Climate change response from vietnam’s commitments under evfta and cptpp to its domestic implementation

HO CHI MINH CITY UNIVERSITY OF LAW INTERNATIONAL LAW FACULTY -*** PHẠM BÁ PHONG STUDENT ID: 1853801012155 CLIMATE CHANGE RESPONSE: FROM VIETNAM’S COMMITMENTS UNDER EVFTA AND CPTPP TO ITS DOMESTIC IMPLEMENTATION BACHELOR THESIS School year: 2018 - 2022 Supervisor: LL.M Nguyen Thi Kim Cuc Ho Chi Minh City - 2022 DECLARATION I declare that this thesis is the result of my research, which is conducted under the supervision of LL.M Nguyen Thi Kim Cuc, ensures honesty, and complies with rules and regarding quotation, the note of references Therefore, I hereby take full responsibility for this declaration LIST OF ABBREVIATIONS Abbreviations COP26 CPTPP DAG Contents 26th United Nations Climate Change Conference of the Parties Comprehensive and Progressive Agreement for Trans-Pacific Partnership Domestic advisory group Decree No 06/2022/ND-CP of the Government on mitigation of green Decree No 06/2022/ND-CP house gas (GHG) emissions and protection of ozone layer dated 07 January 2022 EU European Union EVFTA EU-Vietnam Free Trade Agreement FTA Free trade agreement GHG Greenhouse gas ICAP IPCC The International Carbon Action Partnership Intergovernmental Panel on Climate Change LEP Law on Environmental Protection MEA Multilateral environmental agreements MONRE Montreal Protocol Ministry of Natural Resources and Environment Montreal Protocol on Substances that Deplete the Ozone Layer NDC Nationally determined contributions TPP Trans-Pacific Partnership Agreement UN UNFCCC United Nations United Nations Framework Convention on Climate Change TABLE OF CONTENTS INTRODUCTION 1 Problem statement Literature review Purpose of the study Objectives and Scope of the study 4.1 Objectives of the study 4.2 Scope of the study Research methodologies Scientific and practical values of the thesis Thesis structure CHAPTER 1: CLIMATE CHANGE RESPONSE COMMITMENTS UNDER EVFTA AND CPTPP 10 1.1 Theoretical issues relating to climate change and climate change response 10 1.1.1 Definition of climate change 10 1.1.2 Causes and impacts of climate change 12 1.1.3 General understanding of climate change response 14 1.2 Climate change response commitments under EVFTA and CPTPP 16 1.2.1 The inclusion of climate change response commitments under free trade agreements 16 1.2.2 Climate change responses commitments under the EVFTA 19 1.2.3 Climate change response commitments under the CPTPP 27 CONCLUSION OF CHAPTER 31 CHAPTER 2: CLIMATE CHANGE RESPONSE PROVISIONS UNDER VIETNAMESE LAW AND RECOMMENDATIONS FOR VIETNAM 32 2.1 Climate change response provisions under Vietnamese law 32 2.1.1 General review of Vietnamese law and policy on climate change response 32 2.1.2 Evaluations 42 2.2 Recommendations for Vietnam 46 CONCLUSION OF CHAPTER 52 THESIS CONCLUSION 54 BIBLIOGRAPHY INTRODUCTION Problem statement Climate change has been recognized as one of the biggest challenges of our times threatening both regional and global security as well as diminishing the significant development achievements of humanity at present and in the future According to United Nations (UN), the Earth is now about 1.1oC warmer than it was in the late 1800s and the last decade (2011-2020) was the warmest on record2 Following this, there exists various consequences of climate change such as intense droughts, water scarcity, rising sea levels, flooding, melting polar ice and declining biodiversity Particularly, in 2021, Vietnam witnessed a relatively high average temperature with 24.6oC, 0.7oC higher than usual Moreover, Vietnam has suffered from 12 storms and tropical depressions causing more than 40 heavy rains and widespread flooding3 Besides, although climate change may be a result of natural long-term shifts in temperatures and weather patterns, human activities has been the main driver of climate change since the 1800s4, primarily due to burning fossil fuels like coal, oil and gas Acknowledging climate change and its severe impacts to human lives, countries has gravitated towards signing or participating in international agreements on environmental protection, including climate change response With respect to the global frameworks on climate change response, Vietnam is a constituent member of the United Nations Framework Convention on Climate Change (UNFCCC)5 which For example, people living in small island nations and other developing countries are vulnerable to climate impacts when, due to conditions such as sea-level rise and saltwater intrusion, whole communities have had to relocate and suffer famine United Nations, “What is climate change?”, [https://www.un.org/en/climatechange/what-is-climate-change] (accessed on 24 April 2022) Phan Hau, “Climate change makes weather and natural disasters abnormal and irregular”, [https://thanhnien.vn/bien-doi-khi-hau-khien-thoi-tiet-thien-tai-dien-bien-di-thuong-trai-quy-luatpost1451345.html] (accessed on 24 April 2022) United Nations, supra note The United Nations Framework Convention on Climate Change (UNFCCC) opened for signature at the “Rio Earth Summit” in 1992 entered into force on 21 March 1994 Further information available