Progress on the Viet Nam Green Growth Strategy

1
Progress on the Viet Nam Green Growth Strategy

• Presentation for the G20 Development Working
  Group
• Workshop on Inclusive Green Growth
• Ms. Nguyen Thi Dieu Trinh (DSENRE Vietnam
  Ministry of Planning and Investment)
• Ms. Ngo Thi Nhung (Vietnam Ministry of Finance)
• Moscow - July 2013

2
Content

• Overview of the Vietnam National Green Growth
  Strategy (VGGS)
• Institutional framework
• Key Challenges
• Green growth financing
• Tools and Instruments
• Next Steps

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Overview of the Vietnam National Green Growth
Strategy (VGGS)

• Approved on September 25th 2012 by the Prime
  Minister (decision 1393/QD-TTG)
• Overall objective of the VGGS (Low carbon
  Development Strategy)
• Green growth, as a means to achieve a low carbon
  economy and to enrich natural capital, will
  become the principal direction in sustainable
  economic development reduction of greenhouse gas
  emissions and increased capability to absorb
  greenhouse gas are gradually becoming essential
  indicators in social-economic development.
• 3 strategic tasks outlining the scope of the
  strategy
• Low Carbon Growth
• Greening of Production
• Greening of Lifestyles
• 17 solutions addressing specific Green Growth
  policy directions for sectors and provinces
• 10 priority actions to initiate immediate Green
  Growth action
• Overall supervision through the National
  Committee on Climate Change which is headed by
  the Prime Minister

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Participatory Process

• Prime Minister assigns the Ministry of Planning
  and Investment to formulate and implement the
  Vietnam National Green Growth Strategy (Notice
  38/TB-VPCP dated 03/03/2011 and Decision
  1393/QD-TTg dated 25/9/2012)
• Phase 1
• Establish Drafting Board and Editing Board
  including Ministerial Leaders and Directors from
  relevant sectors (Finance, Industry and Trade,
  Natural Resources and Environment, Agriculture
  and Rural Development, Transportation, Science
  and Technology and Construction)
• Formulate the Green Growth Framework for Vietnam
  with consultation with international community on
  24 November 2011
• Phase 2 Building the Vietnam National Green
  Growth strategy
• Consultation with stakeholders (twice with
  business community, 3 times with local
  authorities, research institutes and social
  society organization and international community
  in 5, 2012)
• Receiving directions from Country Top Leaders
  through thematic reports and comments from
  members of the National Council for Climate
  Change getting recommendations from Drafting
  Board and Editing Board
• Assessments on low carbon development options
• Gaining experiences through site visits South
  Korea, Mexico, Germany and the Netherlands
• International Expert consultations (with support
  from UNDP, WB, KOICA and GGGI).

5
Targets

• The VGGS sets the following targets for GDP
  growth and GHG emission reductions
• For the year 2020 
• GDP per capita is doubled compared to 2010
• Reduce energy consumption per unit of GDP by 1.5
  to 2 per year
• Reduce intensity of greenhouse gas emissions per
  unit of GDP by 8-10  or double the target with
  international support
• For the year 2030
• Reduce total GHG emissions by at least 1 per
  year without and 2 with international support. 
• Environmental degradation is addressed and
  natural capital stocks have been improved while
  the access and use of clean and green technology
  is significantly enhanced.
• In 2050, Viet Nam has mainstreamed Green
  Economic Development

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Implementation

• Establish an Inter-ministerial Coordinating Board
  for implementation of the Green Growth Strategy
  under the National Committee on Climate Change to
  direct the implementation of the green growth
  strategy.
• The Board will have the Deputy Prime Minister as
  its Head. The Minister of Planning and Investment
  will be the standing vice Head of the
  Inter-ministerial Coordinating Board and four
  other vice-Heads are leaders of ministries
  Finance, Industry and Trade, Agriculture and
  Rural Development, Natural Resources and
  Environment. Inter-ministerial Coordinating Board
  members include representatives of some
  ministries, sectors and local authorities and
  representative of some associations.
• The supporting office for the ICB is located in
  the Ministry of Planning and Investment.
• Establishment of Climate Finance Task Force to
  advise Government on policies and mechanisms

7
Key Challenges

• Moving from strategy development towards
  implementation
• Developing mechanisms for provincial and sectoral
  target setting requires tools/mechanisms
• Criteria for green growth projects/ programs.
• Assess investment requirements
• Sources of finance (domestic vs. external)
• Assessing what market based mechanisms are
  appropriate
• Promote private sector involvement
• Work on development partner coordination
• A coordination framework has been developed but
  needs to be rolled out
• Development partners have converging approaches
  which hampers coordination
• Limited understanding at local level.
• Despite significant identified win-win potential
  the upfront investment costs remain significant
  for private sectors which demands new financing
  mechanism.
• Uncertainty on climate finance and green climate
  funds limits mid to longer term commitments.

