If an enterprise exceeds the permitted emission level in the ETS, how will it be handled?

The primary mechanism for handling emissions that exceed a facility's initial allocation is through market participation. Under the ETS, any regulated enterprise is required to surrender a quantity of emission allowances equal to its total verified emissions for a given compliance period. If a company's emissions exceed its allocated quota, it must acquire the necessary number of additional allowances by purchasing them from the carbon market.

Regarding penalties for non-compliance, Vietnam's legal framework is still under development. While Decree No. 45/2022/ND-CP is the primary legal document for sanctioning administrative violations in environmental protection, its current provisions do not yet specify penalties for the act of exceeding emission quotas.25 Instead, Article 41 of this Decree focuses on violations related to the preparatory obligations for the carbon market, such as failing to conduct a greenhouse gas inventory or not adhering to reporting requirements.

It is anticipated that specific regulations detailing the financial penalties and enforcement actions for failing to surrender the required number of allowances will be issued as the ETS moves closer to its official operational launch in 2028.

References

25. The Government of Vietnam. (2022). Decree No. 45/2022/ND-CP on sanctioning of administrative violations in the environmental protection field. Thư viện Pháp luật. https://thuvienphapluat.vn/van-ban/Vi-pham-hanh-chinh/Nghi-dinh-45-2022-ND-CP-xu-phat-vi-pham-hanh-chinh-linh-vuc-bao-ve-moi-truong-484772.aspx