at: UNFCCC, “What is the United Nations Framework Convention on Climate Change?”, [https://unfccc.int/process-and-meetings/the-convention/what-is-the-united-nations-framework-conventionon-climate-change] (accessed on 20 may 2022) was the first global agreement on climate change and possesses near-universal membership with 197 Parties Furthermore, within the UNFCCC framework, Vietnam is also a member of two international agreements, namely the Kyoto Protocol6 and the Paris Agreement7 Regarding Paris Agreement, at the end of the 26th United Nations Climate Change Conference of the Parties (COP26)8 hosted in Glasgow on 31 October – 13 November 2021, the Paris Agreement target of limiting global warming to 1.5 degrees Celsius was kept alive and the Paris Agreement rulebook was completed9 Notably, at COP26, Vietnam delivered strong commitments which include reaching net-zero carbon emission target by 2050, stopping deforestation by 2030 and phasing out coal-fueled power generation by 204010 In addition to participating in international agreements on climate change, Vietnam, similar to other nations, has been striving to incorporate climate change response provisions in regional trade agreements, particularly, the free trade agreements (FTAs)11 In this context, Vietnam has become a constituent member of two new-generation FTAs 12 , namely EU-Vietnam Free Trade Agreement (EVFTA) 13 and Comprehensive and Progressive Agreement for Trans-Pacific The Protocol was adopted on 11 December 1997 and it entered into force on 16 February 2005 Further information available at: UNFCCC, “What is the Kyoto Protocol?”,[https://unfccc.int/kyoto_protocol](accessed on 12 June 2022) The Paris Agreement was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on November 2016 Further information available at: UNFCCC, “The Paris Agreement”, [https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement] (accessed on 12 June 2022) Conference of the Parties (COP) is a global climate summits and COP26 which took place in Glasgow means 2021 was the 26th annual summit Further information available at: European Commission, “COP26: EU helps deliver outcome to keep the Paris Agreement targets alive”, [https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6021] (accessed on 12 June 2022) 10 Dezan Shira & Associates, “COP26 and Climate Change: Vietnam’s Commitment to Reducing Emissions”, Vietnam Briefing, [https://www.Vietnam-briefing.com/news/cop26-climate-change-Vietnamscommitment-reducing-emissions.html/] (accessed on 21 December 2021) 11 In general, a free trade agreement (FTA) is an agreement between two or more countries where they mutually agree on certain obligations that affect trade in goods and services, intellectual property rights, environmental protection, etc 12 In general, new-generation free trade agreements (FTAs) are FTAs that not only include traditional trade provisions but also other non-trade provisions such as environmental protection and labor 13 The EVFTA was signed on 30 June 2019 and approved by the Vietnamese National Assembly on 08 June 2020 It came into force on 01 August 2020 Further information available at: Center for WTO and Partnership (CPTPP) 14 in order to not only create solid foundations for the integration into global supply chains but also promote universal standards such as environmental protection and labor, including climate change response In general, the two FTAs aim to promote sustainable development, including environmental protection and responding to climate change, as well as reaffirm the Parties’ commitments to comply with international agreements such as the UNFCCC or the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol)15 By having made strong commitments at COP26 and participated in the above FTAs, Vietnam is willing to meet the full compliance with international agreements as well as the EVFTA and the CPTPP in order to fulfill the climate change response commitments Following this, Vietnam must amend and/ or issue suitable policies and legal documents On 17 November 2020, the National Assembly of the Socialist Republic of Vietnam adopted the Law on Environmental Protection (LEP) 2020 effective on 01 January 2022, replacing the Law on Environmental Protection 2014 Although the new law makes appropriate amendments and provides new provisions to comply with the international climate response commitments, there still exists certain drawbacks that need to be addressed and improved In this research, the author concentrates on three different aspects to make recommendations for Vietnam International trade - Vietnam Chamber of Commerce and Industry, “Vietnam - EU (EVFTA)”, [https://wtocenter.vn/fta/199-Vietnam eu-evfta-/1] (accessed on 12 June 2022) 14 The CPTPP was signed on 08 March 2018 in Chile, being the result of a process of effort by all members after the United States withdrew from the Trans-Pacific Partnership (TPP) The Agreement officially came into force on 30 December 2018 for the first six countries and 14 January 2019 for Vietnam Further information available at: Ministry of Industry and Trade of Vietnam (MOIT), “General introduction on the