Vietnam is well placed and is already receiving significant international resources towards low carbon development. This article argues for a dynamic approach and underlines that Vietnam is now entering the era of green growth.

Under the United National Framework Convention on Climate Change’s Kyoto Protocol, 37 developed countries have made quantitative commitments to reduce green house gas (GHG) emissions by 5.2 per cent during 2005-2012, when compared to emission levels in 1990. However, some rapid economic growth over the last two decades in China, India and other developing countries are contributing to the global warming by rapid rise in emissions. Among those, China is the largest source of GHG emissions (17 per cent of global emissions).

Based on the Bali Roadmap, developing countries are now expected to commit to global GHG emission mitigation through so-called National Appropriate Mitigation Actions (NAMAs) with international technical and financial support and also to use domestic resources, and to set voluntary GHG emissions reduction targets, for example by showing diversion from a “Business as Usual” (BAU) projection in emissions increases.

Vietnam is preparing a green development strategy and will be part of increasing number of developing countries that are developing or have developed similar plans (green growth or green development plans, or “low carbon development strategies”), often resulting in voluntary emission cuts and national appropriate mitigation actions.

What does this imply for Vietnam? Given the challenges that Vietnam is facing and the implication of mitigation efforts, considerable analytical work is needed to define emission reduction paths to enable the country to meet its socio-economic development targets, i.e. continued high levels of gross domestic product (GDP) growth, reaching newly industrialised nation status in 2020, while reducing its GHG emissions. However, there are not only costs. Low carbon development can also deliver significant new opportunities through greening existing business, developing green businesses, initiating new revenue streams for natural resource management (for example, REDD or reduced emissions from deforestation and forest degradation can become a form of the Payment for Forest Environmental Services, or PFES with international financial sources). It can also simply mean addressing existing inefficiencies in resource use in the economy, especially in energy use. Work in the steel sector by UNIDO showed that significant differences in GHG emissions intensity exist between firms (50-70 per cent measured as GHG emissions/MT of steel). Through sector-based actions rapid improvements in resource use and GHG emissions reductions are possible at positive economic benefits. Analytical work on energy efficiency also points in the same direction, meaning that economic and environmental co-benefits are possible.

The government is already working towards mainstreaming climate change into development planning through the NTP-RCC (National Target Program to Respond to Climate Change) and is receiving related policy loans through the SP-RCC (Support Programme to respond to Climate Change), amongst other climate financing to Vietnam. So far, international donors have provided over $1.3 billion in financial support. The national response is being deepened through the development of a climate change strategy and a green development strategy, in conjunction with existing policies on for example disaster risk management and energy efficiency.

Given Vietnam’s emissions profile and the development challenges it is facing, a staged approach, known as the three roller coasters, might be appropriate. The initial efforts are focused on increasing resource efficiency (making the economy more efficient), followed by a focus on reducing emissions per capita, and the final step is to increase economic growth while reducing total GHG emissions.

In terms of capital inflow, Vietnam is currently the seventh largest host of Clean Development Mechanism (CDM) projects (69) registered by the CDM executive board and 6,646,339 Certified Emission Reduction have been issued. Some 77 per cent of the registered projects are hydropower related emissions avoidance and 12.6 per cent is methane avoidance. There are also three projects under voluntary emission reduction schemes. Investments in “green projects” are not necessarily focused on emissions reduction and energy efficiency is supported by public-private investments funds and there are on going investments in bio fuels and solar panel production accounting for at least 5-10 per cent of the foreign direct investment inflows. These form the building blocks for further green development.

Experiences in neighbouring countries as well as current work in different sectors in Vietnam has shown that significant potential exists to develop win-win low carbon strategies. It will require close collaboration between public and private sector. Investments and public finance have to be aligned to initiate innovation, scale up successful approaches, and provide opportunities for commercial viable options, ultimately leading to increased green employment and sustainable mitigation of GHG emissions.

Source: VIR.