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Code: 2 32(V)2 CTQG - 2015 4 NOTES OF THE PUBLISHER In order to provide readers with the literature on climate change - an issue that has more impact on the life of humanity, the National Political Publishing House issued the book Financial Tracking, Monitoring and Evaluation of State Budget Expenditures in Response to Climate Change: Experience Sharing between France and Vietnam. The book summarizes the content of the seminar of the same name held on 3 December 2013 by the Assistance Technique France (ADETEF) in collaboration with the Agence Française de Développement (AFD) and the Vietnamese Ministry of Natural Resources and Environment. The seminar focused on the future France - Vietnam cooperation in the fight against climate change, sharing experiences in management, monitoring, allocation of the state budget, projects related to climate change in both countries, and so on. We would like to introduce this book. January 2015 NATIONAL POLITICAL PUBLISHING HOUSE 5 6 We would like to acknowledge the assistance of the following persons in organising this seminar: Jean-Claude PIRES, Deputy Director, AFD in Vietnam. Jean-Noël POIRIER, Ambassador of France to Vietnam. Rémi LAMBERT, First Counsellor, Embassy of France in ACKNOWLEDGEMENTS Vietnam. Yannick RICHET, Director, Public Management Pole and We would like to thank the following persons for their Asian Adviser to the Chair of ADETEF. Stéphane GIL, Director, ADETEF Asia. contributions to this seminar: TRAN Hong Ha, Deputy Minister, Ministry of Natural NGUYEN Thi Dieu Trinh, Focal point of green growth, Department of Science, Education, Natural Resources and Resources and Environment. Environment, Ministry of Planning and Investment. Rémi GENEVEY, Country Director, Agence Française de CHU Thi Thanh Huong, Deputy Director of the Science Développement (AFD) in Vietnam. Technology and International Cooperation Division, Secretary Béatrice LECOMTE, ADETEF/ Ministry of Ecology, Sustainable of SP-RCC Programme, Department of Meteorology, Development and Energy. Hydrology and Climate Change, Ministry of Natural Pierre BRENDER, ADETEF/ Ministry of Ecology, Sustainable Resources and Environment. Development and Energy. TRUONG Duc Tri, Deputy Director, Department of DANG Thi Thuy, Expert, Legislation Department, Ministry of Finance. Meteorology, Hydrology and Climate Change, Ministry of Natural Resources and Environment. NGUYEN Tuan Anh, Deputy Director, Department of Science, Education, Natural Resources and Environment, Ministry of Planning and Investment. This document was prepared by Hélène MERLOT and Stéphane-Laure CAUBET, ADETEF Asia. The analyses and conclusions presented in this document are DANG Cong Khoi, Deputy Director, Legislation Department, the responsibility of the authors. Ministry of Finance. 7 8 MOF Vietnamese Ministry of Finance MONRE Vietnamese Ministry of Natural Resources and Environment MPI NTP-RCC National Target Programme to Respond to ACRONYMS AFD Vietnamese Ministry of Planning and Investment Climate Change ODA Official Development Assistance Agence Française de Développement (French PMR Partnership for Market Readiness Development Agency) POPE Programme d’Orientation des Politiques APrT Adaptation Prioritization Tool Energétiques (Guidelines for Energy Policy CDM Clean Development Mechanism Development) CFPD Cross-functional Policy Document (referred to as UNDP United Nations Development Programme DPT in the English version of this paper, see below) UNEP United Nations Environment Programme COP Conference of the Parties SP-RCC Support Programme to Respond to Climate Change CPEIR Climate Public Expenditure and Institutional Review DPT Document de Politique Transversale (Crossfunctional Policy Document) ERDF European Regional Development Fund GHG Greenhouse gas IPCC International Panel on Climate Change LOLF Loi Organique Relative aux Lois de Finances/ Legislation Governing Public Finance MEDDE Ministère Français de l’Ecologie du Développement Durable et de l’Energie/ French Ministry of Ecology, Sustainable Development and Energy 9 10 3) Management of the government’s budget under the Ministry of Finance’s climate change mitigation programmes and fiscal policies TABLE OF CONTENTS 36 B. Climate change policies and budgeting in France 40 Notes of the publisher 5 1) Mechanisms for budgeting, monitoring Acknowledgements 7 and steering the government’s budget Acronyms 9 expenditures Overview 13 measures and expenditure monitoring Presentation of climate shares used in two specific sectors 28 A. Initiatives of the key ministries concerned with Vietnam’s climate change mitigation 28 1) Support programme to respond to climate change under Vietnam’s Ministry of Natural Resources and Environment 28 54 Passenger transportation sector 54 Agriculture sector 58 61 IV. Hands-on challenges in policy implementation 70 Conclusion 79 List of presentations 85 Ministry of Planning and Investment (MPI) in terms of climate change mitigation 33 11 45 III. Working climate change into national policies 2) The financial management role of the and green growth 40 to climate change impacts in France: Policies, 17 assessing the state budget’s expenditures for policy change 2) Climate change mitigation and adaptation II. Views from both sides on monitoring and climate change mitigation climate mitigation I. Climate change mitigation - An important focus for cooperation for 12 OVERVIEW I n the framework of the France - Vietnam year, celebrating 40 years of diplomatic relations, the Assistance Technique France (ADETEF) together with the Agence Française de Développement (AFD), in coordination with the Ministry of Natural Resources and Environment, convened some one hundred participants at a seminar on Tuesday 3 December 2013 on the theme of Financial Tracking, Monitoring and Evaluation of State Budget Expenditures in Response to Climate Change: Experience Sharing between France and Vietnam. The seminar was co-chaired by Mr. TRAN Hong Ha, Deputy Minister, Ministry of Natural Resources and Environment, and Rémi GENEVEY, Country Director, Agence Française de Développement in Vietnam. Particularly vulnerable to the consequences of climate change, Vietnam has been developing a set of climate policies for some years now and is currently focusing on the monitoring of public expenditures related to climate change mitigation. During recent 13 high-level bilateral visits, the fight against climate change was highlighted as an important focus for cooperation and dialogue between France and Vietnam, particularly as preparation moves forward for the 21st Conference of the Parties to be held in Paris in 2015. Since 2009, through the Support Programme to Respond to Climate Change (SP-RCC) co-financed by several international donors, the AFD has been contributing to the Vietnam’s budget in exchange for the design and implementation of climate change policies. In this context, France is pleased to share its experience in the related field and renew its support for the ongoing efforts undertaken by Vietnam. 14 The morning of interchange was spent first on presentations by representatives of the Ministry of Natural Resources and Environment (MONRE), the Ministry of Planning and Investment (MPI) and the Ministry of Finance (MOF), each of which gave an update on their activities and the relevant role of their administration in the design of budgetary allocations and the monitoring of public expenditures related to climate change mitigation policies. The second part of the seminar gave the French experts representing the ministries of finance and of sustainable development an opportunity to outline France’s experience through two presentations. Pierre BRENDER is the “Climate Planning” programme officer and Deputy Head of the “Climate Mitigation Policies” Office at the Ministry of Ecology, Sustainable Development and Energy (MEDDE). He presented a set of measures and policies contributing to the fight against climate change in France: objectives, stakeholders and management tools. Béatrice LECOMTE is first Counsellor with the Regional Accounts Chamber and works as Head of the Financial Affairs Unit at the MEDDE. She presented the government’s budget expenditures for climate change mitigation and its monitoring through an overview of various planning, monitoring and evaluation tools. 15 These exchanges were followed by working meetings between the French experts and representatives of the Vietnamese line ministries in order to identify opportunities for further cooperation aligned with this first experience-sharing event. The document herewith summarises the contributions made and the exchanges that took place during this seminar. Mr. TRAN Hong Ha, Deputy Minister, Ministry of Natural Resources and Environment 16 I. CLIMATE CHANGE MITIGATION AN IMPORTANT FOCUS FOR COOPERATION Severely exposed to the challenges of climate change, Vietnam adopts a climate change mitigation policy. . . Vietnam’s geographical layout, with its river deltas and maritime exposure, has a coastline over 3,200 km long, making it particularly vulnerable to the consequences of climate change, with the rising sea level as a foremost consideration. According to a recent study, a rise of just one meter would affect nearly 5% of the country’s surface area, 11% of its population and 7% of its farmland. This would have a negative impact on 10% of the GDP. The Mekong and Red River Deltas just as the country’s central provinces along the coast are especially at risk. Various studies conducted to establish an overall vulnerability index for countries conclude that Vietnam is among the 15 countries most vulnerable to the diverse consequences of climate change. This vulnerability is a threat to the growth trajectory that has been instrumental in putting Vietnam well on the way to achieving the Millennium Development Goals. With emissions in 2010 estimated at close to 200Mt CO2eq (aside from emissions relating to forestry and changes in land use), Vietnam is now considered to be a low-emission country. On average, one Vietnamese person 17 emits just over 2t CO2eq per year, while worldwide the average is approximately 6.7t CO2eq/year/person. Overall, Vietnam represents 1.3% of the world population and 0.4% of emissions worldwide. However, the emission rate is growing very rapidly, with projections indicating that between 2010 and 2030, Vietnam’s emissions could be multiplied by a factor of three, notably due to energy consumption. Confronted with the challenge of climate change mitigation and Vietnam’s vulnerability to the phenomenon, the Vietnamese government is endeavouring to develop a mid- to long-term strategic action framework. The Vietnamese government has approved the following documents: - National strategy for climate change mitigation (Decision No. 2139/QD-TTg of 5-12-2011), - National action plan on climate change for the 2012-2020 period (Decision No. 1474/QD-TTg of 5-10-2012), - National green growth strategy (Decision No. 1393/QD-TTg of 25-9-2012). Based on these strategic directions, the government is continuing to implement specific theme programmes1 and also attempting to have climate change mitigation issues ____________ 1. An example of which is the National Target Programme to Respond to Climate Change (NTP-RCC), launched under Decision No. 158/2008/QD-TTg of 2-12-2008. 