Japan–Vietnam cooperation in green transformation: Opportunities for low-carbon business

31Aug2026

B&Company

B&Company is the first Japanese company specializing in market research and investment consulting in Vietnam since 2008.

This article is written in English and automatic translation is used for other language versions. Please refer to the English version for accurate content. Although we strive to ensure the accuracy of the original information, please check separately for each information. Interpretations and future prospects are the personal opinions of each researcher.

Abstract

Vietnam’s low-carbon transition is moving from net-zero commitments toward implementation, with growing implications for businesses across the economy. Japan supports this process through ODA, corporate investment, the Joint Crediting Mechanism (JCM), the Asia Zero Emission Community (AZEC), and green finance. This article reviews Vietnam’s policy framework, major areas of bilateral cooperation, and potential opportunities for Japanese companies.

Vietnam’s Net-Zero Policy: Shaping the Foundation for a Low-Carbon Market

Vietnam has introduced a range of policies to support its net-zero target. Among these, corporate decarbonization and the green energy transition have particularly direct impacts on businesses by strengthening emissions-management requirements and promoting investment in cleaner energy and related infrastructure.

Policy Area (Key legal and Policy Framework	Main Targets	Policy Measures and Current Implementation	Business Implications
Corporate Decarbonization (Decree No. 06/2022/NĐ-CP, Decree No. 119/2025/NĐ-CP, Decision No. 13/2024/QĐ-TTg, Decision No. 232/QĐ-TTg, Decree No. 29/2026/NĐ-CP, Decision No. 263/QĐ-TTg)	Vietnam’s updated NDC targets economy-wide GHG reductions of 15.8% from the business-as-usual scenario by 2030 using domestic resources, and up to 43.5% with international support. The framework also aims to establish facility-level emissions management and a domestic carbon market emissions management.	Policy measures: Facilities included in the mandatory inventory list are required to prepare facility-level GHG inventories under the prescribed reporting cycle. Vietnam is also developing an allowance-based carbon market for trading government-allocated emission allowances and eligible carbon credits. The pilot phase runs through 2028, with official operation planned from 2029. Current implementation: For 2025–2026, pilot emission allowances were approved for 110 facilities, comprising 34 thermal power plants, 25 iron and steel facilities, and 51 cement facilities. The domestic carbon exchange began operation on 29 June 2026.	Covered facilities must compare their verified emissions against allocated allowances. Facilities with insufficient allowances may need to purchase additional allowances or eligible credits, while those with surpluses may sell them. Export-oriented manufacturers also face pressure from supply-chain reporting requirements and carbon-related trade measures . This introduces potential carbon-compliance costs and increases demand for GHG accounting, MRV systems, emissions-data platforms, third-party verification, energy audits, industrial retrofits, process optimization, and lower-carbon fuel solutions..
Green Energy Transition (Decision 768/QD-TTg )	By 2030, renewable energy excluding hydropower is planned to account for approximately 28%–36% of electricity generation. The plan targets 46.5–73.4 GW of solar power, 26.1–38.0 GW of onshore and nearshore wind, and 10.0–16.3 GW of storage capacity. It also maintains the target for 50% of government office buildings and 50% of homes to use rooftop solar for self-generation and self-consumption. Offshore wind capacity for domestic electricity demand is expected to reach approximately 6.0–17.0 GW, with operation during 2030–2035.	Policy measures: The plan prioritizes renewable power for on-site consumption, particularly rooftop and industrial solar. New utility-scale solar projects must incorporate battery storage equal to at least 10% of project capacity for two hours. It also calls for investment in transmission lines, substations, smart grids, storage, and flexible power resources	Potential opportunities include rooftop and industrial solar, onshore wind, energy storage, smart-grid technologies, and grid-integration solutions. The plan also indicates longer-term potential in offshore wind and new-energy production, including hydrogen and green ammonia.

Policy Area

(Key legal and Policy Framework

Main Targets

Policy Measures and Current Implementation

Business Implications

Corporate Decarbonization

(Decree No. 06/2022/NĐ-CP, Decree No. 119/2025/NĐ-CP, Decision No. 13/2024/QĐ-TTg, Decision No. 232/QĐ-TTg, Decree No. 29/2026/NĐ-CP, Decision No. 263/QĐ-TTg)

Vietnam’s updated NDC targets economy-wide GHG reductions of 15.8% from the business-as-usual scenario by 2030 using domestic resources, and up to 43.5% with international support. The framework also aims to establish facility-level emissions management and a domestic carbon market emissions management.

