Environment Spotlight May 2022
Freshfields' Vietnam Environment Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive our Vietnam M&A Spotlight, Vietnam Infrastructure Spotlight or Vietnam Competition Law Spotlight.
Balancing the environment and economic development
On 26 April 2022, the Ministry of Natural Resources and Environment (MONRE) held a conference to consult various international partners and advisors on the draft National Strategy on Climate Change. Source: Vietnam Plus
MONRE proposed three options for emissions reduction to achieve the net zero carbon target by 2050 under the NDC.
- Option 1: renewable energy will contribute 73 per cent of the total power generation of the country.
- Option 2: a lower renewable energy percentage (so as to ensure energy security) plus carbon capture and storage (CCS) solutions to be applicable from 2035.
- Option 3: includes nuclear power capacity to replace part of the coal-fired power capacity.
The decision on these options will shape the final National Power Development Masterplan (PDP8). A new proposed PDP8 was approved by the PDP8 Appraisal Committee on the same day (26 April 2022). Based on the approved plan, the MOIT will finalise the PDP8 to be submitted to the Government.
In order to achieve the net zero carbon target per the NDC, Vietnam will enforce a mandatory GHG inventory in 2022, 2030 and 2040 (applicable to emitters of 3,000 tons, 2,000 tons and 500 tons (or more) of GHG equivalent, respectively). Vietnam will start allocating annual emission quotas to relevant entities in 2026.
In Decision 450/QD-TTg dated 13 April 2022, the Vietnam Deputy Prime Minister approved the National Environmental Protection Strategy for 2030 with a vision for 2050. This complements the National Biodiversity Strategy approved in January 2022 and the National Green Growth Strategy approved in October 2021. Sources: VnEconomy, Enviliance Asia, and USDA.
Cut - Plastic bags
Vietnam’s regulations for controlling plastic waste now include one requiring retailers to use environment-friendly bags by 2025. From 2026, supermarkets and stores in shopping malls packing goods in single-use plastic bags will be fined. The rule for other shops remains to be specified. Supermarkets consume 104,000 single-use plastic bags a day on average, or 38 million a year in the country. Source: Vn Express International
Cut - Tax
The Standing Committee of the National Assembly has approved a government proposal to cut the environmental tax on gasoline by half as prices surge. The tax cut will apply to gasoline and diesel starting 1 April 2022 and will last until the end of the year. The National Assembly has already agreed to reduce the environmental protection tax on aviation fuel by half starting from 1 January 2022. Source: Vn Express International
Cut - Air pollution
Vietnam will implement a plan to eliminate fossil-fuel vehicles, tighten emission control and add more green spaces to urban areas. Aside from developing a roadmap to phase out vehicles running on gasoline, diesel or other fossil fuels, the plan will promote the use of non-motorized, eco-friendly means of transport like bicycles, electric vehicles and those running on clean and renewable energy. Source: Vn Express International
Cut - Wildlife Habitat
Dong Nai province wants to consult with UNESCO over the construction of a forest-crossing bridge and road in a biosphere reserve. The planned Ma Da Bridge and National Highway 13C will run through approximately 40km of the reserve, considered the ‘green lungs’ of the southeast. After the province receives feedback from UNESCO, it will report to the Government for further consideration. Source: Vietnam Net
“Green” industrial parks
The HCM City People’s Committee wants changes made to a proposal to convert industrial parks (IPs) and export processing zones (EPZs) into eco-industrial and high-tech zones by 2025. The city has 17 IPs, EPZs and high-tech parks covering a total area of more than 3,800 ha, and it targets having 23 ‘green’ high-tech EPZs and IPs with 6,000 ha. Source: Vietnam Plus
Vietnam is cooperating with international organisations on initiatives for low carbon imprints in the agricultural sector - one of the biggest emitters in the country. International support is crucial for Vietnam to unlock opportunities to pursue net-zero emissions targets, and the World Bank and the Ministry of Agriculture and Rural Development (MARD) are preparing to implement the “Developing a low-carbon agricultural value chain” project with a total estimated cost of US$390 million. Source: Vietnam Investment Review
Rising oil prices could help speed climate action by accelerating the shift to electric vehicles, but in Vietnam that would depend on the infrastructure. Under the pressure of gas prices along with the policy of greening the transport network, prioritising environmental-friendly vehicles, 2-wheel electric vehicle dealers are expected to continue to grow in the near future. Domestic electric motorbikes are growing well at about 20 per cent per year, but still only account for about 3 per cent of the total number of motorbikes sold. Source: Vietnam Investment Review
Some energy experts are recommending that Vietnam should restart its nuclear energy program by 2030 to reach carbon emission neutrality by 2050. In 2009, Vietnam had announced plans to build two nuclear power plants in the south-central province of Ninh Thuan at a cost of several billion dollars, but the National Assembly shot down the proposal in 2016 saying the nation could not afford it. Source: Vn Express International