18 worked into individual sectoral policies as well as in sectoral, provincial and national investment plans. The financial requirements are huge, which is leading to the multiplication of financing projects and channels. Vietnam is therefore launching initiatives to monitor the government’s budget expenditures in the area of climate change mitigation. As the leading agency in charge of the planning and public investments, the MPI set up in April 2012 a ʺTask Force on Climate Financingʺ2, an inter-ministerial platform designed to advise Minister of Planning and Investment to submit to the government recommendations for mobilization and utilization on climate-financing related issues. In partnership with the World Bank and United Nations Development Programme (UNDP), in April 2013, the MPI launched a process to review the governmentʹs climate change mitigation expenditures. The overall thrust of this review is to support the government and to improve the allocation and efficiency of public expenditures to implement the government’s strategic priorities in the fields of adaptation/ resilience in the face of climate change impacts and of greenhouse gas emission reductions. This cross-cutting process initially focused on ____________ 2. The MPI’s Decision No. 505/QD-BKHDT of 25-4-2012. 19 five sectors: (1) environment, (2) agriculture and rural development, (3) industry and commerce, (4) construction and transport and (5) communication. In addition to the national level, it was applied as a pilot measure in three provinces Bac Ninh, Quang Nam and An Giang. Moreover, Vietnam has been receiving for several years now budget support from donors (AFD, JICA, WB, AusAid, Government of Canada, Korea Eximbank) under the Support Programme to Respond to Climate Change (SP-RCC). This involves annual budget assistance packages underpinning the implementation of a public policy matrix and providing support for dialogues between donors and the Vietnamese ministries. Significant funds have been remitted to the government’s budget under the SP-RCC: MUS$ 140 in 2010, MUS$ 220 in 2011, MUS$ 260 in 2012, more than MUS$ 220 in 2013 and around MUS$ 265 in 2014. The government of Vietnam is desirous of allocating a significant share of this budget assistance (non-earmarked) to funding priority projects for climate change mitigation. In recent years, Vietnam has taken several decisive steps to set up practical procedures for the financial mechanism referred to as the SP-RCC: The main points of this mechanism were validated on 10 December 2010 by the Government Office (Government Officeʹs Official Letter No. 8981/VPCP-QHQT); 20 With support from donors, the MONRE developed a set of criteria to identify and select “climate change” projects. The list was approved by the Deputy Minister (Decision No. 1719/QDTTg of 4-10-2011); Additionally, the MONRE drafted Guide No. 3939/BTNMT-KTTVBDKH of 25-10-2011 in order to develop the use of these selection criteria. An inter-ministerial committee made up of representatives from the MONRE, MPI and MOF met to review, in the light of this mechanism, a long list of investment projects from provinces, cities and line ministries. This process led to a short-list of 62 “climate change” projects in accordance with these criteria (such as hydraulic structure, dike and forestry sector projects); The inter-ministerial Circular No. 03/2013/TTLTBTNMT-BTC-BKHDT was approved by the MONRE, MOF and MPI on 5 March 2013, which spells out the conditions for implementing this financial mechanism (procedures for project selection, funding allocation and monitoring their use). In 2013, 11 priority projects received funding in an amount equivalent to €12 million. The discussion process around this financial mechanism made it possible to highlight various methodological difficulties due to the complexity of the 21 subjects: the link between development projects and “climate” projects, prioritisation of initiatives, assessment of project additionality, budget priority given to policies contributing to mitigation or adaptation targets, etc. France is one of Vietnam’s leading partners in climate change mitigation . . . With over €15 billion in funding packages granted since 2005 for activities with a positive co-benefit on the climate change issue, the AFD is now a major and innovative actor internationally in the area of “climate” funding in terms of both quantity and quality, especially with regard to the methods and financial instruments used. Due to a high level of funding, the flexibility and diversity of the tools, and familiarity with the field and recognized experience, the AFD has comparative advantages to purse and consolidate its performance in implementing French commitments toward developing countries in the area of climate change mitigation and in drawing upon international and European “climate” resources or mandates. For this, the AFD has an ambitious strategic commitment and action plan 2012-2016 based on three focal points that giving structure, with the operational application of these pillars being differentiated according to geographic areas of intervention: 22 An on-going targeted financial commitment on climate issues representing 50% of AFD grants to developing countries and 30% of grants from its affiliate PROPARCO to the private sector; A systemic measurement of the carbon footprint of projects funded, based on a rigorous, transparent methodology; A policy of project selectivity based on their impact on the climate, taking into account the level of development of the concerned countries. YES if the support is not EMISSIVE concessional. projects (between 10kteqCO2/year If the support is YES YES concessional, YES if and only and if the country 1MteqCO2/year) has an acceptable climate policy YES The possibility for the AFD to finance emissive projects depends on the level of development of the concerned countries and their “climate” policy Category 1 (Sub-Saharan Africa, LDCs, priority poor countries in crisis) MITIGATION projects and projects with NEGLIGIBLE impact (between -10kteqCO2/year and 10kteqCO2/year) Category 2 (MICs and others) Category 3 (Countries with a green and inclusive mandate for growth) if the support is concessional, no HIGHLY retrocession of NO EMISSIVE concessionality unless the projects to the end country has an (over beneficiary acceptable 1MteqCO2/year) unless the climate policy NO country has an acceptable climate policy YES YES In Vietnam, French cooperation supports various projects that are contributing to the fight against climate change (which is true of 43% of AFD’s commitments during the 2006-2012 period, e.g. €342.5 million) in terms of both mitigation and adaptation. France is YES 23 24 particularly active in the following sectors: agriculture, energy, water (supply, irrigation and flood control) and transportation (national railway network and Hanoi metro project). Along with JICA, the AFD was one of the early partners of the SP-RCC. Through one-off expert missions, the AFD shared in the MONRE think tanks on the subject of identifying the criteria that characterize “climate” projects and, more recently, in discussions on the inter-ministerial circular spelling out the terms of the SP-RCC funding mechanism. “Climate” Outlook - AFD in Vietnam wide range of activities contributing to climate change mitigation in Vietnam: Improvement of urban collective utilities; Development of financial institutions and tools with a strong environmental and social impact; Contribution to developmental projects in the fields of transportation and energy; Water control and flood prevention; Support for a shift in public policies (budget aid, sector dialogue, experience interchange). . . . and is pleased to share its experience with partners in terms of tracking state budget expenditures. Since its Legislation Governing Public Finance (Loi Organique Relative aux Lois de Finances - LOLF) came into effect, France has been using new tools to steer interministerial policies. Thus, the government’s budget is no longer established by ministries, but split into 34 missions, each of which corresponds to one overarching government policy. These missions themselves bring together several programmes that pool the resources dedicated to a public policy within a ministry. However, certain public policies that are cross-cutting by definition go beyond the framework of just one programme or even one mission. These public policies are the focal point of a Cross-functional Policy Document (Document de Politique Transversale, referred to hereinafter by its French acronym DPT). Vietnam Strategy 2013-2015 (Country Framework for Action) In its intervention strategy 2013-2015, the AFD intends to support Vietnam in order to turn its growth model into a more sustainable and equitable one. This objective covers three major intervention pillars: Promote sustainable, inclusive urban development; Support modernisation of private enterprises with a strong environmental and social impact; Coach Vietnam as it copes with the challenges of climate change. By engaging the needed financial instruments and partnerships, the AFD will provide support for a 25 26 DPTs are tools to facilitate making decisions that contribute to building inter-ministerial policy coordination and providing greater budgetary legibility with regard to inter-ministerial policies. Annexed to each draft finance law, they are designed for parliamentarians and freely accessible by all. There are DPTs in 18 different areas, including climate change mitigation. The DPT on the theme of “Climate Change Mitigation” has been annexed to draft finance laws since 2008. It contains a summary of the government’s budget and fiscal expenditures and outlines the indicators of performance monitoring that explain the implementation of policies for adapting to climate change and greenhouse gas mitigation. Its purpose is to outline the appropriations put into implementation of the measures outlined in France’s Climate Plan3 and National Climate Change Adaptation Plan4 as well as the appropriations for climate change mitigation. ____________ 3. France’s Climate Plan is available at: http://www.developpementdurable.gouv.fr/Plan-climat-de-la-France.html, the Climate Plan summarizes the goals of France’s policy for mitigation of greenhouse gases, the actions taken and relevant emissions projections. It has been updated about every two years since 2004. 4. National Climate Change Adaptation Plan 2011-2015 is available at: http://www.developpement-durable.gouv.fr/-Plan-nationald-adaptation-2011-.html 27 II. VIEWS FROM BOTH SIDES ON MONITORING AND ASSESSING THE STATE BUDGET’S EXPENDITURES FOR CLIMATE CHANGE MITIGATION A. Initiatives of the key ministries concerned with Vietnam’s climate change mitigation policy The climate change mitigation policy is committed to ministries and local authorities. We will focus in particular on the ministries that are most concerned with this issue, namely the MONRE, MPI and MOF. 1) Support programme to respond to climate change under Vietnam’s Ministry of Natural Resources and Environment5 In order to meet the requirements of the relevant ministries and local authorities in terms of the management of investment projects in the field of the fight against climate change in the SP-RCC, as well as requests from donors, an open and transparent financial management system, which helps to renew and to examine the level of ODA loans has been developed and approved ____________ 5. Extract from presentation by TRUONG Duc Tri, Deputy Director, Department of Meteorology, Hydrology and Climate Change, Ministry of Natural Resources and Environment. The presentation can be viewed on the AFD website: http://www.afd.fr/home/pays/asie/geo-asie/afd-vietnam/ ctnscroll_ActualitesList/6_18 28 by the MPI, MOF and MONRE. This is the inter-ministerial Circular No. 03/2013/TTLT-BTNMT-BTC-BKHDT of 5-3-2013. This circular outlines the procedure to be followed in management of government funding with regard to investment projects contributing to the “climate” policy. These projects were previously identified on the basis of a set of assessment criteria and included in the Prime Minister’s Decision No. 1719/QD-TTg of 4-10-2011. This circular is applied by: - The organization in charge of managing and steering the programme such as the MONRE, MOF and MPI; - The organization in charge of implementing the programme: Ministries and agencies of ministerial rank; People’s committees of cities and provinces under central authority. Funding sources for implementing SP-RCC programmes: - Government’s annual draft finance law: Provision for funding sources concerning the projects validated by the prime minister and appearing on the SP-RCC programme listed in the annual draft finance law. - Local budget: The local authorities are responsible for making the local annual budget available to projects under the SP-RCC programme. 