Carbon Pricing Aids Vietnam’s Efforts Towards Decarbonization

Vietnam’s speedy financial progress and its rising vitality demand have led to an exponential improve in GHG emissions, leaving the nation with the second highest air air pollution ranges in Southeast Asia in 2019. To fulfill its improvement and local weather change targets, the brand new home carbon emission buying and selling scheme enabled by Vietnam’s revised Regulation on Environmental Safety aimed to create a carbon pricing instrument that may penalize emitters of GHG emissions primarily based on the precept of “polluter pays.”

The carbon emission buying and selling scheme (ETS) envisioned making a market instrument by which manufacturing services, localities, and nations in search of to scale back their contribution of GHG emissions may purchase credit to offset their precise GHG emissions. The carbon pricing mechanism could be supported by complementary insurance policies and devices such because the nationwide GHG stock system, monitoring, reporting and verification (MRV) system, Nationwide Registry. According to worldwide greatest practices, the Vietnam ETS was anticipated to be utilized to massive emitters first earlier than being scaled as much as embody smaller entities.

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The brand new regulation addressed 4 main environmental and developmental challenges.

First, . Vietnam’s nationwide carbon depth per GDP elevated 48 p.c between 2000 and 2010, the second highest in East Asia. Between 2010 to 2020, the CO2 emissions practically quadrupled, largely from coal-based energy era, industrial growth, and a rising transport sector.

The rising air air pollution ranges amounted to over 60,000 deaths in 2017. Lowering emissions would subsequently save hundreds of lives in Vietnam.

Second, . Vietnam has been significantly weak to local weather change: excessive climate occasions have been occurring extra incessantly and rising sea ranges threatened to flood necessary financial zones within the coastal areas, probably forcing tens of millions of Vietnamese to relocate.

Vietnam aimed to scale back 9 p.c of its GHG emissions in comparison with enterprise as regular with home assets as envisioned of their Nationally Decided Contributions (NDCs) and will probably improve its reductions to 27 p.c from enterprise as regular with worldwide monetary help. At COP26 in Glassgow, Scotland, Vietnam’s Prime Minister Pham Minh Chinh introduced that Vietnam goals to realize net-zero emissions by 2050. The adoption of carbon pricing was anticipated to assist ship on these reductions whereas supporting the nation because it tapped into its substantial renewable vitality potential and transitioned to a low-carbon improvement mannequin.

Third, . The buying and selling mechanism was anticipated to  create incentives for companies to put money into options for GHG emission reductions and help achievement of the widespread targets.

Lastly, , together with to the European Union (EU) market.

Ought to Vietnam fall wanting growing a home carbon market and fail to realize decarbonization required to satisfy the EU necessities, then EU carbon requirements may turn into a barrier for a lot of Vietnamese exports to the European Union and plenty of different markets. Moreover, EU bilateral cooperation with different nationwide carbon emission applications resembling China’s may put Vietnamese exporters at a aggressive drawback.