(Updated English translation by Warren B on 27/07/2021)
On 17 November 2020, the National Assembly passed the new Environmental Protection Law (LEP 2020) – law no. 72/2020/QH14 which will take effect from 01 January 2022. The new LEP 2020 has considerable changes from the Environmental Protection Law 2014, especially on policies related to the reduction of greenhouse gas (GHG) emissions and the implementation and development of the carbon market in Vietnam. GreenCIC will recap relevant articles in the law that companies should know to update and implement related activities in the near future.
Article 91. Reduction of GHG emissions
“1. Major GHGs include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). Low-concentration gases that have high global warming potential include hydrofluorocarbons(HFCS), perfluorocarbons (PFCS), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).
2. The reduction of GHG emissions shall focus on:
a/ organizing reduction of GHG emissions and GHG absorption according to a roadmap and method for reducing GHG emissions in conformity with national conditions and international commitments.
b/ inventorying GHGs, measuring, reporting and appraising reduction of GHG emissions at the national, sector, or field level or relevant internal level;
c/ inspecting the compliance with regulations on inventorying of GHGs and reduction of GHG emissions, and the implementation of the mechanism and method for cooperation in reduction of GHG emissions;
d/ formulating and implementing the mechanism and method for cooperation in the reduction of GHG emissions in accordance with regulations of law and international treaties to which the Socialist Republic of Vietnam is a signatory;
dd/ organizing and developing the domestic carbon market.
3. The Prime Minister shall promulgate a list of sectors and GHG emitting facilities subject to GHG inventory, and update it every 02 years according to the ratio of GHG emissions to the total national GHG emissions; socio-economic development conditions and situation; consumption of fuels and energy per unit of product or service by businesses.”
Article 91. (continue)
“7. A GHG emitting facility on the list of facilities subject to GHG inventory has the responsibility to:
a/ organize GHG inventory, build and maintain a database of GHG emissions and send inventory results to the Ministry of Natural Resources and Environment every 02 years by December 01 of the reporting period for consolidation and reporting to the Prime Minister;
b/ formulate and implement the annual plan to reduce GHG emissions; integrate the reduction of GHG emissions into its quality management program, cleaner production program and environmental protection program;
c/ prepare an annual report on the reduction of GHG emissions to implement its GHG emission reduction plan using the measurement, reporting and appraisal system, and submit it to the Ministry of Natural Resources and Environment, other Ministries, ministerial agencies and provincial People’s Committees concerned by December 31 of the reporting period.”
Article 139. Organizing and developing the domestic carbon market
“1. The domestic carbon market covers the exchange of GHG emission quotas and carbon credits obtained from participation in domestic and international carbon credit exchange and offsetting mechanisms in accordance with regulations of law and international treaties to which the Socialist Republic of Vietnam is a signatory.
2. GHG-emitting facilities that are required to conduct an inventory of GHGs on the list specified in Clause 3, Article 91 of this Law are given GHG emission quotas and reserve the right to exchange and trade quotas on the domestic carbon market.
3. Bases for determining GHG emission quotas include:
a/ National climate change strategy and other relevant development strategies and planning;
b/ Results of national GHG inventory, fields and facilities on the list specified in Clause 3, Article 91 of this Law;
c/ Roadmap and methods for reducing GHGs in conformity with national conditions and international commitments.
4. GHG-emitting facilities are only allowed to emit GHGs within the allocated quotas; if they wish to emit GHGs over the allocated quotas, they shall purchase quotas from other entities through the domestic carbon market.
5. Any GHG-emitting facility that reduces GHG emissions or has not used up its allocated quotas is entitled to sell its unused quotas to another entity through the domestic carbon market.
6. Every GHG-emitting facility participating in the domestic and international carbon credit exchange and offsetting mechanisms in accordance with regulations of law and international treaties to which the Socialist Republic of Vietnam is a signatory is allowed to exchange carbon credits on the domestic carbon market.
7. Every GHG-emitting facility participating in the domestic and international carbon credit exchange and offsetting mechanisms shall exchange, auction, borrow, pay for and transfer carbon quotas and credits in accordance with regulations of law and international treaties to which the Socialist Republic of Vietnam is a signatory.”
According to the new LEP2020, greenhouse gas (GHG) emission inventory will become an obligation for large emitters. Detailed information on which GHG-emitting sectors and establishments are required to conduct and report GHG emission inventory will be issued soon. Companies should pay attention to update information and prepare for capacity-building, data collection and reporting systems to comply with the new regulations.
Pham Phuong Linh