29 - Other legal funding sources: The harnessing of contributions from organisations, the corporate world and individuals to implement SP-RCC programmes must be in compliance with the regulations in force and included in the funding sources of the other programmes and projects for effective use of the budget. Structure of funding sources: The State budget covers expenses for the SP-RCC programme for: construction, equipment, “non-build” solutions (reforestation projects); project management; consultation for construction work. The local budget and other legal funding sources cover expenses for compensation, land expropriation (allowances due when land is expropriated) and other legal expenses. Sharing of responsibilities between the programme authorities and the MONRE in implementation of the inter-ministerial Circular No. 03/2013/TTLT-BTNMTBTC-BKHDT of 5-3-2013. For climate change, the programme authority (e.g. the provinces) is firstly responsible for: - Developing proposals for investment projects to facilitate implementation of the climate change mitigation policy and submitting them to the MONRE for review. The inter-ministerial expert 30 The MONRE is then responsible for: - Developing a plan to negotiate for and mobilise funding. - Submitting to the Prime Minister for approval the annual climate change mitigation policy framework. - Assessing the performance of the annual climate change mitigation policy framework in consultation with donors. - Adjusting and expanding upon, if deemed necessary, the performance indicators of the priority projects. - Setting up an inter-ministerial review committee to decide the list of priority projects. - Coordinating the financial needs for the implementation of the project of the year n+1 in order to submit it to the competent authorities for examination and validation. - Giving its opinion on the draft plan for allocation of funds to accredited “climate change” projects. - Giving its opinion on the project assessment results and approvals under this programme. - Reviewing and assessing project execution, when deemed necessary. - Reporting at mid-year and at year’s end, to the Prime Minister and national climate change mitigation Committee, on the progress of the SP-RCC programme performance. - Making available to the donors the annual financing plan for the SP-RCC programme, committee assesses the projects and makes up a list of priority projects in compliance with the existing provisions. - Arranging for assessment and approval of the projects, then forwarding the assessment results and project approval decision to the MPI, MOF and MONRE for opinion. On the basis of the opinions of these three ministries, the next step is to plan for implementation of the accredited projects. - Implementing the projects funded under the - - - - SP-RCC programme in harmony with other current programmes and/ or projects in order to ensure their effectiveness. Developing the draft budget for year n+1 and forwarding it to the programme authorities and other relevant departments prior to 10 July for review and consolidation. Reporting on the investment projects in accordance with the provisions in force on a mid-year and yearly basis. Submitting the mid-year reports to the MONRE prior to 15 July and the yearly reports prior to 15 March of year n+1. Auditing the projects in accordance with the provisions in force. 31 32 along with the plan for allocation of funds for each project, if the need arises. 2) The financial management role of the Ministry of Planning and Investment (MPI) in terms of climate change mitigation and green growth6 The MPI performs the general functions of public management in terms of planning, investments and statistics. Under the national strategy for climate change mitigation (Decision No. 2139/QD-TTg of 5-12-2011), the national action plan (Decision No. 1474/QD-TTg of 5-10-2012) and the national target programme to respond to climate change (Decision No. 158/2008/QD-TTg of 2-12-2008), the MPI is to submit proposals and coordinate the funding sources needed for implementation of the investment projects mobilised on the basis of the tasks assigned by the national climate change mitigation Committee. Under the green growth strategy (Decision No. 1393/QD-TTg of 25-9-2012), the MPI is charged of steering and setting up mechanisms and policies with the MOF and other ministries. They are then ____________ 6. Extract from statement made by NGUYEN Tuan Anh, Deputy Director, Department of Science, Education, Natural Resources and Environment, Ministry of Planning and Investment can be viewed on the AFD website: http://www.afd.fr/home/pays/asie/geo-asie/afd-vietnam/ ctnscroll_ActualitesList/6_18 33 responsible for effectively carrying out the distribution of national and overseas funding sources. Thus, the MPI plays a major role in monitoring the government’s budget expenditures for climate change mitigation. The job of the MPI in terms of climate change mitigation and green growth involves: ¾ Firstly, reinforcing mobilisation of foreign funding ear-marked for climate change mitigation in Vietnam by the following actions: Mobilising and coordinating the use of ODA funds; Taking advantage of opportunities made available through the Green Climate Fund; Creating a task force on climate funding; In coordination with the Frankfurt School of Finance and Management (FFS) and UNEP, making a study of the various institutional arrangements with potential access to funding sources; Coordinating with the World Bank and UNDP a task involving research and formulating different options for financial initiatives that contribute to the climate change mitigation policy. Task force capacity-building with regard to the MPI’s climate and green growth funding, as well as in other local and central departments involved with this issue. 34 ¾ Secondly, putting in place policies relating to climate change by: Writing up “Guidelines regarding green investments in Vietnam”. Drafting a “Selection grid for accredited climate change projects” (Adaptation Prioritization Tool APrT). This tool enables the government to prioritise initiatives to adapt to the effects of climate change and, on this basis, allocate a budget appropriate to these initiatives; Developing “low-carbon” scenarios during 2010-2030. Proposing Vietnam’s contribution to the Partnership for Market Readiness (PMR) on the basis of coordination with the MONRE. Following through with the Climate Public Expenditure and Institutional Review (CPEIR). - The Vietnam Green Growth Strategy (VGGS) and National Action Plan on Climate Change (NAPCC), approved in 2012; - The National Green Growth Action Plan (GGAP), (Decision No. 403/QD-TTg of 20-3-2014); and - The National Target Programme to Respond to Climate Change (NTP-RCC) - three steps (20082011, 2012-2015, and after 2015). 3) Management of the government’s budget under the Ministry of Finance’s climate change mitigation programmes and fiscal policies7 The promulgation of a set of laws for the protection of the environment and the fight against climate change is a primary mission in Vietnam, is embodying the Central Party Resolution, the National Strategy, the Five-year socio-economic development plan (2011-2015) Government’s Action Plan, the competent ministries and local authorities in response to the fight against This plan highlights the major threats to development posed by climate change. The national target programme to climate change and affirms the government’s determination to better respond to climate change confirms the commitment of manage national resources and the climate change-related risks. ____________ Current climate change strategies 7. Taken from the presentation by DANG Cong Khoi, Deputy - The Vietnam National Climate Change Strategy, Director, Legislation Department, Ministry of Finance and can be viewed on the AFD website: http://www.afd.fr/home/pays/asie/geo- approved in December 2011 (VCCS); asie/afd-vietnam/ctnscroll_ActualitesList/6_18 35 36 Vietnam to fight against climate change closely with the fight against storms and floods; search and international community. Under this programme, the rescue disaster victims; relevant ministries and local authorities establish and ¾ Five million hectares of plantation programme, implement adaptation activities to climate change and forest protection and development programme, reduce GHG emissions while integrating them into ticket allocation programme for the forest their strategies and their planning and development. protection and reforestation... The Government has a strong interest and provides significant resources to the fight against climate change Expenditures for implementation of NTP - RCC through the development and implementation of action Commitment authorisations: VND 1,965 billion from plans throughout the country such as: the following funding sources: ¾ Provision of credits required for the implementation of NTP-RCC; - Foreign funding sources: 50% ¾ Allocation of budget appropriations for scientific - National funding sources: 50% (including 30% programmes and technologies the service of the from central budget; 10% from local budget; 10% national target programme to fight against from other sources)8. climate change; ¾ Contribution to budgetary fund to implement the policy framework in the context of strengthening the fight against climate change capacity; ¾ Allocation of funding to implement the enhancement of neighborhoods and residential roads programme to deal with floods in the Mekong Delta; ¾ Boathouses building programme in the event of In addition to the considerable budget expenditures made at the national level, different measures have been taken by the Vietnamese government to tap into other funding sources. Various types of preferential policies developed under the climate change mitigation strategy are being ____________ storms; rehabilitation of river and sea dykes; 37 8. Prime Minister’s Decision No. 158/2008/QD-TTg of 2-12-2008. 