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What could drive Vietnam to go “green” and “clean”? A policy analysis of recent climate- and environment-related national reforms Anne Zimmer with Michael Jakob & Jan Steckel EntDekEn Project meeting 16 October 2012 2 A game theoretical perspective: Is unilateral climate policy rational? • Game theory: ▫ Costs for emissions mitigation are born individually while benefits are shared globally ▫ Individual contribution to emissions is small compared to global sum (benefits 0, costs >0) Individual mitigation efforts w/o global agreement are irrational • No new comprehensive global environmental agreement in sight • Kyoto Protocoll: Developing countries as non-Annex I countries are exempted from obligations Why do we nevertheless observe national climate policy activities in more and more developing countries? 3 What could drive Vietnam to go “green” and “clean”? - Outline 1. 2. 3. 4. Background information on Vietnam Research question Details on the recent „green“ policies Exemplary analysis: potential drivers for Renewable Energy Policy 5. Challenges 6. Methodology & sources 7. Next steps 4 Background: About Vietnam • Political Reform Process “Doi Moi“ (1986) ▫ Transition from centrally planned economy to market economy • Transition from low income country to middle-income country (in 2009) ▫ One of the poorest countries in the world in 1980s ▫ Economic growth rates (2000 -2010) between 5% and 8% ▫ Reduction in poverty rates from 37.8% (1998) to 14.5% (2008) [source: HDR – UNDP 2011] 5 Background: About Vietnam CO2 emissions have more than doubled over past decade Power demand expected to grow by 10% to 11% per year until 2025 [source: UNDP 2012] Policy aim: „Modern Industrialized Nation by 2020“ 6 Background: Overview on “green” policies in Vietnam • National Strategy for Climate Change • Vietnam Green Growth Strategy • Reform of the Power Sector ▫ Law on economical and efficient use of energy ▫ National Master Plan for Power Development for 2011-2020 (MP VII) • Environmental Protection Tax 7 Research Question What motivates a developing country like Vietnam to introduce national environmental and climate policy measures? • Actors: Who are the different stakeholders and what are their motivations? • Determinants: What are the factors on different policy fields and levels (international, national and regional)? • Policy process: How did the policies evolve? Why does the green policy framework look the way it does at the moment? 8 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Fiscal Policy Environmental Protection Tax [Ministry of Finance] Climate Policy Energy Policy National Strategy on Climate Change [Ministry of Natural Resources and Environment] Economic Policy Vietnam Green Growth Strategy [Ministry of Planning and Investment] Reform of the Power Sector [Ministry of Industry and Trade] Fossil Fuel Fiscal Policy Reform 9 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Fiscal Policy Environmental Protection Tax [Ministry of Finance] Climate Policy Energy Policy Economic Policy National Strategy on Growth C „designed basedVietnam on level Green of environmental Climate Change Strategy pollution and degradation caused by [Ministry of Natural taxable object“[Ministry of Planning and Resources and Investment] Environment] C Tax revenue dedicated to ecological purposes only Law: 2010, tax: Jan 2012 CReform No exemptions (e.g.Sector for kerosene) of the Power [Ministry of Industry and Trade] D Tax rates very low (lower boundary of range in law) Taxable subjects: Fossil Fuel Fiscal Policy Reform • Gasoline, coal, oil, grease, D Partially only substitute pre-existing fees • Others (e.g. plastic bags, D Low taxation of coal relative to carbon herbicites, pesticides) content 10 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Fiscal Policy Climate Policy Environmental Protection Tax [Ministry of Finance] National Strategy on Climate Change [Ministry of Natural Resources and Environment] Launched in March 2012 Energy Policy Economic Policy Vietnam Green Growth Strategy [Ministry Planning and Policy shift of from Investment] adaptation only (NTP-RCC 2008) to adaptation plus mitigation actions (but still Reform of the Power Sector main focus on adaptation) [Ministry of Industry and Trade] Announces actions on e.g. • Increasing forest coverage Fossil Fuel Fiscal Policy Reform • Promoting renewable energy • Early warning & monitoring network 11 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Climate Policy Fiscal Policy Submitted to government in June 2012 National Strategy on Climate Change Protection Tax Restructure economy (reduce GHG intensity [Ministry of Natural of[Ministry GDP) of Resources and Finance] Promote the use of clean and renewable Environment] energy Objectives: Environmental • • • Energy Policy Economic Policy Vietnam Green Growth Strategy [Ministry of Planning and Investment] Promote sustainable lifestyle & consumption Reform of the Power Sector [Ministry of Industry and Trade] [preliminary] climate policy targets: by 2020: reduce energy consumption per capita by 2.5 - 3% per year FossilGHG Fuel emissions Fiscal Policy Reform reduce intensity by 10-15 % by 2030: reduce total GHG emissions 2-3 % per year by 2050: green energy and technology will be widely used [source: Presentation of Ministry of Planning and Investment, May 2012] 12 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Fiscal Policy Climate Policy Energy Policy Economic Policy National