Developing Vietnam’s Carbon Market: Comparative Analysis of Korean Emission Trading System and Indonesia’s Compliance Framework

The Korean Emission Trading System (K-ETS), implemented since 2015, is Asia’s first nationwide emission trading system featuring a sophisticated cap-and-trade mechanism, gradual transition from free allocation to auctioning, and effective market stabilization measures. This study compares K-ETS with Indonesia’s flexible cap-tax-and-trade model, which includes dual mechanisms (emissions trading and offsets) but applies lower carbon prices and weaker enforcement. Drawing from these models, the study recommends Vietnam adopt K-ETS’s phased cap-and-trade design while incorporating Indonesia’s flexibility, as well as propose that Vietnam should establish a clear legal framework, classify carbon credits as securities, and ensure market stability to meet its 2050 carbon neutrality target.