Regulations on Emissions Trading System and Carbon Tax: Experiences from Chinese Law and Lessons for Vietnam
Summary: 1. Introduction. – 2. Research Methods. – 3. Regulations on the Emission Trading System and Carbon Tax: Experiences from Chinese Law and Lessons Learned for Vietnam. – 3.1 Analysis of the Legal Framework and Climate Finance Institutions. – 3.1.1 Challenges in Developing Climate Finance Institutions in Vietnam. – 3.1.2. Experience From China: Strengths And Limitations of a Comprehensive Legal Framework. – 3.1.3. Recommendations for Vietnam: Improving the Legal Framework and Climate Finance Institutions Towards Net Zero 2050. – 3.2. Analysis of Environmental Justice Issues and Climate Finance Policy. – 3.2.1. The Implementation of Environmental Justice in Response to Climate Change in Vietnam. – 3.2.2. China's Environmental Justice Enforcement and Its Limitations. – 3.2.3. Recommendations for Vietnam to Improve Regulations to Promote Environmental Justice. – 3.3 Analysis of the Right to Live in a Healthy Environment. – 3.3.1. Provisions of Vietnamese Law to Ensure Human Right to Live in a Healthy Environment. – 3.3.2. Experience From China in the Regulation to Ensure Human Right to Live in a Healthy Environment. – 3.3.3. Lessons Learned for Vietnam in Perfecting Regulations to Ensure Human Right to Live in a Healthy Environment. – 4. Conclusion.
Background: The defining challenge of the 21st century is climate change, which has necessitated countries to incorporate financial instruments ranging from carbon tax to the Emissions Trading System (ETS) for emission abatement. China, the world’s biggest CO2 emitter, has implemented an Environmental Protection Tax (EPT) since 2018 and launched a national ETS in 2021. Vietnam, committed to Net Zero by 2050 and currently developing its carbon market, faces significant challenges in strengthening its financial and legal regulations.
Methods: This article integrates qualitative methodology and comparative analysis to delineate the nexus between carbon taxation and Emissions Trading Systems (ETS), concomitantly emphasising the human right to a clean environment. The qualitative approach is employed for an in-depth examination of policy, economic, and societal facets within the respective jurisdictions of China and Vietnam. In parallel, comparative analysis serves as the central framework for assessing the efficacy of these two instruments in mitigating greenhouse gas emissions, alongside exploring their potential for synergy and associated challenges.
Results and Conclusions: This article seeks to answer the question: In the process of building and perfecting regulations on the emissions trading system and carbon tax, what lessons can Vietnam learn from China's experience to ensure fairness and the right to live in a clean environment?
China’s ETS currently covers approximately ≈40% of CO2 emissions, predominantly in the power sector. However, the lack of coordination between the EPT and ETS, low quota price and free allocation of allowances have discouraged investments in low-carbon technologies. Drawing on these lessons, Vietnam should consider adopting a carbon tax to replace the current Law on Environmental Protection Tax. Such legislation should incorporate reasonable provisions such as higher tax rates, flexible adjustment mechanisms, and targeted exemptions or reductions to influence consumer behaviour and reduce reliance on fossil fuels.
Furthermore, it is crucial to reform state budget management regulations concerning the utilisation of financial resources derived from carbon taxes and an Emissions Trading System (ETS). These funds should be allocated to finance environmentally friendly agricultural models, mangrove reforestation projects, and the development of irrigation systems resilient to mangrove inundation, thereby promoting environmental protection and long-term livelihood security. Concurrently, establishing a rational long-term roadmap for the development of a national carbon market is essential. This integrated approach, combining both financial instruments, will safeguard Vietnamese citizens' right to live in a clean environment and ensure compliance with the Net Zero commitment by 2050.
Abstract
Background: The defining challenge of the 21st century is climate change, which has necessitated countries to incorporate financial instruments ranging from carbon tax to the Emissions Trading System (ETS) for emission abatement. China, the world’s biggest CO2 emitter, has implemented an Environmental Protection Tax (EPT) since 2018 and launched a national ETS in 2021. Vietnam, committed to Net Zero by 2050 and currently developing its carbon market, faces significant challenges in strengthening its financial and legal regulations.
Methods: This article integrates qualitative methodology and comparative analysis to delineate the nexus between carbon taxation and Emissions Trading Systems (ETS), concomitantly emphasising the human right to a clean environment. The qualitative approach is employed for an in-depth examination of policy, economic, and societal facets within the respective jurisdictions of China and Vietnam. In parallel, comparative analysis serves as the central framework for assessing the efficacy of these two instruments in mitigating greenhouse gas emissions, alongside exploring their potential for synergy and associated challenges.
Results and Conclusions: This article seeks to answer the question: In the process of building and perfecting regulations on the emissions trading system and carbon tax, what lessons can Vietnam learn from China's experience to ensure fairness and the right to live in a clean environment?
China’s ETS currently covers approximately ≈40% of CO2 emissions, predominantly in the power sector. However, the lack of coordination between the EPT and ETS, low quota price and free allocation of allowances have discouraged investments in low-carbon technologies. Drawing on these lessons, Vietnam should consider adopting a carbon tax to replace the current Law on Environmental Protection Tax. Such legislation should incorporate reasonable provisions such as higher tax rates, flexible adjustment mechanisms, and targeted exemptions or reductions to influence consumer behaviour and reduce reliance on fossil fuels.
