On December 6, the Department of Climate Change, Energy Transition Partnership, and the United Nations Office for Project Services (UNOPS) organised a workshop for the technical assistance project on the impact assessment of EU’s CBAM and carbon tax policies for Vietnam.
The project is one of the key activities within the framework of cooperation in energy transition and greenhouse gas reduction, as indicated in the Memorandum of Understanding between the Department of Climate Change under the Ministry of Natural Resources and Environment (MoNRE) and UNOPS in June 2022.
Green Climate Innovation Company Limited (GreenCIC) is the leading member of the consortium, along with Perspectives Climate Group (Germany), Applied Economic Modeling and Data Analytics Company (Australia), and NHQuang&Associates, has been selected to implement this Project.
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Workshop participants
The project is expected to be implemented in 15 months from November 2022 to January 2024 with two main deliverables:
Sirpa Jarvenpaa, director of ETP said, “We have a very strong team implementing the project. Today's workshop is the first under this project. And it's a starting point for a longer-term relationship among the implementing partners in MoNRE and the ministers that many of you represent and FOR development partners.”.
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Ms. Sirpa Jarvenpaa – Director of ETP in South East Asia
“During the implementation process of the project and consultants, ETP, together with the DCC at MoNRE, will be arranging stakeholder consultations and works like this to conduct consultations on the findings and recommendations. So we can see the active collaboration of the various ministries, local government, public and private enterprises associations, non-government organisations and other donors in the process.
According to Mr. Tang The Cuong - Director of the Department of Climate Change, Ministry of Natural Resources and Environment, the research results of the project will help the Ministry of Natural Resources and Environment, the Ministry of Industry and Trade, and related ministries and branches to understand clearly impact of CBAM and is the basis for proposing and promulgating timely policies to create favorable conditions for export industries related to CBAM, and at the same time proposing an appropriate carbon tax roadmap policy. Given the socio-economic development situation, Vietnam's goal of achieving net zero emissions by 2050.
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Mr Tang The Cuong - Director of the Department of Climate Change
CBAM aims to address the risk of carbon leakage caused by asymmetrical climate policies between non-EU countries and countries in the EU, complementary to the EU’s Emission Trading Scheme. CBAM certificates, priced equal to ETS certificates, will be issued to importers based on the integrated emissions intensity of the products they import into the EU.
Initially, CBAM will be applied to some products such as the iron, aluminium, cement, electricity and fertilisers sectors, with the possibility to extend to hydrogen, organic chemicals, plastics, and ammonia sectors. With the adoption of the Council and the Parliament in 2022, the proposal is now at the final stage of its legislative process.
According to the 2020 Law on Environmental Protection, Vietnam plans to establish and develop the domestic carbon market, which includes trading emission allowances and carbon credits.
Government Decree No.06/2022/ND-CP provides a roadmap for the development of a regulatory framework and the pilot implementation of the carbon trading scheme from now to 2027 (the carbon trade exchange pilot starts from 2025) and the official operation of the carbon trade exchange from 2028.
Together with the emission trading scheme, the carbon tax is considered an effective carbon pricing instrument for Vietnam to achieve its net-zero target. However, the application of the carbon tax in Vietnam requires a thorough study to achieve an efficient design and fall in line with the trading agreements that Vietnam has signed, as well as to avoid duplication with the existing tax scheme.
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