38 equipment and semi-finished products which cannot be produced locally. applied by the MOF in order to provide an additional source: Contribution to the environment protection fund: Fiscal policies: - Funding for awareness-raising activities regarding climate change mitigation and the CDM; - Funding for the review, approval, management and monitoring of projects generated by the CDM; - Funding for the development of CDM concept design documents; - Price subsidy policies for the Environment Protection Fund for products manufactured by CDM projects: Electricity generation using renewable energies: wind, solar, geothermic and tidal energy; Electricity generation from emanations of methane (CH4) from waste/ residue disposal sites and coal mining operations. Corporate taxation: Corporations are taxed at a rate of 10% for a 15-year period if: - They derive their income from environmental activities; - They derive their income from carrying out new investment projects with an environmental protection component. Furthermore, companies that hold greenhouse gas emissions reduction certificates have a corporate tax exemption where the income is sourced from the transfer of certified emissions reductions (CERs). Import and export customs duties: - Customs duty exemption applies to the importing of production machines, equipment and tools used directly for the collection, storage, transfer, recycling and elimination of waste, in environmental observation and analysis and production of renewable energies; - Customs duty exemption applies to the importing of goods by accredited investment project under the Clean Development Mechanism (CDM) used for the generation of fixed assets, raw materials, 39 B. Climate Change Policies and Budgeting in France 1) Mechanisms for budgeting, monitoring and steering the government’s budget expenditures for climate change mitigation9 The purpose of outlining the mechanisms for budgeting, ____________ 9. Taken from the contribution by Béatrice LECOMTE, ADETEF/ Ministry of Ecology, Sustainable Development and Energy. 40 monitoring and steering of the government’s budget ministries) and at the operational level. Overall expenditures for climate change mitigation is to show consistency is ensured by having a continuing how, in France, the budgetary system makes it possible movement from forecast of the expenditures to actual to monitor cross-cutting policies such as climate disbursement for them and, in return, drafting of an change. update on execution submitted back to Parliament in After outlining the characteristics of the LOLF the same form as the forecast. enacted in 2001 and tantamount to the “financial constitution,” the first French expert sharing in the However, such an approach is limited by its seminar outlined the main objectives and operational verticality: one programme per policy and one policy procedures of such legislation. The appropriations are per programme. grouped by public policy in coherent clusters bringing together all the their to address cross-cutting policies bringing together the sources dealing with various issues such as climate performance of the relevant actions seeks to increase change? This theme flows through 31 programmes: the effectiveness of public management. energy, transportation, risk prevention, agriculture and implementation. A resources strategy necessary for for Under these circumstances, what is done in France monitoring The budget structure provides the basis for research, to mention only a few. A tool was therefore parliamentary discussion and for management of the created to deal with this - the overarching policy appropriations received during the year. It furthermore document rounding out the finance law and tabled in highlights a managerial challenge because of its matrix support of this draft to inform parliamentarians of structure, in that it describes the stakeholders and expenditures that have been made in this area. departments that will implement the public policies Actual implementation right in the departments and sponsor them at the local level. Finally, it is based contemplated in the finance law was analysed in its on improving performance at the policy and strategic dimension of dialogue between the strategic levels of levels (documents submitted to Parliament and the line the administration and the operational aspect in 41 42 territorial implementation. Under such a contractual highest policy level in order to succeed. This approach, appropriations assigned to implement such a change was implemented in France over a ten- policy segment link to an outcome goal to be reached year and, at the end, from the local level to the central has to transformation of public finances. period, resulting in the complete submit a report on the outcomes achieved prior to setting new targets for the next year. Key goals of France’s public finance legislation – At the year’s end, the annual management report A top-down performance and management approach summarizes from the financial, operational and policy standpoints the results achieved that are all put up for vote by Parliament under the accounts bill. The Promote the multiyear strategy for improved forecasting and management accounts are then certified by the Court of Auditors. The role of this agency is like that of auditors in the corporate world. Improve transparency and control at all levelsfrom Parliament to the operational department Improve the efficiency of public management In conclusion, the parameters for the success of these new management approaches were highlighted: ¾ Firstly, the setting up of a coordinated crosscutting steering mechanism designed to create an overall dynamics (because, in addition to its y In the public finance programming law, then annually in the draft finance law budgetary procedure, it defines a managerial project that implies the adherence of the staff involved), and ¾ Secondly, compliance with an ambitious but realistic timeframe that must reach up to the 43 44 Budget documents for Parliament are clearer and more informative, thus enabling better decisions to be made and greater control y Greater management leeway and increased responsibility are given to the sponsors of public policy, to the “bosses” of their organisations y Budgets driven by results: the targets to be reached are monitored by indicators 2) Climate change mitigation and adaptation to climate change impacts in France: Policies and measures for expenditure monitoring10 France feels that the consultative treatment of climate issues is very important, in particular under the United Nations Framework Convention on Climate Change (UNFCCC). In 2008, it made the Energy Climate Package one of its priorities when it chaired the European Union. Since then, it has worked with its European partners toward meeting their commitments under the Kyoto Protocol between 2013 and 2020. Finally, it offered to host the 21st Conference of the Parties to the UNFCCC, to be held at Paris-Le Bourget in late 2015, on which occasion an agreement binding upon all parties will be sought. With regard to the reduction of greenhouse gas emissions, France has already enacted ambitious, longterm legislation with the target of cutting by four its greenhouse gas emissions by 2050 (fleshed out for the first time in the framework legislation known as the “POPE” programme (Programme d’orientation de la politique énergétique) which sets the guidelines for energy policy, enacted in 2005 and reaffirmed since then). A draft law to ____________ 10. Contribution by Pierre BRENDER, ADETEF/ Ministry of Ecology, Sustainable Development and Energy. 45 phase in the energy transition for green growth was prepared subsequent to a far-reaching national debate on the energy transition, which took place during the first half of 2013. It is expected to spell out the objectives to 2030 and put in place the measures needed to achieve them, enabling this top priority to be reinforced beyond the commitments made to 2020 under the energy-climate change package (a 21% reduction compared with 2005 of allocations under a community emissions quota exchange that brings together the main greenhouse gas spewing facilities in the European Union, and also a 14% reduction compared with 2005 of emissions from sectors not covered by the foregoing mechanism: transportation, construction, agriculture, etc.). Sectoral policies targeting all mitigation initiatives are implemented in the various sectors. They are summarized in France’s Climate Plan11 and the Report on the Monitoring Mechanism that France submits biannually to the European Commission.12 Rounding out its greenhouse gas mitigation policy, France is also gradually enhancing its policy of adaptation to the impacts of climate change, which will be of increased urgency, given the belatedness of implementing measures to control greenhouse gas emissions. A national ____________ 11. http://www.developpement-durable.gouv.fr/Le-plan-climatde-la-France-plan-d,14496 12. http://www.developpement-durable.gouv.fr/IMG/pdf/Fr_RMS_ 2013__.pdf 46 adaptation strategy13 was drawn up seven years ago, embodying 43 recommendations that respond to four main objectives: - Ensure safety and public health, - Address inequalities in view of the threat, - Limit costs and take advantage of opportunities, - Preserve natural heritage. A five-year national climate change adaptation plan (PNACC 2011-201514) has been drafted since then. It purports to improve knowledge about the impacts, inform society about the issues, include adaptation in existing policies by considering the interactions between activities and pinpointing responsibilities in terms of implementation and funding. A mid-term review was recently completed (mid-2013),15 which showed the overall satisfactory forward movement of the plan (such as 81 actions of the 84 targeted). The adaptation policy focuses notably on review of the risk benchmarks. So, with regard to the probable rising of the sea level which may not be a direct threat to ____________ 13. http://www.developpement-durable.gouv.fr/IMG/pdf/Strategie_ Nationale_2-17_Mo-2-2.pdf 14. http://www.developpement-durable.gouv.fr/Contenu-du-plannational-d 15. http://www.developpement-durable.gouv.fr/Plan-national-dadaptation-au,37066.html 47 persons, but rather gives rise to wide-ranging financial and logistical issues, the parameters prevailing over the size of coastal infrastructure work have been reviewed. While a comparison with historical extremes was used up to the present, it is now required to take into account a possible rising of 40 to 60cm of the sea level in vulnerability studies. And further, with regard to coastline risks, a call for activity relocation projects has been launched by the Ministry of Sustainable Development rounds out the local initiatives and pledges of EU-funded appropriations. In order for it to work, the “climate” policy must be taken into account and implemented throughout the sectors in its mitigation and adaptation dimensions. This requires inter-ministerial mobilisation. The DPT Climat (or Cross-functional Policy Document)16 that has been annexed to each draft finance law since 2008 in order to inform the parliamentarians regarding the government’s budget expenditure being put into this policy (both in terms of budget expenditure and tax cuts) is one of the support tools used in policy decisionmaking. Coordinated by the General Directorate for ____________ 16. http://www.performance-publique.budget.gouv.fr/sites/performance_ publique/files/farandole/resources/2014/pap/pdf/dpt/DPT2014_climat.pdf 48 Energy and Climate of the MEDDE, it currently brings together 31 programmes sponsored by a dozen different ministries. The policies hinge upon three pillars: mitigation (spelled out at the sectoral level), analysis of climate change impacts and adaptation in their domestic dimension as previously outlined, and finally international commitments. In order to give an overview of the expenditures committed in the government’s budget, taking into account budget expenditures likewise committed for purposes other than those entailed by implementation of the “climate” policy, the choice was made to introduce a sum of expenditures weighted by a “climate share”, thus highlighting the importance of the climate policy in the various