A New Framework for International Carbon Credits
Vietnam has approved an Implementation Agreement with Singapore under Article 6 of the Paris Agreement by creating a legal framework for the international transfer of carbon credits generated by emissions reduction projects in Vietnam. Approval was issued by Government Resolution No. 235/NQ-CP on 14 August 2026, and it paves the way for closer bilateral cooperation and provides Vietnamese project developers with a clearer route to accessing international carbon markets. The Ministry of Foreign Affairs was designated to complete the necessary diplomatic procedures and notify the official entry-into-force date of the agreement.
From September 2025 Agreement to Its Implementation
The agreement was first signed on 16 September 2025, marking Vietnam’s very first Implementation Agreement of this kind, and strengthening its cooperation with Singapore regarding international carbon markets. At the time, both governments presented the deal as an important step towards creating new ways to finance climate projects, supporting projects to reduce emissions and encouraging investment in low-carbon technologies.
The agreement is part of Singapore’s broader strategy of establishing bilateral arrangements with countries where high-quality carbon credits can be generated. Singapore uses these agreements to create legally binding frameworks for transferring carbon credits that comply with Article 6 of the Paris Agreement. By September 2025, Vietnam had become Singapore’s second Southeast Asian partner to sign such an agreement, after Thailand.
Article 6 enables countries to collaborate internationally to reduce GHG emissions and transfer Internationally Transferred Mitigation Outcomes (ITMOs) towards climate targets. Under Article 6.2, such transfers require corresponding adjustments to avoid double counting. The new agreement creates a clearer legal basis for connecting Vietnam's domestic emission reduction activities with international demand. As for Singapore, the agreement provides a bilateral mechanism for cooperating with Vietnamese project developers and accessing emission reductions generated in Vietnam.
Opportunities and Implications
The agreement could create new opportunities for Vietnamese companies to develop projects in areas such as clean energy, sustainable agriculture, and environmental protection, as well as other activities that reduce emissions. By providing a framework for the international recognition and transfer of eligible carbon credits, the partnership could enable projects to access revenues from the international carbon market and attract additional investment.
It is also expected to encourage the implementation of technologies that reduce emissions and support Vietnam’s broader transition towards a more sustainable, greener economy. Singapore’s status as a leading regional financial centre, coupled with its expertise in developing carbon markets, could further increase investment in Vietnamese projects.
Singapore has developed its own carbon market through measures including the Carbon Pricing Act, which was introduced in 2019, as well as through international carbon exchanges such as CIX and ACX. Cooperating with Singapore gives Vietnam the opportunity to strengthen its connections with regional carbon market infrastructure and develop its own systems for managing international carbon transactions.
The partnership could also contribute to Vietnam’s broader climate objectives, including its commitment to reaching net-zero emissions by 2050. In addition to the potential financial benefits, developing emission reduction projects could enhance energy security, reduce pollution, and generate benefits for local communities.
What Comes Next?
Although the agreement establishes the overall legal framework, several important details still need to be determined. The Vietnamese Government has not yet published the specific projects that will be eligible to generate credits for transfer to Singapore. It has also not released the complete list of approved methodologies. The authorities are expected to provide further information on the project approval process and eligible methodologies in the near future.
These rules are important and necessary because they will determine how Vietnamese projects can participate in the bilateral mechanism, and the requirements they must meet before their emission reductions can be recognized internationally and transferred. Clear procedures will also provide certainty for businesses and potential investors.
Therefore, the agreement represents an initial framework rather than a fully operational carbon credit trading system.
The partnership with Singapore is strategically significant for Vietnam, it offers more than just the immediate opportunity to transfer carbon credits. It could provide experience in developing project approval systems, methodologies, and domestic carbon market governance, and potentially serve as a model for future cooperation with other international partners. As Vietnam continues to develop its carbon market infrastructure, the agreement could facilitate the connection between domestic climate action and international finance, thereby contributing to the country’s long-term transition towards a low-carbon economy.
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