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Climate Finance in Viet Nam

• Government investment for Climate Change projects
  and program of around 1 annually.
• Viet Nam has received International Climate
  Finance support under the form of ODA from 1993
  of about 2 billion
• Almost all CFs are for adaptation purpose
• Funding channels SPRCC, REDD, VEPF, CDM.
• Assessing existing expenditures on climate and
  green growth will provide more detail and
  accurate data
• UNDP and WB supported Climate Public Expenditure
  and Investment Review (has been initiated).
• Improving access to climate finance
• Establish the Vietnam Climate Finance Options
  Framework (inception workshop March 26 )
• In collaboration with UNEP and Frankfurt School
  of Finance and Business develop green
  growth/climate financing mechanisms
• MPI DSENRE is a member of the Steering Committee
  for the Asia Low Emission Development Strategies
  Partnership Forum a partner network of the LEDS
  Global Partnership.
• Work with sectors and provinces to set targets
  and identify policy actions and investments
• Work on developing the MACC (Marginal Abatement
  Cost Curve) findings into investments and policy
  actions.
• Develop synergies between existing work at
  sectoral level (agriculture and rural
  development, renewable energy, green industry
  strategy)

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VGGS requires a broad based funding strategy

• - Engagement of private sector, as investor and
  as recipient
• Building on PPP modalities work on blending
  CF/Green finance sources in private sector
  investments in infrastructure, power generation
• Develop new modalities to facilitate innovation
  through subsidizing promising R D which engage
  private and public sector partners.
• - Use the Budget as entry point? enlarging fiscal
  space to allow public investments in green
  growth.
• - Develop market based mechanism to generate
  financing for green growth (with PMR support)
• NAMA development (credited/performance based)
• A future cap and trade system (probably initiated
  through sector based CO2 based emission
  allocations).

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Proposed Roadmap
Phases Learning ?main-streaming-? Green Growth?
towards a GE? green Viet Nam

• 2012------------------2015------------------2020--
  -----------------2025-----------------------2030--
  -? 2050

GGS
Mainstream GG in (SEDP 2015-2020
Gradual sharpen targets through cap and trade,
increased and targeted env taxes,
Learning On GG, identify win-wins
GGS tasks 1. Low carbon growth 2. Greening of
production 3. Green lifestyles
Establish national REDD Program
Green Viet Nam high Green GDP and low GHG/unit
GDP
Develop MRV
Initiate innovation in Green Supply Chains
Develop financial infrastructure and market
based mechanism (new mechanism/NAMA)s
CDM
Climate finance master plan
Green public Procurement
PMR support area
Public awareness campaigns
IEC
Develop Human resources and technology for GG
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Tools and Instruments
TAX POLICIES
FINANCIAL POLICIES ON LAND
CDM POLICIES
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TAX POLICIES
CIT PROMOTE GREEN ENTERPRISES
Enterprises in the domains of high technology,
scientific research and technological development
and Enterprises operating in environmental domains
are entitled to tax exemption for no more than
four years and a 50 reduction of payable tax
amounts for no more than nine subsequent years.
are entitled to the tax rate of 10 (general tax
rate is 25) for 15 years since enterprise has
turnover.
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TAX POLICIES
IMPORT TAX Encourage enterprises to invest in
waste treatment sector
ROYALTIES Limit wasteful resource use,
especially water resources
machines, equipment, means, tools and materials
for exclusive use in collection, storage,
transportation, recycling and treatment of wastes
are entitled to tax exemption.
machines, equipment, means, tools and materials
for exclusive use in environmental observation
and analysis generation of clean or renewable
energy are entitled to tax exemption
Tax rate for exploiting groundwater is from 3 to
8 prevent environmental pollution caused by
exploiting and processing minerals
Tax rate for exploiting surface water is from 1
to 3 prevent the depletion of water resources
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Financial policies on land
List of domains are entitled to special
investment preferences Treatment of pollution
and protection of environment production of
equipment for pollution treatment and equipment
for observation and analysis of the environment.
Collection and treatment of wastewater, waste gas
and solid waste recycling or reuse of waste...
located in geographical areas with exceptionally
difficult socio-economic conditions.
are exempted from land use levy and land rents
1
1
2
2
Are reduced 50 of land use levy, land rents
amounts payable into the state budget
List of domains are entitled to special
investment preferences Manufacture of
equipment for responding to and dealing with oil
spills Manufacture of equipment for waste
treatment.
located in geographical areas with difficult
socio-economic conditions
3
3
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CDM (Clean Development Mechanism) policies

• Invest in producing certain goods in "clean
  production - environmental protection way
  requires large capital investments and its profit
  will be lower than invest in producing other
  goods. So, there should be an appropriate
  mechanisms and policies to encourage investment
  in this sector.
• To encourage investment, support enterprises, the
  Prime Minister issued Decision dated 02/7/2007
  No.130/2007/QD-TTg on a number of mechanisms and
  fiscal policies for projects under the clean
  development mechanism (CDM). Investors that build
  and implement CDM projects in Vietnam are
• ) Exempt or reduce CIT
• ) Exempt or reduce land use levy, land rents in
  special investment preferences domain (highest
  preference)
• ) Consider subsidies for products of CDM
  projects in Vietnam

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Next steps

• Roll out the 10 priority programs (including the
  financing)
• Design the VGGS Implementation Plan, obtain
  approval and roll out of the priority actions
  (second half of 2013) which includes low carbon
  policy instruments.
• Coordinate interested Development partners based
  on aid effectiveness principles.
• Building capacity for Climate Finance Fask Force
• At provincial and sectoral level, awareness and
  understanding remains limited? requires
  additional capacity building investments.
• Develop an overall climate/green growth finance
  mechanism to start working towards directly
  assessing the Green Climate Fund.

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• Thank you for your attention!