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The environmental and economic impact of the emissions trading scheme (ETS) in Vietnam

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  • Nong, Duy
  • Nguyen, Trung H.
  • Wang, Can
  • Van Khuc, Quy

Abstract

This study aims to fill a gap in the literature by examining the impacts of an emissions trading scheme (ETS) in Vietnam, as the policy has been discussed for a decade in the country but the likely impacts on the economy and different sectors are still unidentified. The simulations are carried out in a global energy computable general equilibrium (CGE) model, an extension of the GTAP-E model, which treats Vietnam as a country region. Results show that restricting the number of industrial sectors in the emissions trading market substantially affects the country's economy with a decline in real GDP by 4.57%. However, the country experiences much smaller adverse impacts (e.g., real GDP declines by 1.78%) when all industries participate in the emissions trading market. In either case of the ETS design, the coal mining, manufacturing, transportation, and electricity sectors are highly adversely affected; however, the crude oil and natural gas extraction sectors would experience expansion in their production levels due to substitutions for coal. In general, under the policy the emission levels from burning fossil fuels decline at significant rates, particularly from the electricity generation sector.

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  • Nong, Duy & Nguyen, Trung H. & Wang, Can & Van Khuc, Quy, 2020. "The environmental and economic impact of the emissions trading scheme (ETS) in Vietnam," Energy Policy, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:enepol:v:140:y:2020:i:c:s0301421520301191
    DOI: 10.1016/j.enpol.2020.111362
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    Cited by:

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    4. Shuang Liang & Xinyue Lin & Xiaoxue Liu & Haoran Pan, 2022. "The Pathway to China’s Carbon Neutrality Based on an Endogenous Technology CGE Model," IJERPH, MDPI, vol. 19(10), pages 1-22, May.
    5. Nong, Duy & Wang, Can & Al-Amin, Abul Quasem, 2020. "A critical review of energy resources, policies and scientific studies towards a cleaner and more sustainable economy in Vietnam," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    6. Jia, Zhijie & Lin, Boqiang, 2020. "Rethinking the choice of carbon tax and carbon trading in China," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    7. Guang Chen & Akira Hibiki, 2022. "Can the Carbon Emission Trading Scheme Influence Industrial Green Production in China?," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    8. Yan Xiao & Yan Zhang & Jiekuan Zhang, 2023. "The Impact of Carbon Emission Trading on Industrial Green Total Factor Productivity," Sustainability, MDPI, vol. 15(7), pages 1-18, April.
    9. Mardones, Cristian & Ortega, José, 2021. "Are the emissions trading systems’ simulations generated with a computable general equilibrium model sensitive to the nested production structure?," Applied Energy, Elsevier, vol. 298(C).
    10. Chen, Xing & Lin, Boqiang, 2021. "Towards carbon neutrality by implementing carbon emissions trading scheme: Policy evaluation in China," Energy Policy, Elsevier, vol. 157(C).
    11. Nong, Duy & Simshauser, Paul & Nguyen, Duong Binh, 2021. "Greenhouse gas emissions vs CO2 emissions: Comparative analysis of a global carbon tax," Applied Energy, Elsevier, vol. 298(C).
    12. Wei, Yu & Zhang, Jiahao & Bai, Lan & Wang, Yizhi, 2023. "Connectedness among El Niño-Southern Oscillation, carbon emission allowance, crude oil and renewable energy stock markets: Time- and frequency-domain evidence based on TVP-VAR model," Renewable Energy, Elsevier, vol. 202(C), pages 289-309.
    13. Li, Mingquan & Gao, Huiwen & Abdulla, Ahmed & Shan, Rui & Gao, Shuo, 2022. "Combined effects of carbon pricing and power market reform on CO2 emissions reduction in China's electricity sector," Energy, Elsevier, vol. 257(C).
    14. Li, Changsheng & Qi, Yaping & Liu, Shaohui & Wang, Xu, 2022. "Do carbon ETS pilots improve cities' green total factor productivity? Evidence from a quasi-natural experiment in China," Energy Economics, Elsevier, vol. 108(C).
    15. Siriwardana, Mahinda & Nong, Duy, 2021. "Nationally Determined Contributions (NDCs) to decarbonise the world: A transitional impact evaluation," Energy Economics, Elsevier, vol. 97(C).

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