Impacts of emission trading scheme in Vietnam: A perspective of revenue redistributions

With ambitious emission reduction targets presented in the international commitments, Vietnam has a pathway to implement an emission trading scheme (ETS) to curb its carbon emissions. However, research on the impacts of ETS in Vietnam is still unclear, especially since there is no study on ETS reven...

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Bibliographic Details
Published in:Sustainable development (Bradford, West Yorkshire, England) West Yorkshire, England), 2024-10, Vol.32 (5), p.5452-5462
Main Author: Nguyen, Phuong Thao
Format: Article
Language:English
Subjects:
Ambition
Carbon
CGE
Construction industry
economics
Electric industries
Electricity
Emissions
Emissions control
Emissions trading
Energy industry
environment
ETS
GDP
Government
Gross Domestic Product
Households
Income taxes
Policies
Redistribution
redistribution policy
Residential energy
Revenue
Sustainable development
Taxation
Vietnam
Welfare
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Summary:With ambitious emission reduction targets presented in the international commitments, Vietnam has a pathway to implement an emission trading scheme (ETS) to curb its carbon emissions. However, research on the impacts of ETS in Vietnam is still unclear, especially since there is no study on ETS revenue redistribution policies. By developing a computable general equilibrium (CGE) model, this paper simulates the potential impacts of the ETS with different revenue redistribution options. The results indicate that to achieve Vietnam's target of 15.8% carbon emission reduction, the carbon price would significantly affect the economy with a GDP drop of 3.7% and a welfare loss of 2.89% of GDP. The revenue redistribution policies would lighten these negative impacts. While transferring to government activities reduces GDP loss, reducing income tax policy results in welfare improvement. At the sectoral level, the electricity sector is most negatively affected and also plays a key role in reducing carbon emissions in Vietnam. The revenue redistribution for government activities could improve outputs for the construction and some heavy industries while the revenue redistribution policy for households creates improvements for light industries and the electricity industry.
ISSN:0968-0802
1099-1719
DOI:10.1002/sd.2987