policies. which expenditures to upgrade the thermal performance of state-owned buildings are handled. Their share in the expenditures under programme 309 managed by France Domaine comes under periodic review. On this basis, 15% of appropriations for major renovations are taken into account, 25% of appropriations for corrective maintenance, of which a considerable share is used to replace furnaces with more energy-efficient models and only 10% of preventive maintenance costs, of which a lesser proportion is used for operations designed to reduce energy consumption. - The action includes staff costs. Only the appropriations for staff in charge of defining and moving the climate policy along are covered (a climate share of 100% is limited to such full-time equivalents, a climate share of 0% is applied to the cost of staff whose missions are only indirectly related to the climate policy). Three types of cases are encountered - The action (investments, miscellaneous costs excluding - The action (respectively a part of it) contributes staff) indirectly contributes to the climate policy. In directly and primarily to the “climate” policy, so this case, a climate share is applied, highlighting the scope the appropriations mobilised are counted in full. The of greenhouse gas emissions reduction in the socio- climate share is then “100%” (respectively indicating the economic assessment of projects where such an assessment share of relevant appropriations in the overall action). can be made (e.g. investments in high-speed rail transport That is notably what happens with funding from infrastructure for which a climate share of 8% is applied). Observ’ER who monitors the development of renewable When such an assessment is not available, flat rates energies in Europe and worldwide. This is also the way in giving a qualitative indication of multiple targets and their relative priority are used. For instance, government 49 50 support for innovative crop insurance schemes covering most climate-related risks are included at 10%. This encourages farmers to take climate-related hazards into account in their choice of practices and informs them, by means of the risk premium, of their level of exposure to risk and its evolution. For tax expenditures, a simpler approach is used: Only expenditures that are, as a matter of priority, related to implementing a pillar of the “climate” policy are counted (no “climate share” calculation), the other expenditures are excluded from the DPT Climat. So among the measures that promote thermal renovation of buildings, the eco-loan at zero interest that encourages heavy renovation work is included in the DPT Climat, but the loss of income due to the lower VAT allowed for the cost of renovations done by professionals, initiated to combat illicit work, is not factored in. Given the foregoing scenarios, the government’s expenditures in 2013 were broken down as follows: €2.64 billion in budgetary expenditure, a very significant part of which is dedicated to research and to the transportation sector, and €1.38 billion in tax expenditures incurred essentially to implement the greenhouse gas emissions mitigation policy in the construction and energy sectors. 51 Taking a broader look at the assessment, by using lump-sum climate shares of 0%/ 50%/ 100% in an approach similar to that used in other assessments of international scope on the basis of “Rio-type markers”, (e.g.: consolidation of the climate share of climate expenditures in the EU budget17), recognising measures funded directly by consumers, such as the feed-in tariffs for renewable electrical energies, taxes applied directly to certain government agencies such as the French Environment and Energy Management Agency (Agence de l’environnement et de la maîtrise de l’énergie- ADEME) and expenditures incurred under funding secured by means of an exceptional loan taken out in 2010. All in all, over €10 billion is being poured into government’s “climate” funding. Energy, transportation, research and construction are included therein (and in this order), as well as the four leading budgetary line-items. To illustrate, the breakdown of transportationrelated expenditures shows that each of the three mitigation policy levers in this sector entails considerable expenditure (support for the development of the cleanest means of transport, cutting down on the intensity of greenhouse gases in energies used in this sector and improving the energy efficiency of the different modes, notably of road transport which is the source of most greenhouse gas emissions in the sector). ____________ 17. http://www.ieep.eu/assets/1349/Tracking_system_for_climate_ expenditure_in_the_post-2013_EU_budget.pdf 52 A sectoral breakdown of expenditures incurred for climate change impact assessment and implementation of the adaptation policy is also given. It shows that monitoring is not only limited to the measures provided for under the PNACC, but also recognises measures that promote more resilient practices, even though they were already supported for other co-benefits before an adaptation policy was specifically implemented. The priority given to awareness raising is included among the expenditures provided for, while few investments are recognised, because firstly, their funding is more related to the local authorities, and secondly, investment financing that is recognised in Vietnam under climate investments (such as dike maintenance) is picked up in a different annex to the draft finance law under risk protection: only their reinforcement by virtue of submersion risk reassessment can validly be included in the DPT and particular attention is given to avoid any double counting between these documents. assessing the overall consistency of the resources mobilised and the priority given them in sectors where they would promote the most significant changes. Greenhouse gas emissions reduction is now accounting for most “climate” expenditures in France and incurring very substantial long-term investment and research expenditures. PRESENTATION OF CLIMATE SHARES USED IN TWO SPECIFIC SECTORS Passenger transportation sector Integrated treatment is given to the mitigation and adaptation polices in the DPT Climat. Although government expenditures are only validly included as one of the pillars of the “climate” policy in addition to such measures as the introduction of a carbon price signal, monitoring them is helpful in 53 Several types of appropriations are recognised in the DPT Climat. The following are considered to have a 100% climate share: 54 * “Tax expenditures” (tax cuts) used to support the development of “alternative fuels,” in particular biofuels which, under life cycle analysis, are shown to have much better GHG balances than their fossil fuel alternative. * Appropriations to support the most energyefficient vehicles. The main support of this policy is the bonus/ malus system put in place by the government to encourage the purchase of the least polluting vehicles on the new vehicles market. Interestingly, expenditures under this programme are virtually covered by the malus resource applied to the most polluting vehicles. Put together, the sum of these expenditures indicates the size of the displacement amounts, and not the expenditures for which tax resources from the general budget (revenue from the value-added tax, etc.) need to be harnessed. * Appropriations for upstream R&D to promote the emergence of significantly more energyefficient vehicles, regardless of the mode (including aircraft).18 Consideration is also given to: * Appropriations for the development of modes of transportation that emit less greenhouse gases. Particular attention is given to supporting “active” modes (walking, cycling, etc.), but support for these modes is sourced mainly from local budgets rather than from the State. Beyond these relevant modes, support for the development of urban public transit infrastructure and for long-distance rail transport, which have a more favourable GHG balance than private car transportation,19 are also taken on board in the DPT Climat. For new infrastructure development expenditures (such as those incurred by the French rail network (Réseau ferré de France - RFF), Article 4 of its statutes stipulates that any public support is now granted from the construction start-up stage of infrastructure work and not during its use year after year, the climate shares allowed are 8% for rail, 5% for transport by inland waterways and sea, 1.5% for public transit and 0% for road and airport ____________ ____________ 18. The two foregoing points are justified by the assumption of a degree of relevance for all modes of transportation and that by enhancing the competitiveness of those means of transportation that continue to be more intensive greenhouse gas generators than alternative means are not resulting in greater traffic volumes than the direct gains obtained. 55 19. Although this gap is significant in France, it may be much more limited in countries where electricity generation is much more dependent upon fossil fuel sources. Inasmuch as it should be easier in the long run to reduce the GHG of the electrical mix than to reduce the use of petrol in private car transportation, much other research on “low carbon” investment monitoring comes out in favour of projects that allow for an increase of the electricity share in the transportation sector energy mix. 56 infrastructure. They are obtained by assessing the mitigation gains outlined in the socio-economic assessments undertaken when the draft national transport infrastructure Plan was prepared. Reducing these climate shares is meant to point out that the necessary investments cannot be justified by a target that is limited to greenhouse gas emissions reduction. For the expenditures made under network management (such as infrastructure built prior to the establishment of the RFF), the climate shares used are 11.4% for rail transport and 3.6% for transport by inland waterway and port networks. They are calculated based on the assumption that without such grant aid, all travellers using the network would have to travel by road. The amount of GHG emissions that would result from there is estimated and given a value based on the shadow price of carbon as per the Quinet report (curve of €32 in 2010 to €100 in 2030). * As much as 10%: Appropriations to promote automated speed control on the road. Actually, for the range of speeds targeted, reduction of the average speed thus achieved contributes to a measurable reduction of greenhouse gas emissions. Yet, the impact on fuel consumption is a modest co-benefit of a policy which has the primary purpose of reducing road accidents. The value of the gains in terms of greenhouse gas emissions obtained in a socio-economic benefit study (if the shadow value of carbon, now approximately €40, is considered) would not justify more than 10% to 20% of the expenses incurred, in which the gains relating to reduced mortality and morbidity are significantly higher than the investments. Agriculture sector Although the agriculture policy is managed under a harmonised policy in the European Union, the government also mobilises government expenditures in this sector to the tune of €2 billion a year that are included in the DPT Climat. For the agriculture sector, a major challenge was to avoid any double counting of “expenditures for the 57 58 - 10% of appropriations for the compensatory allowance scheme for areas with natural handicaps. - Appropriations used for regional agroenvironmental measures in the amount of 20% for mitigation and 20% for adaptation. - 50% of appropriations applied to the