Opportunities for carbon pricing in Viet Nam
The world can only achieve the Sustainable Development Goals if accelerated climate actions are taken at scale in the next 12 years. Climate change presents the biggest challenge of this generation, it also provides the opportunity to do better while growing the economy. The United Nations Secretary-General’s address to the General Assembly made on 25 September 2018 encouraged the governments to pursue green economy policies that utilise opportunities offered through affordable and competitive clean energy and create millions of new green jobs worldwide. He underscored the importance of the establishment of adequate price for carbon and end investments in unsustainable infrastructure that lock countries into high-emission decades to come.
There is a significant gap between the current committed greenhouse gas emission reduction in all Nationally Determined Contributions and the emission targets required to meet the Paris Climate Agreement of limiting global temperature increase by 2°C. Carbon financing, including carbon tax has been increasingly accepted as a cost-effective policy instrument for incentivising greenhouse gas emission reductions where they occur (“polluter pays principle”) helping to address the “greatest market failure ever” of climate change.
In this context, the research/discussion paper “Opportunities for Carbon pricing in Vietnam” by the Ministry of Planning and Investment, Ministry of Finance, the United Nations Development Programme (UNDP) and the US. Agency for International Development (USAID) presents an overview of the current trends and lessons from the evolving carbon pricing practices in over 40 countries worldwide, the existing taxation framework in Viet Nam, and proposes three options for introduction of carbon taxes or fees. The paper also assesses the potential revenues under scenarios of carbon taxes ranging from 1.5 to 15 USD per tons CO2 for the period between 2017 and 2030, including the volume of revenues generated each year and their final allocation towards national budget or towards local government budgets.