Selecting a carbon dioxide emissions pricing model: Experience from the European Union and policy recommendations for Vietnam

Carbon pricing is becoming an important policy instrument for reducing carbon dioxide emissions and promoting sustainable economic development. This study compares two principal models: emissions trading systems and carbon taxes. Drawing on European Union experience, the study evaluates their operating mechanisms, advantages, limitations, and suitability for Vietnam. It also examines the current status of carbon pricing in Vietnam and identifies requirements concerning measurement, reporting, and verification, emissions allowance allocation, market governance, and regulatory capacity. The study recommends a phased roadmap for strengthening the national MRV system, establishing transparent allowance-allocation mechanisms, and considering a hybrid approach combining emissions trading with carbon taxation. An appropriately designed combined model could improve greenhouse-gas reduction efficiency, limit adverse economic impacts, and support Vietnam’s commitment to achieving net-zero emissions by 2050.