March 11, 2025
Meghan O'Toole
Linh Pham awarded climate grant to study economic impacts of Vietnam carbon transition
Assistant Professor of Economics Linh Pham recently won a grant to study the macroeconomic implications of the carbon transition in Vietnam.
The project is funded by the Climate Compatible Growth (CCG) program’s Flexible Research Fund (FRF). It is scheduled to run through 2025.
Pham's project aims to provide evidence-based analyses of the macroeconomic implications of various net-zero carbon transition scenarios in Vietnam.
Pham collaborated with researchers from France, the United Kingdom, the US, New Zealand, and Vietnam.
“We explore different decarbonization scenarios, including a cap-and-trade system, emission intensity targets, and carbon tax, using a dynamic general equilibrium model (E-DSGE),” Pham explained.
Vietnam’s climate commitments provide unique opportunity for study
Vietnam’s 2022 “National Strategy for Climate Change until 2050” outlines the country’s commitment to achieve net-zero emissions by the middle of the 21st century.
However, Vietnam will face challenges during this transition. Currently, half of the country’s energy production is from coal, and that number is only expected to rise in the near future to make up for energy crunches.
“An optimistic perspective, previously delineated in the country’s 2012 ‘Green Growth Strategy,’ envisions that this shift to clean energy could yield various favorable ancillary outcomes, including fresh investment opportunities, the cultivation of green jobs, enhancements in air quality, and more effective management of natural resources,” Pham shared. “Although potential risks and benefits associated with the strategy were documented, there is a lack of evidence-based implications of this energy transition plan on macroeconomic factors in Vietnam.”
“The grant allows us to collect macroeconomic, energy and environmental data from Vietnam,” Pham said. “It also covers expenses related to the disseminations of the results, for example, by organizing and presenting at workshops, conferences, and policy seminars. The grant also covers costs associated with public relations or media outreach to promote the research outcomes and partnership with stakeholders.”
Key findings of Pham’s research
- Under a carbon policy with lump-sum revenue transfers, Vietnam’s gross domestic product (GDP), household consumption, and labor increase while emissions decrease by 15.8 percent, indicating a positive impact on both the economy and environment.
- Carbon tax revenue boosts economic indicators when it is redirected to support environmental abatement.
- Moderate emission reduction targets of 20 percent pose manageable economic impacts.
- Larger and more ambitious emission reduction targets of 45 percent significantly contract GDP.
- Moderate abatement costs appear to bolster GDP through improved efficiency and productivity.