Vietnam Starts Cap-and-Trade in 2020

Vietnam’s government has approved a plan to begin cap-and-trade in 2020.

The country is the third in the region to announce such a program – emissions trading begins in South Korea in 2015, the same year as in Australia and China. New Zealand has a tiny program that started in 2009.

Vietnam’s program is unique in that it caps emissions of six major greenhouse gases (GHG): carbon; methane; nitrous oxide; hydrofluorocarbons; perfuorocarbons; and Sulfur hexafluoride.

Methane emissions, for example, will be reduced by capturing it from landfills and from industrial waste water processing. Carbon emissions will be absorbed by restoring forests and planting new ones.

Vietnam already benefits from carbon trading. It ranks fourth in the world for Clean Development Mechanism projects, with 164. Those projects are funded by carbon offsets polluters buy as an alternative to reducing their own emissions.

Before the plan goes into effect, the country’s goal is to cut GHG emissions 20% by 2020 (from 2005 levels) by focusing on its two biggest pollution sources – agriculture and forestry. Measures such as changing the diet of livestock, collecting and recycling agricultural waste for biogas, and implementing water-efficient rice farming are expected to reach that goal.

Vietnam is also upgrading its grid in an $800 million project. The World Bank is loaning Vietnam $449 million to introduce smart grid technologies across the country through local utilities. Another $30 million will come from US Climate Investment Funds, $8 million from the Australian Development Aid Agency and the rest from the Vietnam’s government.

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