Recommendations for Vietnam Carbon Market from Experience of Typical International Emissions Trading Systems

Abstract

Vietnam just starts pilotting its carbon market in an effort to pursue its committment on emission reduction and net zero, thus it is important to improve the market prior official launching. Based on a review of the legal framework, development roadmap, and market design aspects, this paper summarizes the critical features and practical operational experiences from typical emissions trading systems in the EU, Korea, and China. These results, when reflecting to Vietnam’s carbon market, show limitations, such as lacks of certain detailed guidelines, or challenges during official implementation due to the development trajectory or the current state of data systems. The study proposes eight key policy recommendations relating to addressing legal gaps, developing a harmonized data structure, a  comprehensive measurement-reporting-verification system, adopting an appropriate roadmap for allowance allocation, and gradually expanding market coverage and participants in a controlled manner, accompanied by effective transaction management mechanisms.