Strategy National Master Plan for Policy Instruments: Environmental Vietnam Green Growth on Climate Change Protection Tax Power Development • Feed-in tariff for windStrategy power: 7.8 US$ [Ministry of Natural [Ministry of [Ministry of Planning and (July 2011) Resources andcents/kWh Finance] • Develop competitive electricity market • targets for renewable Energy (RE): Environment] Investment] Reform of the Power Sector [Ministry of Industry and Trade] Increase RE as % of total electricity produced from Fossil Fuel Fiscal Policy Reform 3.5% (2010) to 4,5% (2020) and to 6% (2030) 13 Details on policies and main actors: Vietnam‘s “Green Economy" Framework Fiscal Policy Climate Policy Energy Policy Economic Policy Status Quo: National Strategy on impacts of cut in fossil fuel subsidies: Environmental Vietnam Green Growth Climate Change several studies recommend Vietnam‘s Central Protection Tax Government Strategy cuts in [Ministry of Natural subsidies[Ministry + levy taxof Planning and [Ministry of • caps electricity and fossil fuel Resources and (e.g. UNDP 2012) Finance] Investment] prices at low level Environment] Vietnam‘s government seems to seek • compensates (state-owned) policy advice concerning this topic energy enterprises for losses (indirect) fossil fuel Reform of Power Sector the Plans for reform not yet [Ministry of Industry and Trade] subsidies officially announced Fossil Fuel Fiscal Policy Reform 14 An exemplary analysis of drivers: Renewable Energy Policy as cross-cutting issue National Strategy on Climate Change [MoNRE] Vietnam Green Growth Strategy [MoPI] National Master Plan on Power Development (MPVII) [MoIT] New and Renewable Energy Policy of Vietnam: Targets and Measures 15 Potential motivation for Renewable Energy Policy Underlying Policy objective Level • Fossil fuel price volatility • Threat of becoming coal importing country • Energy security and National independence • Exploiting high potential for RE • International competitiveness • Studies on high climate change vulnerability • Increase in climate-related desasters • Control growth in own emissions • Signal to animate international climate negotiations National • Bad air quality • local pollution • Improve local environment • Reduce health impacts National & regional • Decentralized energy access for remote areas • Raise living standards in rural areas / reduce migration to city Regional • Negative headlines about Vietnam in the press • Politcal action in neighbor countries • Reconstitute „green“ reputation International • Policy transfer via development aid • Gain funding and expertise International Internat./ regional 16 Challenges ▫ Recency of most policies: Subject to frequent changes Instruments and way of implementation not clear yet Enforcement not clear ▫ Complexity of „green“ policy framework Overlapping responsibilities of ministries and resorts Different levels of policy making: international, national & regional level Interactions between different policy instruments and targets ▫ Transparency and availability of information (in English) is low 17 Methodology and Sources Country Case Study based on synthesis of literature and qualitative Interviews • Literature ▫ journal articles, IO/NGO reports, newspapers, VN government homepages, legal texts • Qualitative interviews with stakeholders ▫ Vietnamese ministries & institutions (MoF, MoNRE, MPI, VEA, ISPONRE) ▫ IOs and NGOs (e.g. UNDP) ▫ National Development Agencies (GIZ, Danida) • Cooperation with expert from BMU and GIZ local office Vietnam 18 Next Steps • Until end of this year: ▫ Prepare interviews and background for study ▫ Further define research design and structure / work on theoretical background • February / March 2013: ▫ Conduct interviews in Vietnam together with Kai Schlegelmilch 19 Cám ơn Thank you ! Looking forward to your comments! 20 Sources used for Presentation • NCCS (2011): National Climate Change Strategy, Challenges and Opportunities of Climate Change, Prime Minister of Vietnam. • UNDP (2012): Fossil Fuel Fiscal Policies and Greenhouse Gas Emissions in Vietnam, United Nations Development Program, May 2012. • HDR- UNPD (2011): Human Development Report 2011. • National Master Plan for Power Development for 2011 – 2020 period with vision to 2030, Vietnemese Prime Minister, July 2011. 21 Back-up: Climate Change Vulnerability • Rise in frequency of local climate related extreme events • Climate related shocks & disasters have resulted in 9500 dead or missing people and have cost 1.5 % of GDP annually over last decade (2001-2011) • International and national studies on future Climate Change impacts for Vietnam ▫ One of the most vulnerable countries to Climate Change worldwide ▫ E.g.: Sea level rise of 1 m 40% of Mekong Delta flooded [source: NCCS 2011] 22 BACK-UP: more environment-related policies ▫ 2002: foundation of Vietnam Environment Protection Fund (VEPF) ▫ 2004: establishment of National Sustainable Development Council ▫ Taxes on purchase of cars and motorcycles ▫ national strategy for environmental protection by 2020 ▫ 2008: National Target Program to Respond to Climate Change (NTP-RCC) 23 Back-up: Other potential drivers • Influence from abroad through development aid and consulting ▫ GIZ, Danida, Sida, …(policy transfer) ▫ World Bank, UNDP • Influence of individual politicians • Increase in (social and political) awareness for environmental and climate issues ▫ Signing of Kyoto Protocoll (Non-Annex I-country ) ▫ IPCC Reports, Stern Review ▫ Higher local media coverage