Quantitative Approaches for Analyzing the Potential Effectiveness of Vietnam’s Emissions Trading System: A Systematic Review

Abstract

Carbon pricing initiatives have been developed globally in recent decades. Among carbon pricing initiatives, direct carbon pricing, particularly the emissions trading system (ETS), has attracted the interest of stakeholders and nations. With its ambitious potential for climate change mitigation, Vietnam has considered establishing a domestic ETS. However, studies on the effectiveness and impact of Vietnam’s ETS are scarce. This study reviews the quantitative approaches to assessing Vietnam’s ETS and evaluates the methodologies, limitations, and challenges of current quantitative assessments such as the simple reduced-form emission projection method, computable general equilibrium (CGE), input–output analysis (IOA), and multi-criteria analysis. CGE and IOA are highly recommended to obtain comprehensive results. However, IOA is more capable of avoiding numerous assumptions, complicating the use of CGE. This study recommends directions for possible innovative improvements for utilizing IOA in future research on Vietnam’s ETS; thus, suggesting a competent approach for effectively analyzing ETS.