On 9/2, the Prime Minister approved the total pilot greenhouse gas emission quota for the 2025-2026 period. This greenhouse gas amount is allocated to 34 thermal power plants, 25 steel production facilities, and 51 cement production sites.

Workers at Hoa Phat's Dung Quat steel production plant in Quang Ngai, 20/4/2024. Photo: Giang Huy

Accordingly, the total pilot greenhouse gas quota for 2025 is over 243 million tons of CO2e. This amount for 2026 increases by 10,4%, capped at over 268 million tons.

A greenhouse gas emission quota is the maximum limit of greenhouse gases a nation, industry, or business is permitted to emit within a specific period, typically one year.

Following the approval of the total quota, the Ministry of Natural Resources and Environment will lead, in coordination with the Ministry of Industry and Trade and the Ministry of Construction, to pilot the allocation of quotas to individual plants and production facilities. Concurrently, the ministries will guide businesses in implementation, summarize the pilot process, and propose policy improvements regarding inventory and quota allocation.

Last month, the Government issued the operating mechanism for the domestic carbon exchange. Quota allocation is the next step in the development roadmap for this exchange. Based on this, businesses exceeding their allocated emission levels will need to purchase quotas from less-polluting businesses or buy carbon credits to offset their emissions.

A carbon credit is a tradable license or certificate, with commercial value, providing the holder the right to emit one ton of CO2 or another greenhouse gas from the approved list.

The carbon credit exchange is expected to be piloted until 2028, then officially operate from 2029.

Thuy Truong