Vietnam Partnership for Market Readiness

Friday, 20/09/2024 | 05:22

Project activities

10:40 - 20/11/2018

The Partnership for Market Readiness is internationally considered one of the effective tools to motivate all parties involved in greenhouse gas emission mitigation to change from voluntary actions such as NAMA (Nationally Appropriate Mitigation Action) to mandatory mechanism when policies on taxes, fees, emission quota, carbon labeling, carbon footprint are developed in many countries in the world.

Overview of the Global Partnership for Market Readiness (PMR) Program

The Partnership for Market Readiness initiative, which is developed by the World Bank, creates a forum for sharing ideas and technical proposals and providing financial support to countries to improve their capacity of carrying out greenhouse gas mitigation actions. The PMR initiative is implemented within the framework of the World Bank-funded Global PMR Program assisting countries in conducting researches, proposing and applying policies on promotion of greenhouse gas emission mitigation activities by carbon pricing instruments.

The Global PMT Program, more than 30 countries and territories now receive technical and financial support to research from the potential of application and piloting of market instruments such as taxes, fees and a carbon emission trading market. Within the framework of the Global PMT Program, the Global PMR Forum has attracted the participation of a number of international organizations, technical experts across countries to share information, knowledge and technical guidance materials on development and implementation of policies on greenhouse gas emission mitigation; measurement, reporting and verification, reports on researches on development and deployment of the global carbon emission trading market,…. For more information, please visit: https://thepmr.org.

Pricing carbon - a key issue of the PMR Program in countries

Pricing carbon through instruments such as emissions trading and carbon taxes is one of the cost-effective means to promote greenhouse gas emission mitigation activities in each country and the whole world. Within the framework of the PMR Program, a number of governments carry out researches on carbon pricing policies and incorporate them into their greenhouse gas emission mitigation strategies.

The PMR is committed to helping countries design and implement carbon pricing instruments, including emissions trading systems, carbon taxes, and crediting and offset mechanisms. Results of some researches and implementation of the PMR Program in some countries are as follow:

Argentina: Argentina studies the possibility of establishing a greenhouse gas emission credit trading system from renewable energy development and efficient and economical use of energy, then implements policies on carbon taxes in the country.

Costa Rica: Costa Rica is currently researching how to develop a domestic carbon market by promoting and encouraging voluntary actions, accessing and carrying out the PMR Program's regulations and guidelines. With the support of the PMR Program, Costa Rica restarts its low carbon development program, focuses on the offset mechanism then designs a voluntary carbon trading program which will be piloted in some industrial sectors.

Chile: Carbon tax is levied on some fossil fuels such as coal, oil and gas and on some major sources of emissions such as thermal power stations.

However, the tax rate is low ($5 per ton of CO₂). The Chilean government is considering increasing the carbon tax and reducing other related taxes such as environmental taxes then gradually establishes a domestic carbon emission trading system.

India: India has applied a system of Market Based Instruments and conducted researches on mechanisms to achieve the national and sectoral greenhouse gas reduction goals. In the short term, India has a plan to apply carbon pricing to the waste management sector.

China: China has made great progress in researching and developing the domestic carbon trading market. China has introduced the carbon emission trading system since December 2017 which was initially piloted a large city in China including Beijing, Shanghai, Shenzhen, etc., in the field of power production with the main participation of state-owned enterprises.

Some key researches of the Vietnam PMR Program

The Vietnam PMR Program was approved by the World Bank's PMR General Assembly in August 2014. After the preparation and finalization of internal documents and procedures in accordance with legal provisions, the Vietnam PMR Program was approved by the Government of Vietnam in 2017 and has officially been implemented from 2018 to June 2020 by the Ministry of Natural Resources and Environment in coordination with the Ministry of Finance, Ministry of Planning and Investment, Ministry of Industry and Trade and Ministry of Construction as follows:

- The component falling within the management of the Ministry of Natural Resources and Environment, Ministry of Finance, Ministry of Planning and Investment involves researches on development of a number of state management policies and instruments related to the carbon market.

- The component guided by the Ministry of Construction involves the establishment of a database on greenhouse gas emissions, market-based instruments and the carbon market development plan in the field of solid waste management.

- The component managed by the Ministry of Industry and Trade is expected to study the development and piloting of the NAMA for carbon credit, the greenhouse gas emission mitigation reporting system and the carbon market development plan in the steel sector.

Currently, the Vietnam PMR Program is recruiting consultants researches required by the project management unit. It is expected that the researches will be conducted simultaneously in the period of 2019-2020. During this period, the Project Management Unit will organize many conferences, workshops and training courses for all stakeholders to inform them of basic and professional knowledge about designing and operation of new market mechanisms for greenhouse gas emission reduction, financial instruments for carbon pricing such as taxes, fees, trading and offset mechanism and greenhouse gas emission quotas, etc. In addition, research results of the program will be reported to the Government to select proposed policies related to carbon pricing to be issued and implemented during the implementation of the National Determined Contributions (NDCs).

Main contents of the PMR initiative and some issues of concern for Vietnamese enterprises

In the context of global climate change, countries around the world and international organizations have been conducting many researches and developing a great number of policies at the national, regional and global levels on the greenhouse gas emission reduction. Initiatives accelerating greenhouse gas emission reduction effort have been developed early. The Nationally Appropriate Mitigation Action (NAMA) is an initiative formed in 2007 at the 13th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 13) in Indonesia and specified in the Bali Action Plan to which many developing countries in the world responded.

However, at an early stage, countries only did researches and called for international assistance. In the COP13 to COP15, no effective mechanism was established to reduce greenhouse gas emissions especially when the Kyoto Protocol was no longer in effect and emerging and developing countries wanted to accelerate the economic growth rate than ever before. The need for economic growth of countries is justified with a view to ensuring the sustainable development, protection of the climate of the Earth and climate change damage mitigation, scientists and international organizations established the Low Emission Development Strategy (LEDS), the Intended National Determined Contributions (INDCs) and NDCs, which will be implemented by all parties to the United Nations Framework Convention on Climate Change from 2021.

The PMR initiative is internationally considered one of the effective tools to motivate all parties involved in greenhouse gas emission mitigation to change from voluntary actions such as NAMA to mandatory mechanism when policies on taxes, fees, emission quota, carbon labeling, carbon footprint are developed in many countries in the world. Therefore, from now to 2020, countries should focus on developing national policies in line with the economic integration trend in the context of climate change and new mechanisms related to carbon emissions. These policies will have effect on the whole country, businesses and the whole society. They cannot only bring about many development opportunities but also become major barriers.

Therefore, it is necessary for the business community to pay attention to the following contents in order to improve their adaptability to new international and regional mechanisms and policies:

1) To actively do researches, access and update the latest information on policies on carbon tax, carbon labeling, carbon market;

2) To active participate in training course on improvement of capacity of carrying out tasks and solutions to climate change response, green growth, sustainable development; to develop high-quality human resources to meet market demands in the context of implementing international commitments on climate change;

3) To take initiative in building a database on and controlling greenhouse gas emissions related to energy use in production and business activities;

4) To abide by the Law on Economical and Efficient Use of Energy; to invest in renewable energy systems; to reduce dependence on fossil fuel energy sources resulting in decreasing carbon emissions during production and business processes;

5) To find out and develop energy efficient supply chains to reduce carbon footprint on products.

Above are some basic information related to new mechanisms and policies on greenhouse gas emissions in recent sectoral and international studies.

They will be development opportunities or challenges in case of improper awareness.

By Office of Cleaner Production and Sustainable Production and Consumption