agroenvironmental grassland premium. - 50% of appropriations applied to crop rotation. - 10% of appropriations applied to other environmental initiatives and pastoralism. - 60% of appropriations applied to the afforestation of agricultural land (former scheme). * Secondly, appropriations used for the reduction of fossil energy consumption through enhancement of energy efficiency and development of renewable energies used in the agriculture sector, including: - All appropriations under the energy efficiency plan. - The share of appropriations contributing to the reduction of greenhouse gas emissions in actual greenhouses, notably reduction of consumption of fossil energies and enhancement of the energy efficiency of greenhouses, or 33% of appropriations under the greenhouse energy plan for market garden greenhouses and 19% of those used as horticultural greenhouses. - The share of appropriations used under the plan for modernising animal husbandry buildings to reduce energy consumption, promote use of wood as a construction material and put in place effluent treatment systems (17% of appropriations). balanced, sustainable management of the territories” in the DPT Climat and in the annex to the draft finance law dealing with other “environmental” issues (water, soil, biodiversity, preservation of landscapes and risk protection). As a step coming in between the draft DPT Climat and the initiating departments of the Ministry of Agriculture, this identification work led to developing a matrix of sub-actions (breaking the budget into tranches of €0.3-40 million) in order to highlight the relative importance between greenhouse gas emissions mitigation and adaptation to its impacts and other environmental issues. In addition to research and staff costs, the following items are recognised: * Firstly, support for practices that promote the reduction of non-energy related greenhouse gas emissions in the agriculture sector: - The share of appropriations ranging from the vegetal plan for the environment corresponding to appropriations used for incentives to put in plant covert to limiting the use of fertilizers and to energy savings (17% of appropriations). - Allocations for programme to control pollution of agricultural origin (Programme de Maîtrise des Pollutions dʹOrigine Agricole - PMPOA) used for the reduction of GHG emissions related to management of animal husbandry effluents (7% of appropriations). 59 60 * Finally, expenditures contributing to building the resilience of farms and to adapting the sector to the impacts of climate change: - A climate share of 10% of appropriations under the crop insurance line in the adaptation policy (improved integration of vulnerability to climate hazards when making technology choices and the like) notwithstanding the fact that the blame for climate change in weather events damaging to agriculture is very difficult to assess. - Allocations 10% of appropriations for agricultural water management systems. to the question. It has anchored in legislation France’s greenhouse gas emissions reduction goals and spelled out notably that these goals were accompanied by energy efficiency improvement targets. It also makes it mandatory for the government to publish every two years a summary of its climate change mitigation policies; however, it did not include any particularly binding mechanism for the government in the event it went astray and proved unable to reach the target it had set for itself. So, there is potential latitude for the French government, particularly since the national III. WORKING CLIMATE CHANGE INTO NATIONAL POLICIES debate on the energy transition taking place in the first At this point, the experts outlined changes in the budget, in France that opened the way to promote greater involvement of the elected representatives in developing the national budget and the perception that citizens may have of it. This was conducive to a knowledge and technology transfer promoting discussion and giving rise in particular to the question: greenhouse gas emissions by a factor of four. Following half of 2013 attained the consensual goal of reducing this debate, MEDDE and most notably the General Directorate for Energy and Climate were asked to draft a framework law on the “energy transition.” It will include proposals to improve governance in this area. This draft law will be submitted next spring to the government, then to Parliament. The government of How is France managing its long-term climate change plans (between 20 and 50 years)? The “POPE” law-guidelines for energy policy development enacted in 2005 is a first point in answer 61 France is indeed concerned about long-term governance regarding this theme, which is absolutely necessary to achieve its national targets and have a response proportionate to the issues. 62 The government of France is indeed concerned about long-term governance regarding this theme, which is absolutely necessary to achieve its national targets and have a response proportionate to the issues. Vietnam is also attempting to have climate change worked into management plan strategies. When we say “work in,” are we talking about putting climate change into national, sectoral and regional policies and in the plans? Can it be said clearly “where” and “how” it will be worked into? Furthermore, each plan has its targets, terms of reference and appropriations. Can it be said how the percentage of total appropriations is determined for each sector on a scientific basis? That is both a very important and very challenging question in implementing a “climate” policy: How can budget choices be made and priorities set along a timeline? With regard to planning, we hope to improve the mid-and long-term steering mechanism by means of the upcoming energy transition law. An important point to be stressed is that the targeting greenhouse gas emissions mitigation will have a very structuring role. Coming up with an ambitious target accepted by all stakeholders is a fundamental step. 63 From this standpoint, the situation is clearly readable in France: the mid-and long-term targets have already been set. We now need to build the capacity to reach them. Reducing greenhouse gas emissions in France by a factor of four by 2050 is a target entrenched in law, very well accepted by all stakeholders. For this target to attain a concrete result, we had to identify the carbon deposits in various sectors and the effort required to deal with them. A number of studies were done in France on this subject: locate the deposits and then assess the investment requirements by sector over time. Investments in centralised energy generation, notably electricity, have a very long life span. For a lasting outcome, provision for expenditures under the climate heading must be made in phases where there is growth or very strong stock renewal. The choices made then will have an impact on national emissions for a very long time, in other words they are ʺlocked inʺ. If meaningful greenhouse gas options are not identified in these phases right now, it will cost a great deal of money to come back to those choices for coming decades. In other sectors, postponing the effort will have a lesser impact. The ongoing development of electricity capacity in Vietnam puts the country in one of these phases where significant long-term differences will be found depending on the choices made. 64 The development of electricity capacity in Vietnam puts the country in one of these phases where significant long-term differences will be found depending on the choices made. Let’s take another example-housing renovation in France. Given the modest rate of renewal in this area, nothing can be better than a long and sustained renovation effort. No major technical upheaval is expected in coming decades in this sector, so the most reasonable response seems to be to lose no time in building up the scope of the renovations. The right answer to the question raised earlier also requires defining the effort that the government has to put into research costs, which is virtually impossible. It requires making a wager on the future, so to speak, and experience has taught us that this is very often a win-win situation, so it is worth making the outlay. If the effects of being ʺlocked inʺ that I mentioned before are set aside, studying out mitigation sites sector by sector and the public cost of mitigation, we have useful criteria to define the relative scope of the expenditure that it would be good to make in each sector, once an overall target has been set. However, certain choices (of ambition, of the roll-out of mitigation efforts over time) cannot be summarised by economic optimisation alone. Researchers of the Intergovernmental Panel on Climate Change (IPCC), 65 Panel 3, for instance, synthesise information on carbon deposits on the basis of accessible sectors in the different regions of the world, but again, these fields cannot be taken as indicative because not all of them come with the same co-benefits. The sector-by-sector evaluation of expenditures to be made is still at an early stage in terms of adaptation, but a look at IPCC Panel 2’s report, to come out next spring, could prove insightful. Socio-economic assessments can be valuable tools to optimise the public expenditure and to finance the most cost-effective mitigation of greenhouse emissions to the extent possible. With regard to Mr. Ha’s first question about including climate change in other policies, France’s approach also involves putting climate change issues into sectoral strategies and plans. It has also required many stakeholders to prepare for the issue by making it mandatory for them to produce: (i) regional climate-airenergy scenarios, (ii) GHG balance sheets and action plans to reduce emissions in companies with over 500 employees, (iii) territorial climate-energy plans for all communities with over 50,000 inhabitants (communes, clusters of communes, departments, etc.). We could provide our Vietnamese partners with a summary of how these different obligations are being met. 66 In its SP-RCC, the government of Vietnam is working climate change factors into existing policies. Among the five principles in France’s national climate change adaptation strategies, how many technical norms are there in which climate change is included? In the field of housing, for example, thermal regulations in France have been strengthened in recent years. France had previously fallen behind other countries in this area, especially in Europe. In 2007-2008, a major 7% higher on average. The new thermal regulations target results rather than means. In other words, the obligation does not focus primarily on the materials to be used, but on finding a solution to achieve a thermal performance up to a certain standard in the end. The regulations also highlight what is referred to as “summer comfort,” in other words, housing is to be designed so as not to entail excessive air conditioning expenses. And there are other aspects involving issues of air quality, notably ventilation. national consultation called the Grenelle Environment Forum sought to find areas of consensus among most of In France, thermal regulations were amended to bring norms into the picture, and more broadly, from an economic standpoint, this was used by insurance companies looking at risks and current asset value in determining the insurance premium cost for their customers, in both housing and transportation. the stakeholders (government, social partners, economic actors, non-governmental organisations, associations) on the most consensual investments and initiatives leading to improvement of the environmental policy. Speeding up improvement of the thermal performance of housing was then chosen because from an economic viewpoint as well, it was of value to the stakeholders concerned. France picked up on that to reinforce its thermal regulations very significantly. The thrust was in fact to get the stakeholders to be less short-sighted. But this evolution was only possible because it was backed up by the legitimacy of a broad public consultation. It is estimated that construction costs are 67 In other areas, review work on the different building standards by various network managers is underway under the Directorate General for Infrastructure, Transportation and the Sea. The experts involved in this work could certainly be connected with their Vietnamese counterparts if deemed helpful. 