS.

COCOSCE: Formal technical forum for consultation, orientation, social participation, and advice for the Pilot ETS. Its members are representatives from SEMARNAT as well as the ministries of Finance, Energy, and Economy; a representative from the National Institute of Ecology and Climate Change; a representative of the Confederation of Industrial Chambers; a representative from the Coordinating Business Council; and representatives of the regulated sectors.

Article 10 of the Agreement on the establishment of the preliminary basis of the Pilot Program provided for SEMARNAT to annually review the Pilot, publishing reports on topics such as price behavior and emissions reductions achieved. SEMARNAT developed an internal evaluation on the ETS´s components during the Pilot, in order to improve and update the regulation of the operational phase.

Moreover, an evaluation of the Pilot, supported by the COCOSCE, has been conducted to determine if adjustments to the ETS design are necessary.

COCOSCE’s working groups have developed different recommendations to the Federal Government on the cap and allocation methods, offset credits, as well as key topics on the energy sector and legal recommendations.