Policy measures: Facilities included in the mandatory inventory list are required to prepare facility-level GHG inventories under the prescribed reporting cycle. Vietnam is also developing an allowance-based carbon market for trading government-allocated emission allowances and eligible carbon credits. The pilot phase runs through 2028, with official operation planned from 2029.

Current implementation: For 2025–2026, pilot emission allowances were approved for 110 facilities, comprising 34 thermal power plants, 25 iron and steel facilities, and 51 cement facilities. The domestic carbon exchange began operation on 29 June 2026.

Covered facilities must compare their verified emissions against allocated allowances. Facilities with insufficient allowances may need to purchase additional allowances or eligible credits, while those with surpluses may sell them. Export-oriented manufacturers also face pressure from supply-chain reporting requirements and carbon-related trade measures .

This introduces potential carbon-compliance costs and increases demand for GHG accounting, MRV systems, emissions-data platforms, third-party verification, energy audits, industrial retrofits, process optimization, and lower-carbon fuel solutions..

Green Energy Transition

(Decision 768/QD-TTg )

By 2030, renewable energy excluding hydropower is planned to account for approximately 28%–36% of electricity generation. The plan targets 46.5–73.4 GW of solar power, 26.1–38.0 GW of onshore and nearshore wind, and 10.0–16.3 GW of storage capacity. It also maintains the target for 50% of government office buildings and 50% of homes to use rooftop solar for self-generation and self-consumption. Offshore wind capacity for domestic electricity demand is expected to reach approximately 6.0–17.0 GW, with operation during 2030–2035.

Policy measures:

The plan prioritizes renewable power for on-site consumption, particularly rooftop and industrial solar. New utility-scale solar projects must incorporate battery storage equal to at least 10% of project capacity for two hours. It also calls for investment in transmission lines, substations, smart grids, storage, and flexible power resources

Potential opportunities include rooftop and industrial solar, onshore wind, energy storage, smart-grid technologies, and grid-integration solutions. The plan also indicates longer-term potential in offshore wind and new-energy production, including hydrogen and green ammonia.

B&Company’s synthesis

Carbon management is shifting from general reporting to the allocation and trading of compliance instruments. Large emitters must manage verified emissions against assigned allowances, making decarbonization an operational and financial requirement. This may create opportunities for Japanese companies with industrial optimization capabilities, including high-efficiency utility equipment, plant retrofits, and energy-audit services.

Notable Low-Carbon Cooperation Projects Between Vietnam and Japan

Vietnam and Japan are advancing low-carbon cooperation primarily through the Joint Crediting Mechanism (JCM) and the Asia Zero Emission Community (AZEC). JCM is a bilateral project and carbon-crediting mechanism, while AZEC is a broader regional platform for policy cooperation, technology demonstration, project development, finance, and business partnerships.

The Joint Crediting Mechanism (JCM)

– Nature: Under the principle of “Technology Contribution – Credit Exchange,” the Japanese government typically funds up to 50% of equipment costs, Vietnamese companies operate the facilities, and resulting CO₂ reductions are converted into credits shared between the two countries.

– Implementation Status: Since 2013, 48 projects in Vietnam have been selected under the Japanese Ministry of the Environment’s JCM Financing Programme. Their combined estimated reduction amounts to approximately 454,615 tCO₂ per year. These are ex-ante project estimates and should not be interpreted as carbon credits already issued or verified reductions already achieved^[1]

– Key Sectors: The portfolio covers renewable energy, energy efficiency, transport, waste treatment, and F-gas recovery and destruction.

– Participants: JCM involves government agencies from both countries, state-owned enterprises and public utilities, private companies, financial institutions, local authorities, and research or technical organizations.