68 A major step forward to enforcing France’s LOLF is putting more responsibility on the parliamentarian because he/she understands what he/she is voting on and is given “tangible” judgement-making, results and public policy background material. There is also greater transparency. With regard to projecting budget missions and budget programmes over several fiscal years, how are gains For example, in recent years, a lot of work has been done on biodiversity policies. This multiyear strategy along with very thorough parallel implementation has made it possible to steer and ensure the reality of our budget forecasts by keeping up with the pace of commitment and payments for three years or even five years. This has made it possible to verify the relationship between the government’s theoretical commitments and actual payments and better respond to actual needs. estimated right now in terms of public policies and quality If one looks only at the budget appropriations channelled to public policies, this is overly simplistic and underestimates the cost of implementing these public policies. of the budget expenditure? Those are complex issues that depend, among other things, on the policies under consideration. Multiyear projections require first of all comprehensive knowledge of the costs based on very in-depth cost accounting that takes into account such things at the cost of the support policies, the weight of which cannot be overlooked in public policies. If one looks only at the budget appropriations channelled to public policies, this is overly simplistic and underestimates the cost of implementing these public policies. For policies based on the allocation of third-party subsidies, the outcome rests both on economic assumptions for the future and on dominant trends that can be observed in the past or with regard to specific strategies of each sector. 69 When planning is rolled out over several years, one has much better idea of the real cost of public policies. What stands out is that such planning enables the financial and human resources to be better allocated and budget management to be optimised by pointing out possible areas of leeway. IV. HANDS-ON CHALLENGES IN POLICY IMPLEMENTATION France is in a position to make assistance available 70 with regard to climate shares either by addressing directly the mechanics behind the choices made in France or by doing research on the hypotheses that seem most relevant to the Vietnamese party based on its own experience. Here are some points for discussion: The National Ecological Transition Board states that the government’s bill on the energy transition for green growth is based on emissions ceilings covering five-year periods (carbon budgets) established about 15 years in advance. vulnerability to such a risk in investments being made now. That does not necessarily entail substantial additional costs, but can be a source of considerable savings in the future. Coastline risk prevention plans work with an assumed 60cm rise in the sea level by 2100. How can the reference framework for long-term urban development and construction work be determined? Each scenario requires great investments from government and society. Is France taking into account the uncertainty of What advice can be given to the government of Vietnam for investments based on what some contributors have described as the “probable rise” in the sea level? What is France’s position beyond the vulnerability studies? Have any investments been made and what is behind the decisions made? The question seems to imply that the studies carried out have no operational results. Well, to illustrate, coastline risk prevention plans are included in the documents that address this probable rise of the sea level in France. In other words, in coastal areas at risk, there are restrictions on urban development and restrictions on future development zones where such risks are inherent. Before relocating already established activities, there must be no further increasing of the 71 scenarios in climate change assumptions and how is it dealing with this? Vietnam does not at this time have a scientific basis allowing it to come up with a precise climate change scenario. Based on certain forecasts, the temperature could rise 2°C by the turn of the century; others claim it could go up 4 to 5°C. Sea level is predicted to rise not just 1 meter, but 3 to 4 meters. With regard to uncertainties and how they are handled, we can look at the latest report from the international Panel on climate change regarding a + 4°C scenario as mentioned (type RCP 8.5). It gives an 72 average sea level rise of 45 to 82cm for the 2080-2100 period, or 52 to 98cm by 2100. Actually, in this scenario, the sea level rise is one that would take place, without any significant effort to mitigate greenhouse gas emissions, very rapidly in this time frame, of 8 to 16cm per decade. Because we are speaking of the rise in sea level, it must be kept in mind that the time inertia is very strong, and it is also important to remember that it will go on beyond that time horizon (turn of the century). There is no magic solution for taking the uncertainty into account; the solution would also largely depend on future greenhouse gas emissions. It will likewise depend upon the development trends that will occur in the various societies during the coming decades, and upon choices yet to be made collectively. In France, recommendations had to be open-ended in order to be sure that infrastructure size is in keeping with the knowledge we have today. There was also a need to simplify its concrete application by eliminating the issue of uncertainty regarding the “sea level rise” parameter and by determining a base case scenario. Until very recently, the size of coastal infrastructure work was simply determined in order to respond to extreme events occurring in the past. From now on, if we realise that the average sea level will also go up, there will certainly be a lot more to be done. 73 But that requires a specific approach and the mix of mechanisms required to tackle the mid-term adaptation challenge that has not necessarily been put in place. As for “private investments,” government expenditure is not the only consideration and government’s sphere of action cannot be confined to the expenditure that it incurs of itself. In France, recommendations had to be open-ended in order to be sure that infrastructure size is in keeping with the knowledge we have today. The example of the energy efficiency of new buildings can be taken. In France, regulations have been beefed up considerably with the Thermal Regulation legislation enacted in 2012. To prepare the professional world for this change in regulations, incentives were first used to help a growing number of stakeholders choose solutions going beyond the performance level that was mandatory under the previous regulation. During that phase, the government made use of public budget and fiscal supports. In concrete terms, certain estimates put the additional construction induced by this regulation at an average of 5 to 7%. With knowledge of private investment in housing (brought together in the 74 “national housing accounts” published annually), the more overarching assessment of additional private investment prompted by this policy of improved energy efficiency in buildings can be estimated. Indeed we are looking here at an increase in investment, but the private stakeholders will get a return on this expenditure over time, even though there is the assumption that energy costs are open-ended, without fossil fuels becoming significantly more expensive. Other projections look at an even wider area than the projection annexed yearly to the draft finance law and outlined in detail. An example is the study done by the climate research team in the Deposit and Consignment Office. Among other things, a current research project is focusing specifically on “climate” expenditures in France (and other countries of Europe) on the aforementioned scale. They submitted their preliminary findings to the Warsaw Conference of the Parties to the Climate Convention in November 2013. The French government has furthermore just put up for consultation a white paper on funding the energy transition that will have to be driven in the decades to come. What is the French government’s staff level in charge of preparing these documents? At the DPT Climat steering stage, coordinating the 75 drafting of documents requires only a small number of persons. Last year, the Climate Change Mitigation Policy Office had only two persons working on this job, which is but a small part of all the work they do. But to explain why such a job can be handled with such a moderate time investment at the coordination level, it must be remembered that there is proper information feedback in each of the programmes. To provide a broader view, the teams in charge of coordinating the national mitigation policies have a total staff of about 20. These teams include the Department for Mitigation of the Greenhouse Gas Effect and the National Observatory on the Effects of Global Warming, the latter focusing on adaptation. Beyond their specific role in defining the national “climate” policy and keeping it moving, these teams care for the monitoring required in the framework of France’s commitments toward the European Union and the United Nations. Every four years, France submits to the United Nations a paper summarising the public policies implemented. Each year, the country’s greenhouse gas inventories are reviewed by both the European Union and the United Nations. 76 In each of the “business” directorates, there are two or three persons in charge of the consolidated budget report (synthèse budgétaire) and these persons collate all the information fed in through the business lines of each department. The staff members are but a few: only about 20 persons of all handling the budgetary missions for the processing of all financial information. They consolidate it for purposes of policy choices and work it into the ministry’s finance law. The business directorates get data from the departments in charge of implementing public policies. For instance, there are three officers working with Béatrice Lecomte at the Directorate General for Transportation, and they have counterpart officers in all departments that channel in consolidated “business” and “financial” data. management cycle, for the purpose of positioning to deal with more adverse unforeseen events, the finance law makes provision for what are referred to as “precautionary reserves.” In other words, at the beginning of the management cycle in early 2014, 7% of appropriations are frozen in each of the programmes. What mechanisms are there to encourage project managers to save money? should happen that the regulatory appropriation During the year, appropriations can be adjusted on a regulatory basis under certain restrictive conditions: With Ministry of Financeʹs decree and after consulting the finance commissions of the two assemblies, appropriations can be moved from one programme to another. Furthermore, at the beginning of the finance 77 The law on finance makes provision for what are referred to as “precautionary reserves.” In other words, at the beginning of the management cycle in early 2014, 7% of appropriations are frozen in each of the programmes. These budget packages are then reviewed at the end of the management cycle, usually around OctoberNovember. At that time, appropriations are reallocated. If it reallocations are insufficient, an amendment to the law can be used to make additional appropriations available. So, the amendment to the 2013 law on finance, now under parliamentary review, is making provision for our line ministries to receive additional appropriations for very specific operations, such as housing subsidies. 