EU’s Experience in Establishing Emission Trading Systems and Lessons for Vietnam Using Fuzzy Analytic Hierarchy Process (AHP)

Governments are employing a wide range of policies to combat climate change and make the transition to low-carbon economies. Being the pioneer in initiating and executing environmental actions, the EU and its member states have adopted various strategies for carbon reduction for the last few decades, reflecting the distinctive economic and political environments and environmental concerns of each country. Emission trading systems have become one of the most essential schemes the EU has implemented to encourage emissions reduction and the growth of green enterprises. This paper offers an overview of the development and implementation of carbon pricing mechanisms, particularly the carbon trading systems in the EU, focusing on their performance and efficacy. Using the Fuzzy Analytic Hierarchy Process, the EU’s solutions are analyzed to understand if they can be applied in Vietnam. The study identifies the top six solutions for developing a carbon trade system in Vietnam in the next few years, including (1) establishment of monitoring, reporting, and verification systems for emissions, (2) financial support for investment in carbon reduction projects, (3) financial support and business incentives for renewable energy production, (4) carbon tax, (5) carbon trading systems, and (6) auctions for emission permits.