Furthermore, it is crucial to reform state budget management regulations concerning the utilisation of financial resources derived from carbon taxes and an Emissions Trading System (ETS). These funds should be allocated to finance environmentally friendly agricultural models, mangrove reforestation projects, and the development of irrigation systems resilient to mangrove inundation, thereby promoting environmental protection and long-term livelihood security. Concurrently, establishing a rational long-term roadmap for the development of a national carbon market is essential. This integrated approach, combining both financial instruments, will safeguard Vietnamese citizens' right to live in a clean environment and ensure compliance with the Net Zero commitment by 2050.
About Authors
Deputy Dean, Faculty of Commercial Law, Ho Chi Minh City University of Law, Vietnam
phanphuongnam@gmail.com
https://orcid.org/0009-0009-6293-0899
Corresponding author, responsible for conceptualization, methodology, data curation, resources, investigation, formal analysis and writing – original draft.
Competing interests: No competing interests were disclosed.
Disclaimer: The author declares that his opinion and views expressed in this manuscript are free of any impact of any organizations.
Rights and Permissions
Copyright: © 2025 Phuong Nam Phan. This is an open access article distributed under the terms of the Creative Commons Attribution License, (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Editors
Managing editor – Mag. Bohdana Zahrebelna. English Editor – Julie Bold. Ukrainian language Editor – Lilia Hartman.
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Дослідницька стаття ПРАВИЛА РЕГУЛЯЦІЇ СИСТЕМИ ТОРГІВЛІ ВИКИДАМИ ТА ПОДАТКУ НА ВУГЛЕЦЬ: ДОСВІД КИТАЙСЬКОГО ЗАКОНОДАВСТВА ТА УРОКИ ДЛЯ В'ЄТНАМУ Нам Фан Фуонг АНОТАЦІЯ Вступ. Значним викликом 21-го століття є зміна клімату, яка змусила країни впровадити фінансові інструменти, починаючи від податку на вуглець до Системи торгівлі викидами (СТВ) задля скорочення викидів. Китай, найбільший у світі емітент CO2, запровадив податок, повʼязаний з охороною навколишнього середовища (Environmental Protection Tax – далі EPT), з 2018 року та запровадив національну СТВ у 2021 році. В'єтнам, який прагне досягти нульових викидів до 2050 року та наразі розвиває свій ринок вуглецю, стикається зі значними труднощами у зміцненні своїх фінансових та правових норм. Методи. Ця стаття поєднує якісну методологію та порівняльний аналіз, щоб окреслити зв'язок між оподаткуванням вуглецю та Системою торгівлі викидами (СТВ), одночасно підкреслюючи право людини на чисте навколишнє середовище. Якісний підхід використовується для поглибленого вивчення політичних, економічних та соціальних аспектів у відповідних юрисдикціях Китаю та В'єтнаму. Паралельно, порівняльний аналіз є основою для оцінки ефективності цих двох інструментів у пом'якшенні викидів парникових газів, а також дослідження їхнього потенціалу для синергії та пов'язаних із цим проблем. Результати та висновки. У цій статті поставлено за мету відповісти на питання: у процесі розробки та вдосконалення нормативно-правових актів щодо системи торгівлі викидами та податку на вуглець, які уроки може винести В'єтнам з досвіду Китаю, щоб забезпечити справедливість та право жити в чистому навколишньому середовищі? Система торгівлі викидами (СТВ) Китаю наразі охоплює приблизно 40% викидів CO2, переважно в енергетичному секторі. Однак відсутність координації між EPT та СТВ, низька ціна квот та безкоштовний розподіл квот не сприяють інвестиціям у низьковуглецеві технології. Спираючись на ці уроки, В'єтнам повинен розглянути можливість запровадження вуглецевого податку замість чинного Закону про податок на охорону навколишнього середовища. Таке законодавство повинно містити обґрунтовані положення, такі як вищі податкові ставки, гнучкі механізми коригування та цільові пільги або скорочення, щоб впливати на поведінку споживачів та зменшувати залежність від викопного палива. Крім того, вкрай важливо реформувати нормативно-правові акти управління державним бюджетом щодо використання фінансових ресурсів, отриманих від податків на вуглець та Системи торгівлі викидами (СТВ). Ці кошти слід виділити на фінансування екологічно чистих сільськогосподарських моделей, проєктів з відновлення мангрових лісів та розвитку іригаційних систем, стійких до затоплення цих лісів, тим самим сприяти довгостроковій безпеці та захисту довкілля. Водночас, важливо розробити раціональний довгостроковий план розвитку національного ринку вуглецю. Такий комплексний підхід, що поєднує обидва фінансові інструменти, захистить право громадян В'єтнаму жити в чистому довкіллі та забезпечить дотримання зобов'язання щодо нульових викидів до 2050 року.
АНОТАЦІЯ УКРАЇНСЬКОЮ МОВОЮ
Publication history
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Date of submission: 30 May 2025
Date of acceptance: 31 Jul 2025
Online First publication: 06 Oct 2025
Last Published: 18 Nov 2025Whether the manuscript was fast tracked? - No
Number of reviewer report submitted in first round: 2 reports
Number of revision rounds: 2 rounds – first round with major revisions and second round with minor revisions.
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How to cite it?
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Phan PN, ‘Regulations on Emissions Trading System and Carbon Tax: Experiences from Chinese Law and Lessons for Vietnam’ (2025) 8(4) Access to Justice in Eastern Europe 197-221 <https://doi.org/10.33327/AJEE-18-8.4-a000125>
