26 March 2024
Co-organized by AfD and the Ministry of Finance, today in Hanoi, with the participation of representatives of the French Embassy, Ministry of Finance, Ministry of Natural Resources and Environment, research institutes, representatives of international organizations in Vietnam, experts from France and Vietnam.
For many years now, Vietnam has committed to implementing an approach that combines socio-economic development with environmental and resource protection. The environmental policy reform plan for the period 2021-2030 has been approved, emphasizing carbon neutrality.
The project “Green bonds, environmental taxes and carbon markets” provides technical support to the government to help Vietnam strengthen its fiscal and environmental tax policies. Currently, Vietnam has built a good system of environmental taxes and fees. However, environmental taxes focus on protecting natural resources and the environment. Innovating and adjusting fiscal and financial tools will bring dual opportunities for Vietnam: on the one hand, reducing greenhouse gas emissions through the application of carbon taxes. On the other hand, it will ensure financial and operational support for decarbonization projects through new revenue sources. The project will focus on three main topics, as the name of the project suggests: Green bonds; Environment tax; and Carbon Market.
Delegates from the French and Vietnamese delegations presented presentations revolving around the three issues mentioned above. Although it has just been implemented not long ago, this consultation workshop has contained in-depth research and very important initial recommendations:
1. Carbon Market: Initial regulations for the operation of the carbon market have been established, especially in Article 139 of the revised Environmental Protection Law. However, some important steps still need to be taken to ensure the development of carbon markets. Initial recommendations are i) A step-by-step approach to implementing a carbon market in Vietnam; ii) Achieve long-term goals cost-effectively; iii) Clarifying the difference between the quota market system and the related financial market; iv) Immediately prepare necessary monitoring systems (e.g. emission registration portal).
2. Carbon Tax: Currently, environmental taxes focus more on protecting natural resources than greenhouse gas emissions. Initial recommendations: Tax leverage could be used to complement the creation of future carbon markets. This engagement can take two forms: i) Creating a new tax on energy products; ii) Include the carbon component in the tax schedule as stipulated in the environmental protection tax.
3. Green Bonds: Vietnam’s green bond market is still underdeveloped despite its strong potential, clear investment will and real interest from investors. Initial recommendations are: i) Public authorities can play a catalytic role in developing the domestic market by issuing government green bonds; ii) Identify in more detail the classification system used for Vietnam and the possibility of separating projects clearly related to the state budget.
This workshop marks an important turning point in the ongoing capacity-building technical assistance process in green public financial management. Renowned policymakers, experts and practitioners participated in the session, with delegates discussing in depth and breadth potential scenarios and roadmaps for developing the green bond and tax market carbon in Vietnam to weigh in on the findings and recommendations arising from the comprehensive situation analysis report related to green bonds, environmental taxes and carbon markets. The results are expected to be completed and proposed to the Vietnamese government in the near future.
