Title: Emissions Trading System Development and Green FDI Screening: A Policy Case Study in Türkiye and Implications for Vietnam
Authors: Bui Ngoc Tu
Volume: 10
Issue: 8
Pages: 1-7
Publication Date: 2026/08/28
Abstract:
The intersection of carbon pricing policy and foreign direct investment (FDI) governance has emerged as one of the most consequential domains of sustainable development policy in emerging market economies. This paper employs a comparative qualitative case study methodology to examine how Türkiye developed its Emissions Trading System (ETS) under Climate Law No. 7552 (2025) and simultaneously deployed green FDI incentive architecture - specifically the HIT-30 High-Technology Investment Programme - to redirect investment flows toward low-carbon sectors. The paper analyses the institutional design choices, political economy constraints, and international trade pressures - particularly the European Union's Carbon Border Adjustment Mechanism (CBAM) - that shaped Türkiye's carbon governance trajectory. Drawing on policy documents, institutional reports, and secondary empirical literature, the study identifies key transferable lessons for Vietnam, which launched its pilot ETS under Decree 119/2025/ND-CP and operationalised its first carbon trading exchange under Decree 29/2026/ND-CP. Three central findings emerge: (1) CBAM exposure is a more powerful driver of ETS adoption than domestic environmental advocacy; (2) green FDI screening requires both exclusionary mechanisms (blocking dirty FDI) and attractional mechanisms (incentivising clean FDI); and (3) institutional capacity - particularly verification and monitoring infrastructure - is the binding constraint on ETS effectiveness in both economies. The paper concludes with an actionable policy roadmap for Vietnam's carbon market maturation.