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Vietnam has approved a Paris Agreement implementation deal with Singapore, clearing the way for the two countries to trade carbon credits directly.
The move could draw new investment into emissions-cutting projects in Vietnam.
At the same time, it raises concerns that companies may rely on offsets instead of making deeper pollution cuts within their own operations.
Here’s what to know
According to Energynews.pro, Vietnam’s government has formally approved the Article 6 pact with Singapore. That domestic approval gives the arrangement legal effect in Vietnam and allows verified emissions cuts to be transferred to Singapore.
This pact uses the bilateral pathway under Article 6.2 rather than the U.N.-run mechanism in Article 6.4. Under the Paris Agreement, those are the two routes countries can use to trade internationally recognized emissions reductions.
Because Singapore has limited room to cut emissions at home, it has made bilateral agreements like this a major part of its climate approach. By building up partner-country relationships, it can secure carbon credits that may be used within its carbon tax system.
Singapore’s Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, Grace Fu, signed the agreement for Singapore, and Trần Đức Thắng, then head of Vietnam’s Ministry of Agriculture and Environment, signed for Vietnam. More detailed operating rules are still expected.
More background
These policies help determine whether major polluters cut emissions at the source or pay for reductions elsewhere. If companies lean too heavily on offsets, progress can slow.
The ministry that oversaw the pact was itself newly formed from the merger of two former ministries and was responsible for negotiating and signing the agreement.
Vietnam’s approval also came during a leadership transition there: after Thắng’s tenure, Trịnh Việt Hùng was appointed and now leads the Ministry of Agriculture and Environment.
At the same time, the agreement could create real opportunities in Vietnam if it directs funding to credible projects that reduce heat-trapping emissions and meet strong international standards.
However, whether those benefits reach workers and local communities will depend on how the system is ultimately designed and enforced.
What’s being done?
The approved framework would allow Vietnamese groups and companies to develop emissions-cutting projects, issue carbon credits, and transfer those credits to Singapore after authentication.
Adding Vietnam strengthens Singapore’s wider network of bilateral carbon-credit deals, which are meant to support its increasing carbon tax regime. Companies covered by that system may be able to use these credits to offset part of what they owe.