Special edition

Global efforts to combat anthropogenic climate change are already leading to significant changes both in aid/financial assistance and investments flows as well in the nature of these flows.

The Ministry of Planning and Investment (MPI) has been working on mainstreaming sustainable development and developed relevant socio-economic development plan (SEDP) indicators. Climate financing could enable Vietnam to improve the growth quality and meet sustainable development indicators, write Nguyen Tuan Anh, Johan Kiet and Nguyen Dieu Trinh.

A careful eye must be placed on the environment as Vietnam’s rapid development gathers pace

Green growth will enable the implementation of current commitments and addressing challenges of future development.

The related additional finance enhances progress on improving environmental management and generates new employment and growth while contributing to global climate change mitigation efforts as outlined in the Cancun accords. Domestically, Vietnam has recently reaffirmed commitment to improved quality of growth.

The MPI is leading national Sustainable Development, the development of a Green Growth/Low Carbon Strategy and the development of the SEDP 2011-2015 in which emphasis is giving on climate change and environmental mainstreaming, which are rooted in its mandate. While sustainable development represents a paradigm linking economy, society and environment, a green growth strategy proposes a policy framework. In that sense, green growth is more concrete.

Sustainable Development, Green Growth and Climate Change

The principles of sustainable development reflect long-term aspirations, while green growth combines efforts to exploit opportunities to shape a more robust economic recovery in the short-term with promoting new, greener sources of growth over the longer-term. Green growth policies highlight the links between economic and environmental challenges to identify the best conditions for growth. There is no conflict between the two: a green growth strategy contributes to sustainable development by providing an actionable policy framework to generate these conditions. The aim of a green growth strategy is to provide a clear framework for how countries can achieve economic growth and development while preventing costly environmental degradation, climate change and inefficient use of natural resources.

China proves that this works. Its renewable energy programme is currently the largest producer of renewable energy and is achieving significant progress in improving environmental performance by replacing coal with renewables. This underlines that economic growth, improved environmental management and low carbon development are reachable and even feasible.

The ADB estimates damages of flooding for $49 billion by 2050 based on gross domestic product (GDP) losses.

Developing Climate Change Financing Framework

Climate change negotiations are leading to additional international financial assistance. This funding covers both efforts to adapt as well to mitigate climate change. Vietnam has associated with the "Copenhagen accord". Thus, Vietnam is not obliged to reduce emissions but commits to contribute to global efforts.

This brings us to the key point. Climate change financing towards green development enables Vietnam to accelerate the transition towards high quality sustainable growth. It is likely that green-development options have wider implications. The import of hybrid cars, implications of REDD-plus on wider spatial planning and development, energy efficiency policy development are economy wide changes.

This requires clear and more evident planning to ensure that investments see maximum environmental, climate change and financial returns such as:

• CDM (Clean Development Mechanism) projects are enabling Vietnamese companies to assess green technology. Most Vietnamese projects are focusing on waste water treatment and land fill methane capturing which have significant sustainable development impacts.
• The work on the Energy Efficiency Law requires the introduction of new industrial standards. The Energy Efficiency Law and the National Target Programme aim at reducing energy use by 5 per cent annually.
• REDD-plus and Payment of Environmental services support efforts to enhance the forest cover to 42.5 per cent of total land area. This will provide economic incentives to initiate sustainable development at local level and provide options for biodiversity conservation while storing carbon.
• Climate financing is deemed to increase in importance which will impact the management of the investment flows, i.e. domestic funds, including national and provincial budgets and the national development bank; foreign direct investment to support innovation and green technology; and the carbon market (now represented by the CDM) and bilateral and multilateral development mechanisms.
• Mainstream sustainable development and climate change in regional master-plans in the Mekong regions and the North Eastern region which are vulnerable.
• Initiate studies on low carbon climate resilient development pathways. The aim is to understand what the implications are for overall economic growth and human development in the country, thus to understand what economic and sustainable development means.
• The development of a green/growth low carbon strategy and National Appropriate Mitigation Action (NAMA) development. These NAMA can be developed by sectors and subsectors such as the oil and gas sector, power generation, cement and transport to access external financial assistance. NAMA will generate co-benefits such as improved air quality, water and biodiversity benefits.

These activities underpin the foundation of new development paths. To ensure that a low carbon growth path ensures significant environmental management co-benefits and addresses issues such as air and water quality, careful planning is required.

Development Planning, Climate Change and Environmental Planning

• The role of planning is important to ensure that the response to climate change enhances competitiveness and further growth. Already, the following is under development:
• The next SEDP includes an indicator on carbon intensity of growth (part of the MDGs). Vietnam is not required to bring down emissions but green growth provides interesting opportunities to improve environmental management. This includes:

1. Provide planners at local level the tools to cope with the current climate change impacts;
2. Create the foundation for industrial innovation and up-scaling of green investments;
3. Link mitigation with adaptation efforts through improved management of coastal wet land areas, thus addressing land loss and salination; and
4. Further strengthen the use of impact appraisal tools but widen their scope. This requires: Improved strategic environmental assessment circulars and related guidelines and tools; and add additional elements to Strategic Environmental Assessment (SEA) plus such the above mentioned carbon stock management and green house gas emissions inventory mechanism at provincial level.

• Further develop a policy framework to improve environmental standards for the industry and building codes to stimulate the production of energy efficient equipment and energy efficient building.
• Mobilise support through markets for climate change response efforts and sustainable development. Market based mechanism have shown to reduce risks of small holders to disasters through weather index based micro insurance.

These development options will have significant benefits for environmental management as are emerging in other countries. The international climate finance mechanism has enabled small scale application. The Sustainable Development Strategic Orientation combined with international climate finance through UN-REDD and the clean technology fund shows that in the case of Vietnam this is promising.

Conclusions

During this decade we have seen significant achievements in environmental management. The sustainable development framework environmental policies are being made operation at local level. The rapidly evolving environmental management legal framework has started to address some of the key environmental issues but needs refinements. Climate financing and the investment in adaptation could enhance its effectiveness.

The emerging response to climate change thus has to be stronger rooted in the existing sustainable development framework. Climate financing has to generate environmental co-benefits to ensure that Vietnam meets its SEDP set sustainable development targets, to which a climate change mainstreaming can contribute.