Voluntary Market vs Vietnam ETS | Key Differences Compared
How does the voluntary carbon market differ from the pilot Emission Trading System (ETS) in Vietnam?
As Vietnam prepares to launch its pilot Emission Trading System (ETS), it is important to understand how this new compliance market will differ from the existing Voluntary Carbon Market (VCM). While both involve the trading of environmental assets, they operate on fundamentally different principles and serve distinct purposes. The VCM is driven by voluntary corporate climate goals, whereas the ETS is a regulatory tool designed to enforce national emission reduction targets.19
Here is a detailed comparison of the two systems:
| Criteria | Voluntary Carbon Market (VCM) | Vietnam's Pilot Emission Trading System (ETS) |
|---|---|---|
| Nature & Purpose | Voluntary. Participants choose to buy credits to offset their emissions for ESG, CSR, or brand reputation purposes. | Mandatory. A "cap-and-trade" system where the government sets a limit (cap) on total emissions and participants must comply. |
| Participants | Any organization, corporation, or individual can choose to participate. | Mandatory for large emitting facilities designated by the government, initially focusing on key sectors like steel, cement, and thermal power.20 |
| Tradable Unit | Carbon Credits. These are generated from independent, project-based activities that reduce or remove emissions (e.g., a reforestation project). | Emission Allowances (Quotas). These are permits to emit one ton of CO₂e, allocated or auctioned by the government to regulated facilities. |
| Legal Basis | Governed by international, non-governmental standards like the Verified Carbon Standard (VCS) or Gold Standard. | Governed by Vietnamese law, primarily the Law on Environmental Protection (2020) and Decree 06/2022/NĐ-CP. |
| Primary Driver | Corporate climate ambition, stakeholder pressure, and enhancing brand image. | Legal compliance to cover all emissions with an equivalent number of allowances to avoid financial penalties. |
Table 2: Comparison of the VCM and Vietnam's Pilot ETS
References
- Vets | Energy and Environment. (2024). Carbon Credit Market: Opportunities and Challenges for Vietnamese Enterprises. Vets. https://vets.energy/thi-truong-tin-chi-carbon-co-hoi-va-thach-thuc-cho-doanh-nghiep-viet-nam/
- Nguyen, B. (2024). Vietnam implements pilot program of emission trading market. VTV. https://vtv.vn/kinh-te/viet-nam-trien-khai-chuong-trinh-thi-diem-thi-truong-giao-dich-phat-thai-20250613151547402.htm
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