CPTPP”, [http://cptpp.moit.gov.vn/default.aspx?page=news&do=detail&category_id=8be36248-117a-4530814c-555746b31c92&id=fd3872ae-b8f7-4e46-bd8a-141a8b522a2d] (accessed on 12 June 2022) 15 The Montreal Protocol on Substances that Deplete the Ozone Layer is a multilateral environmental agreement that regulates the production and consumption of ozone depleting substances More information available at: United Nations Environment Programme, “About Montreal Protocol”, [https://www.unep.org/ozonaction/who-we-are/about-montreal-protocol] (accessed on 20 June 2022) regarding its domestic implementation, namely the development of domestic carbon market, the promotion of renewable energy and the protection of ozone layer16 Firstly, with respect to the development carbon market, it is widely acknowledged that carbon market has been a major component of responding to climate change17 Vietnam is also concentrating on the operation of this market in the near future 18 In the EVFTA, the Parties acknowledges the promotion of domestic and international carbon markets [Article 13.6(2)(b)], while the LEP 2020 19 only contains general provisions on the construction, operation and promotion of such market Therefore, it is necessary to research and draw recommendations where suitable on this matter Otherwise, Vietnam will not be able to construct and operate the domestic carbon market, which is the foundation for integration in international carbon market Secondly, in terms of the promotion of renewable energy, developing renewable energy sources in order to replace traditional energy can be consider as a sustainable mean that contribute to mitigate climate change 20 The EVFTA also provides that Parties acknowledges the promotion of energy efficiency, lowemission technology and renewable energy [Article 13.6(2)(c)] However, the development of renewable energy in Vietnam has not yet been regulated by a stable and long-term legal framework, which causes difficulties in fulfilling the climate change response commitments under EVFTA as well as effective domestic implementation of such commitments in Vietnam 16 The development of carbon market and the promotion of renewable energy are regulated under the EVFTA, while the protection of ozone layer is provided under the CPTPP 17 The World Bank, “What You Need to Know About Article of the Paris Agreement”,[https://www.worldbank.org/en/news/feature/2022/05/17/what-you-need-to-know-about-article6-of-the-paris-agreement] (accessed on 20 June 2022) 18 To Duc Huy and Hoang Anh, “Vietnam will have domestic carbon market in 2028”, [https://nongnghiep.vn/viet-nam-se-co-thi-truong-cac-bon-trong-nuoc-tu-nam-2028-d306939.html] (accessed on 10 June 2022) 19 The LEP 2020 is also guided by a recently issued Decree which is the Decre (BỔ SUNG) Although there is a guidance document, the legislations regarding domestic carbon market in Vietnam still leaves room for improvement 20 Moomaw, W et al., “Renewable Energy and Climate Change”, [https://www.ipcc.ch/site/assets/uploads/2018/03/Chapter-1-Renewable-Energy-and-Climate-Change-1.pdf] (accessed on 13 June 2022) In another aspect, the Vietnam’s government should adopt a Decision appproving the national MRV system to have a leading MRV system to create basis for the establishment of MRV system at all levels and sectors In this context, Vietnam can study from the EU Under EU’s legal framework on carbon market, there is a concept of ETS compliance cycle containing the annual procedure of monitoring, reporting and verification (MRV), together with all the associated processes Following this, annually, operators must submit an emissions report The data for a given year must be verified by an accredited verifier by 31 March of the following year Once verified, operators must surrender the equivalent number of allowances by 30 April of that year The rules related to this compliance cycled are prescribed under two regulations, namely the Monitoring and Reporting Regulation (MRR) and the Accreditation and Verification Regulation (AVR)140 Finally, yet importantly, Vietnam should establish a sanction regime within the legal framework on carbon market In this context, experience from the EU and South Korea will be valuable Within the EU-ETS, if a participant's emissions exceed its allocated allowances, it can be fined 114.22 USD/ton of CO2 and its information will be published in the business community In South Korea’s carbon market, after the GHG inventory is audited and reported to the government by a third party, GHG emission quotas will be allocated to participants according to regulations If a participant's emissions exceed its allocated allowances, it will be fined up to 10.000 won/ ton of CO2 and brought in the management list of the GHG Target Management System (TSM)141 simultaneously By threatening the benefits, especially economic ones, of the participants, an effective sanction regime can help orient the activities of entities taking part in the carbon market, thereby assisting in an effective carbon market 140 For more information, see: https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-euets/monitoring-reporting-and-verification-eu-ets-emissions_en (accessed on 22 June 2022) 141 Vo Trung Tin and Nguyen Quoc Dat, “Environmental legal provisions on carbon market and challenges when implementing in Vietnam”, Conference on Climate Change and Legal Issues, hosted by Ho Chi Minh City University of Law on 15 December 2021 at Ho Chi Minh University of Law, p.93-107 49 Third, in terms of developing renewable energy, it is reasonable that a new law on renewable energy should be adopted to establish a stable legal framework on the development of renewable energy Regarding this issue, Vietnam can study from foreign legal systems such as Japan and China In Japan, the government has been aware of the role and importance of clean energy for the nation’s socio-economic development142 Following this, since 2008, the Japanese government has implemented policies supporting loans to purchases houses using renewable energy with a maximum repayment time period of 10 years Among the households within the scope of the policies, those reconstructing their houses to transit to using solar power are entitled to borrow a maximum amount of up to million yen, equivalent to nearly 5,000 USD143 In 2012, Japan has adopted the FIT system based on the Act on Special Measures Concerning Procurement of Renewable Energy Electricity to encourage the development of renewable energy The act was amended and renamed the Act on Special Measures Concerning the Promotion of the Use of Renewable Energy Electricity (the Renewable Energy Act) in June 2020 introducing the new feed-in premium (FIP) system which coexists with the FIT system 144 Generally, the FIP system is intended to “upgrade the renewable energy electricity business and promote its integration into the general electricity market” 145 Moreover, the establishment of the new system aims to “expand renewable power capacity without subsidiaries, encourage competition and reduce the cost burden on consumers under the current FIT system”146 142 Vu Ha and Lan Anh, “Recommendation for early drafting law on renewable energy”, [https://quochoi.vn/tintuc/pages/tin-hoat-dong-cua-quochoi.aspx?ItemID=61383#:~:text=Lu%E1%BA%ADt%20N%C4%83ng%20l%C6%B0%E1%BB%A3ng%20 t%C3%A1i%20t%E1%BA%A1o,l%C6%B0%E1%BB%A3ng%20gi%C3%B3%20c%E1%BB%A7a%20n% C6%B0%E1%BB%9Bc%20n%C3%A0y.] (accessed on 25 June 2022) 143 Vu Ha and Lan Anh, supra note 142 144 Yusuke Sugihara, “Renewable energy regulations in Japan”, [https://law.asia/renewable-energyregulations-japan/] (accessed on 24 June 2022) 145 Yusuke Sugihara, supra note 144 146 Motoko Hasegawa, “Japan’s FiP renewables system likely to exclude biomass”, [https://www.argusmedia.com/en/news/2112632-japans-fip-renewables-system-likely-to-exclude-biomass] (accessed on 24 June 2022) 50 In China, since 2006, the People’s Republic of China has adopted law on renewable energy which provided the general conditions for renewable energy to become a more important energy source in China147 Following this, the nation has adjusted the price of electricity generated from renewable sources and cancelled plans on deploying coal-fired power plant projects; encouraged foreign investors to invest in clean energy production To sum up, the new law on renewable energy in Vietnam should include at least following contents: stipulating general principles on developing renewable energy, rights and obligations of relevant entities, responsibilities of relevant competent authorities, etc.; establishing a stable, framework to attract investments from all economic sectors, especially private ones, in developing renewable energy; adopting a suitable framework with detailed provisions governing the participation of private sector to the construction of the power grid, relieving the Government from the pressure to enhance the electricity transmission capacity of the country only by itself Furthermore, since the provisions on developing renewable energy are still scattered across many legal documents such as Electricity Law and Law on Economical and Efficient use of energy, the new law is expected to create a consistent framework for further efficient implementation 147 IEA/IRENA, “Renewable Energy Law of the People’s Republic of China”, [https://www.iea.org/policies/3080-renewable-energy-law-of-the-peoples-republic-of-china] (accessed on 24 June 2022) 51 CONCLUSION OF CHAPTER The second chapter has analyzed the legal and policy framework of Vietnam as well as legislations of some foreign legal systems to address the limitations regarding climate change response, thereby offering some recommendations for Vietnam The content of this chapter has the following remarkable points: First, regarding the adoption of a new law on climate change By analyzing the current legal and policy framework of Vietnam as well as legislations of the EU and South Korea on climate change response, the new law on climate change in Vietnam should establish a consistent and transparent framework in line with the MEAs to which Vietnam is a party in general and the EVFTA, CPTPP in particular This framework shall promotes climate change response, including the development of carbon market, the promotion of ozone layer protection and renewable energy; stipulates sanctions to