The Vietnamese government has launched the pilot phase of an emissions trading system (ETS), according to a report by Reuters. With this pilot phase, the government aims to stimulate carbon emission reduction in three major industries: steel, cement and thermal power. The scheme is in line with Vietnam’s aim to achieve net zero by 2050.
The first phase will last until 2029 and will cover around 50 percent of the country’s total carbon emissions. Accordingly, the companies in these three industries will have to buy carbon dioxide emission permits based on their intensity (the amount of carbon generated per unit of output) with the first emission permits for 2025-2026 to be issued by the end of this year.
The government plans to expand the scheme to other sectors, including freight transportation and commercial real estate.
In the early years of the ETS, most permits will be issued free of charge initially. Therefore, the scheme will not have an immediate impact on the emissions of major industries.