Fossil fuel fiscal policies and greenhouse gas emissions in Viet Nam

14 May 2012

Subsidies and taxes in Viet Nam’s energy sector, and their effects on economic development and income distribution in the context of responding to climate change

Viet Nam is capping electricity and fossil fuel prices, which amounts to very substantial indirect government subsidies to energy prices. These policies are not sustainable, are benefiting the better off more than the poor, and are counter-productive for future growth and modernisation, whilst also contributing to climate change. Fossil fuel fiscal reform may have economic, social and environmental benefits, as has been shown in many other countries. The G-20 and APEC leaders, including the Vietnamese president, agreed in 2009 to phase out ‘inefficient fossil fuel subsidies’, and this may also be addressed at the Rio+20 conference in June 2012. Such reform is also in line with the objectives of the forthcoming national Green Growth Strategy, and requires strengthening of the ongoing energy markets reform and of state owned energy enterprise reform.

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