List projects under the JCM mechanism[2]

Sector	No. Projects	Project introduction	Estimated GHG reduction (tCO₂/year)
Renewable energy	23	· Utility-scale solar, rooftop solar for factories and commercial facilities, biomass boilers and biomass power plants, onshore wind, and small hydropower	362,863
Energy-efficiency improvement	20	· High-efficiency transformers, air-conditioning systems, chillers, boilers, kilns, pumps, LED lighting, production equipment, and factory energy-control systems. · Most focus on reducing electricity or fuel consumption in industrial facilities, buildings, and public utilities	30,260
Transport	2	· Eco-driving using digital tachographs and a modal shift from truck transport to cargo shipping using freshness-preservation refrigerated containers	10,427
Waste handling and disposal	1	· The portfolio includes a waste-to-energy plant that generates electricity while reducing emissions associated with conventional waste disposal	41,804
F-gas recovery and destruction	2	· Collection schemes and dedicated destruction or decomposition facilities for used fluorocarbons	9,261
Total	48		454,615

Source: B&Company’s synthesis

Asian Zero Emissions Community (AZEC)

– Nature: This is a Japan-led, large-scale, multilateral strategic alliance. The mechanism does not focus on the buying and selling of carbon credits but rather on shaping policies and green standards and providing substantial funding for the development of clean energy infrastructure.

– Implementation Status: 34 cooperation items, covering MOUs, MOAs, research, demonstration, and implementation initiatives.

– Key Sectors: focuses mainly on low-carbon agriculture, food systems, agricultural carbon credits, and MRV, alongside corporate carbon management, circular infrastructure, and CCS.

List of projects under the AZEC initiative

Sector	Cooperation items by type	Project introduction
Clean energy, storage, and agrivoltaics	· 3 MOUs	· Cooperation focuses on solar-sharing systems that combine agricultural production with solar power generation and battery storage. · The MOUs also provide a basis for joint research, technology introduction, and potential development into JCM projects.
Low-carbon agriculture, fisheries, and food systems	· 2 MOUs · 2 research initiatives · 2 demonstrations or pilot trials · 3 commercial or implementation collaborations	· Activities cover methane reduction in rice cultivation, improved fertilizer efficiency, regenerative agriculture, sustainable fisheries, and lower-emission sugar and coffee supply chains. · The portfolio ranges from research and field trials to commercial supply-chain cooperation and technology implementation.
Agricultural carbon-credit generation and MRV	· 8 MOUs · 4 MOAs	· 8 MOUs support the development of agricultural carbon-credit projects, emissions-calculation systems, and satellite-based monitoring. · 4 MOAs commission research institutes and universities to measure methane reductions in rice paddies across different regions of Vietnam.
Corporate carbon management and enabling finance	· 7 MOUs	· The MOUs cover corporate GHG accounting, emissions visualization, IoT-based energy monitoring, agricultural digital platforms, decarbonization support for industrial-park tenants, business matching, and financing cooperation.
Circular economy and low-carbon infrastructure	· 2 technical cooperation and standardization initiatives	· Cooperation promotes recycled-asphalt and roadbed-recycling technologies. · Activities include technology dissemination, technical assessment, development of implementation roadmaps, and support for adoption under Vietnamese technical standards.
Carbon capture and storage	· 1 MOU	· The MOU establishes a cooperation framework for the technical assessment and early-stage formation of a CCS project involving Japanese and Vietnamese energy-sector organizations.

Source: B&Company synthesis

Strategic Outlook: Shaping the Low-Carbon Business Market in Vietnam

Vietnam’s green transition is moving from policy development toward implementation, driven by mandatory GHG inventories for designated high-emitting facilities, the pilot carbon market, and investment in renewable energy and grid infrastructure. However, progress will still depend on regulatory clarity, transmission capacity, financing, and project bankability.

Japan supports this transition through complementary frameworks. JCM enables project-level measurement and crediting of emission reductions, while AZEC promotes broader cooperation in policy, finance, carbon markets, supply-chain decarbonization, infrastructure, and project development.

For Japanese companies, near-term opportunities extend beyond large-scale energy projects to industrial energy efficiency, self-consumption solar, carbon management, waste and resource recovery, and green finance. Success will require factors such as strong local partners, reliable emissions data, viable off-takers, and workable regulatory and financing structures.

From rice fields to carbon credits: Japan–Vietnam cooperation in the next phase of decarbonization

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[1] [2] GEC. List of projects under the JCM Financing programmed by MOEJ (FY2013-2026) (as of July 14, 2026) (2026). <<Assess>>