Decree 112/2026: A Financial Lever for Hydrogen Investment in Vietnam
April 4, 2026
Edited by Annie Nguyen
Vietnam’s Decree 112/2026 on international carbon credit exchange marks a pivotal step in the country’s carbon market development. For the hydrogen sector—long challenged by high costs and weak offtake—this policy could serve as a critical financial lever.
Unlocking a dual-revenue model
Hydrogen projects in Vietnam have traditionally relied on a single revenue stream: product sales. However, high production costs have limited their financial viability.
Decree 112 introduces a structural shift by enabling:
- International carbon credit transfers
- Participation under Article 6 of the Paris Agreement
As a result, hydrogen projects can now generate:
- Energy product revenue
- Carbon credit (ITMO) revenue
This significantly improves project bankability.
Impact on Final Investment Decisions
With many hydrogen projects across Asia facing delays, carbon revenue can:
- Reduce reliance on hydrogen pricing
- Improve financial metrics
- Accelerate Final Investment Decisions (FID)
Carbon credits effectively act as an indirect subsidy mechanism.
Not an automatic opportunity
The decree imposes strict requirements:
- International-standard MRV systems
- Government approval for credit transfers
- Corresponding adjustment rules
This means:
Only well-structured projects will qualify.
Redefining project development
Developers must now:
- Integrate carbon strategies from the outset
- Develop crediting methodologies
- Optimize carbon allocation strategies
Hydrogen projects evolve into hybrid energy-carbon finance models.
Attracting international capital
Article 6.2 mechanisms enable partnerships with:
- Japan
- South Korea
- European Union
These countries may invest in Vietnamese hydrogen projects in exchange for carbon credits, aligning capital with resource availability.
Strategic trade-offs
Projects must balance:
- Selling credits for immediate revenue
- Retaining credits for national climate targets
This trade-off will shape project positioning between export and domestic markets.
Outlook
Opportunities:
- Improved project economics
- Increased foreign investment
- Market creation
Risks:
- Carbon price volatility
- Regulatory complexity
- Risk of undervaluing carbon assets
Conclusion
Decree 112/2026 reshapes hydrogen investment in Vietnam by integrating carbon finance into the core business model. The next phase will favor developers who can structure bankable, carbon-integrated projects and move quickly in a competitive regional landscape.
Summary of Decree 112/2026/ND-CP
On International Transfer of Greenhouse Gas Emission Reductions and Carbon Credits
1. Core Objective
The Decree establishes a legal framework for international carbon credit trading, aiming to:
- Fulfill Vietnam’s commitments under the Paris Agreement (Article 6)
- Support national emission reduction targets (NDC)
- Enable Vietnamese entities to participate in the global carbon market
2. Scope of Application
Applies to:
- Government agencies
- Enterprises
- Organizations generating or trading carbon credits
Covers activities such as:
- Exporting carbon credits abroad
- Importing credits into Vietnam
- Participating in Article 6.2 and 6.4 mechanisms
3. Key Principles
All international transfers must:
- Prioritize Vietnam’s national climate commitments (NDC)
- Avoid over-selling carbon credits
- Ensure balanced benefits between the State, businesses, and society
- Align with low-carbon economic development
4. Critical Mechanism: International Transfer Control
a. Government authorization required
- Carbon credits cannot be freely exported
- Approval must be granted by the Ministry of Agriculture and Environment
b. “Corresponding Adjustment” requirement
- If credits are transferred abroad → Vietnam must deduct them from its national emissions balance
- Prevents double counting under the Paris Agreement
5. Limits on Credit Transfers
- Up to 90% of credits can be transferred (in most cases)
- Some sectors limited to 50%
- Remaining credits must be retained for domestic use
→ This ensures protection of national carbon assets
6. Public and PPP Projects
- The State controls carbon credits from public projects
- Revenue allocation:
- Public projects → state budget
- PPP projects → integrated into financial structures
7. Monitoring and Governance
- All transactions must be recorded in a national carbon registry
- Multi-agency oversight (environment, industry, construction, public security, etc.)
- Local authorities are responsible for project-level supervision
8. Strategic Significance
The Decree establishes three major pillars:
(1) Opening Vietnam to the global carbon market
→ Enables international carbon trading
(2) Strong control over national carbon resources
→ Prevents uncontrolled or excessive export of credits
(3) Integration with the domestic carbon ecosystem
→ Linked with:
- Carbon exchange development
- MRV systems (Measurement, Reporting, Verification)
9. Key Implications for Businesses
- Carbon credits are not freely tradable commodities
- Companies must:
- Get project approval
- Obtain certified credits
- Secure government authorization for international transfer
→ Carbon becomes a regulated asset class
Conclusion
Decree 112/2026/ND-CP is a foundational policy that:
- Positions Vietnam within the global carbon market
- Maintains sovereign control over carbon assets
- Supports the country’s pathway toward Net Zero
Find details of Decree 112/2026-NĐ-CP at https://thuvienphapluat.vn/van-ban/Tai-nguyen-Moi-truong/Nghi-dinh-112-2026-ND-CP-trao-doi-quoc-te-ket-qua-giam-nhe-phat-thai-khi-nha-kinh-va-tin-chi-cac-bon-699909.aspx