78 CONCLUSION: Possible areas of future cooperation Vietnam has a good basis for its climate change mitigation policy. However, to make it even more effective, a few areas can be explored. Ways of calculating the climate share of a project or a programme For calculating the climate share of a programme, thought can be given to the way climate expenditures are monitored in the EU budget. The EU has made it a goal to channel 20% of its expenditures into climate change mitigation for the 2014-2020 period. Work is underway to spell out these procedures. For projects eligible for support from the European Regional Development Fund (ERDF) and the European Social Fund (ESF), climate shares of 100%/ 40%/ 0% are available based on the project category. For details, see page 16 and following of this document: http://ec.europa.eu/regional_policy/what/future/pdf /preparation/fiche_categorisation_climate%20change%2 0tracking_2013_05_30.pdf20 ____________ 20. Note: This grid was designed with a relatively broad approach to what a “low-carbon” investment involves. The climate shares allowed are therefore sometimes much higher than those allowed in the DPT Climat annexed to the French state budget. E.g.: rail transport infrastructure, 40% in the EU versus 12% in the DPT, even though electricity generation in other EU countries depends much more on the use of fossil fuels than that in France. 79 In budget monitoring in France, calculation of “climate shares” is done at the scale of initiatives in the various government programmes in order to recognise the indirect contribution of certain national climate policy project clusters. The procedure is not broken down to the project level. Although technically nothing prevents this, it would result in a substantial administrative burden if it was applied from an individual assessment of the various benefits expected from the projects rather than on the basis of a project typology for which climate shares have been determined in advance. Mechanisms of inter-ministerial coordination Generic recommendations can be made, such as a sub-sector breakdown of the mitigation targets included in the green development strategy and determination of a pilot project action by action, clear sharing of responsibilities for implementation, etc. Yet, examples on which future interchange could be based are different according to the coordination aspects that the Vietnamese authorities would like to strengthen as a matter of priority. It could involve the following: - Policy steering: Putting in place an overarching policy that includes the issues associated with mainstreaming climate change in the roadmap used by all ministries. First in line are overall operating 80 principles (not specifically dealing with climate change). Implementing a national low-carbon strategy such as the one France is preparing to draw up and the compliance links that are contemplated for other planning documents could also be outlined. - Technical support: Definition of the shared technical specifications (these could be illustrated concretely in presentations for the Vietnamese partners, including determination of the “shadow” value of carbon and its use in socio-economic project assessments, setting up sector task forces under the aegis of the adaptation plan in France, etc.). - Budgetary support (for instance, in France, the DPT Climat annexed to each draft finance law plus any additional specific monitoring of projects that have contributed to the national adaptation plan). Obviously, interchange on the pitfalls and difficulties encountered would certainly be more meaningful than a purely academic interchange. Mechanisms to work the climate dimension into public policies Several mechanisms for integration of the climate dimension into public policies could be covered in more in-depth exchanges with the Vietnamese authorities. Among them is the “greening” of the tax structure. The French authorities could provide an example of how 81 a carbon tax base is already being taken into account in setting up the energy tax structure. And ecological taxation includes an incentive to behavioural change in economic stakeholders which could be a source of ideas for Vietnam. Thus, the bonus/ malus mechanisms in the automobile industry or “sustainable development” tax credits could be outlined. This is also true of the general tax on polluting activities that have had a significant impact on waste treatment and the decline of highly polluting activities such as on air quality. In the socio-economic assessment projects: Definition of the “shadow value of carbon” and factoring this aspect into the relative value of different projects can play a pivotal role (Shadow price of carbon, report of the Commission chaired by A. Quinet is available in French at the following site: http://www.ladocumentationfrançaise.fr/ var/storage/rapports-publics/094000195/0000.pdf). In studies of risk zoning, taking the probable change of weather patterns into account rather than simply considering past statistics on weather extremes (notably for the sea level) plays a pivotal role. Other levers can also be drawn upon, such as incentives to ensure that the investments ear-marked for emissions reduction are part of funding that is broadly consistent with their specific target (verification of “carbon neutrality” of operational programmes funded by the ERDF or planning contracts between the state and regions). 82 Raising the awareness of consumers and crosscompliance standards (environmentally friendly packaging) is two other mechanisms contributing to integration of the climate dimension into public policies in a broad sense. Reliable, consolidated and integrated budgetary and accounting data collection systems among the various levels of administration The ministries stressed their need to have reliable physical and financial data collection tools to brief Parliament and better steer public policy’s appropriations and thus reassure international donors regarding the use of the funds provided. France’s experience in this area could be outlined in greater detail. Our system uses a dedicated nomenclature, one that is unique, cross-departmental and relating to the public finance legislation, the relevant data being used by aggregation according to different criteria and needs, to brief Parliament (DPT) in steering the policies (with both a timeline and feedback on the reality and finality of the payments). It is cross-cutting, merging the references to public policies (one programme per policy), the implementing departments (central administration or local authority departments), the nature of the appropriations (investment, operating costs, employee costs), the purpose 83 (grant to local public authorities, to companies, subsidies for public service costs, etc.) and also highlights the activity benchmarks to round out the information. This information is coded and included in each commitment for expenditures and in each payment arising therefrom. All of this is included in the government’s finance system. The treasury and budget management information system (TABMIS) used in Vietnam with the World Bank funding could be used for this without having to develop new tools of uncertain application if they depend on the “good will” of the administrative departments alone. If it is going to work, such a database, it must be a routine tool of the departmental staff, not overburden them and yield added value for the officers in charge of putting it to use. 84 DANG Cong Khoi, Deputy Director, Legislation Department, Ministry of Finance. Tools for Budgeting, Tracking and Steering the Government’s Financial Effort to Mitigate Climate Change. LIST OF PRESENTATIONS Béatrice LECOMTE, ADETEF/ Ministry of Ecology, Sustainable Development and Energy. Mitigation of and Adaptation to Climate Change in France: Statement by TRAN Hong Ha, Deputy Minister, Ministry of Natural Resources and Environment. Policies and Measures - Tracking Expenditures. Pierre BRENDER, ADETEF/ Ministry of Ecology, Sustainable Opening statement by Rémi GENEVEY, Country Director, Development and Energy. Agence Française de Développement in Vietnam. The AFD and Climate Change Mitigation. Rémi GENEVEY/ Jean-Claude PIRES, AFD in Vietnam. Guidelines on the Fund Management Mechanism of the Support Programme in Response to Climate Change and Responsibilities of the Ministry of Natural Resources and Environment. TRUONG Duc Tri, Deputy Director, Department of Meteorology, Hydrology and Climate Change, Ministry of Natural Resources and Environment. Role and Jurisdiction of the Ministry of Planning and Investment in Funding the Climate Policy and Initial Results of the Climate Public Expenditures and Investment Review. NGUYEN Tuan Anh, Deputy Director, Department of Science, Education, Natural Resources and Environment, Ministry of Planning and Investment. Introduction to the Current Expenditures Management Mechanism and Inventory of Policies and Financial Mechanisms Relating to Climate Change Mitigation. 85 86 In charge of publication ACTING DIRECTOR - EDITOR IN CHIEF Dr. HOANG PHONG HA In charge of content VICE DIRECTOR - DEPUTY EDITOR IN CHIEF A public development institution at the centre of Dr. DO QUANG DUNG France’s cooperation system, the Agence Française de Développement (AFD) has been working for 70 years toward Copy editors: poverty alleviation and promoting development in countries MSc. NGUYEN KIM NGA of the Global South and overseas territories. By means of HOANG THU QUYNH subsidies, loans, guarantee fund mechanisms and debt NGUYEN THU HUONG reduction and development contracts, it provides funding Book designer: for projects, programmes and research work, supporting its Digital pre-press specialist: partners in developing countries through capacity building. Proof print technician: DUONG HONG MAI PHAM NGUYET NGA NGUYEN THU HUONG HOANG THU QUYNH Proof-reader: NGUYEN THU HUONG ADETEF is the international technical cooperation agency for the Ministry of Economy and Finance and the Ministry of Printing 102 copies, size 14.5x20.5cm, at Vietnam Book Printing Sustainable Development. It makes the professional skills of Joint Stock Company, 22B Hai Ba Trung, Hanoi. French public experts in these areas available to governments and Publication Plan Registration No.: 27-2015/CXB/249-124/CTQG. the public authorities of partner countries. For a number of years Publication Decision No.: 5519-QD/NXBCTQG, 13-01-2015. now, the Hanoi office has been the focal point of ADETEF’s ISBN: 978-604-57-1334-1. regional cooperation for the countries of Southeast Asia. Completed and registered in Ferbuary 2015. 87 88