orient activities on responding to climate change, reporting obligations of public and private sector on GHG inventory; regulating provisions on rights, obligations and responsibilities of organizations as well as individuals in proactively responding to climate change; improving provisions on public consultation and enhancing public participation Second, regarding specifically the operation and development of carbon market, the Article 139(1) of the LEP 2020 should be rephrased, there should be a clear explanation of activities occurring within the carbon market Besides, a Decision appproving the national MRV system should be adopted and a sanction regime within the legal framework on carbon market should be established Regarding the sanction regime, Vietnam can learn from experiences of the EU and South Korea Finally, yet importantly, regarding the adoption of a new law on renewable energy, the new law should establish a stable framework to attract investment from private sector and govern the participation of this sector in constructing the power grid, the new law also should create a consistent framework for further efficient 52 implementation In this regard, Vietnam can learn from experiences of Japan and China 53 THESIS CONCLUSION In line with global efforts in responding to climate change, Vietnam has participated in the EVFTA and the CPTPP to not only create solid foundations for the integration into global supply chains but also promote environmental protection, including climate change response In the context of climate change response, both the EVFTA and the CPTPP provides general obligations with which members shall comply, as well as creates pressure on members to effectively implement these obligations Following this, Vietnam has demonstrated the country’s willingness in implementing the climate change response commitments under the EVFTA and the CPTPP by making strong commitments at COP26 and adopting the LEP 2020 as well as many other legal documents and policies However, there still exists limitations in the legal framework of Vietnam on climate change response that need to be addressed, especially in the development of domestic carbon market, promotion of renewable energy and protection of ozone layer Therefore, this thesis, by analyzing the legal and policy framework of Vietnam as well as legislations of some foreign systems on climate change response, offers some recommendations for the effective implementation of climate change response commitments under the EVFTA and the CPTPP as follows: First, it is necessary to adopt a new law on climate change By analyzing the current legal and policy framework of Vietnam as well as legislations of the EU and South Korea on climate change response, the new law on climate change in Vietnam should establish a consistent and transparent framework with specific provisions such as sanctions to orient activities on responding to climate change, public consultation and public participation Second, regarding specifically the operation and development of carbon market, some provisions should be amended, a Decision appproving the national MRV system should be adopted and a sanction regime within the legal framework on carbon market should be established Regarding the sanction regime, experiences 54 from the EU and South Korea demonstrate that an effective sanction regime can help operate the carbon market effectively Finally, yet importantly, a new law on renewable energy should be adopted The new law should establish a stable framework to attract investment from private sector and govern the participation of this sector in constructing the power grid, the new law also should create a consistent framework for further efficient implementation In this regard, experiences from Japan and China indicate that a stable and consistent framework help promote the development of renewable energy 55 BIBLIOGRAPHY A LEGAL DOCUMENTS – INTERNATIONAL AGREEMENTS v Legal documents The Construction Law (Law No 50/2014/QH13) on 18 June 2014 (amended in 2020) The Decree No 06/2022/ND-CP of the Government on mitigation of green house gas (GHG) emissions and protection of ozone layer dated 07 January 2022 The Hydrometeorology Law (Law No 90/2015/QH13) on 23 November 2015 The Land Law (Law No 45/2013/QH13) on 29 November 2013 The Law on Environmental Protection (Law No 72/2020/QH14) on 17 November 2020 The Law on Water Resource (Law No 17/2012/QH13) on 21 June 2012 v International agreements The Comprehensive and Progressive Agreement for Trans-Pacific Partnership The EU-Vietnam Free Trade Agreement The Kyoto Protocol 10 The Paris Agreement 11 United Nations Framework Convention on Climate Change B MATERIALS v Vietnamese materials 12 “Political Program for National Construction in the Period of Transition to Socialism approved at the 7th National Congress of the Communist Party of Viet Nam”, Communist party of Viet Nam online Newspaper, [https://tulieuvankien.dangcongsan.vn/ban-chap-hanh-trung-uong-dang/dai-hoidang/lan-thu-vii/cuong-linh-xay-dung-dat-nuoc-trong-thoi-ky-qua-do-len-chunghia-xa-hoi-1558] (accessed on 20 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