VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DAO THI HIEN ASSESSMENT OF APPLICABILITY OF CLEAN DEVELOPMENT MECHANISM PROJECTS UNDER REQUIREMENT OF ARTICLE 6.4 OF PARIS AGREEMENT AND VIETNAM NATIONALLY DETERMINED CONTRIBUTION MASTER’S THESIS VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DAO THI HIEN ASSESSMENT OF APPLICABILITY OF CLEAN DEVELOPMENT MECHANISM PROJECTS UNDER REQUIREMENT OF ARTICLE 6.4 OF PARIS AGREEMENT AND VIETNAM NATIONALLY DETERMINED CONTRIBUTION MAJOR: CLIMATE CHANGE AND DEVELOPMENT CODE: 8900201.02QTD RESEARCH SUPERVISOR ASSOC. NGUYEN TAI TUE DR. TRAN DANG QUY Hanoi, 2023 PLEDGE I hereby declare that this thesis is the result of my own research work with the support of my supervisors, Associate Professor Doctor Nguyen Tai Tue and Doctor Tran Dang Quy. The research results have not been published in any previous research.
Data and information collected from other research‘s results, documents, books, research papers, and web pages must be cited and added in list of references of the thesis in compliance with regulations. If any fraud is detected, I would like to take full responsibility before the Master's Program in Climate Change and Development and Viet Nam Japan University. Author of the thesis Dao Thi Hien ACKNOWLEDGEMENT First of all, I would like to express my sincere gratitude to my supervisors - Associate Professor Doctor Nguyen Tai Tue and Doctor Tran Dang Quy from VNU University of Sciences, Vietnam National University, Hanoi (VNU) - for their valuable guidance and enthusiastic support throughout the implementation of my thesis. I am also grateful to the experts in the field who generously shared their experiences and contributed ideas for me during the implementation process and the results of this thesis.
I would like to acknowledge the support of the NAFOSTED project, entitled "Optimizing the eutrophication monitoring of urban lakes using Sentinel 2 satellite imageries: the case study of lakes in Hanoi urban area. I am deeply grateful to all the lecturers and Ms. Bui Thi Hoa from the Department for Climate Change and Development, Vietnam – Japan University, who always mobilize, support, and provide the best conditions for my studies and completion of the thesis. Lastly, the thesis would not have been completed without encouragement, sharing, and advice from my family, friends, and colleagues; and I wish to express my special thanks to them.
I acknowledge that due to time constraints, the thesis may have some limitations, errors and I highly appreciate any comments and suggestions to further enhance the research's completeness. TABLE OF CONTENT LIST OF TABLES .i LIST OF FIGURES. ii LIST OF ABBREVIATIONS .2 The necessity of the research. Research question and hypothesis.
Research objectives and tasks. Objects and scope of the research .1 History of the climate negotiations .2 The principle of CDM and Article 6.3 Policy framework on related climate change and sustainable development in Vietnam .4 International research on CDM transition and Article 6.1 Top-down approach .2 Bottom-up approach. RESULTS AND DISCUSSION. Overview on development of CDM projects in Vietnam.1 Historical development and current status of CDM projects in Vietnam .2 Legal framework for development of CDM projects in Vietnam .3 Stakeholder mapping in the project implementation process .4 Lesson learned from implementation of CDM projects in Vietnam.
International requirements for implementation of CDM transition to Article 6.4 of the PA .1 The requirements on CDM transition to Article 6.4 of the PA .2 Potential sectors and types of projects for the to-be-designed domestic ETS and Article 6 of the PA. Proposed in-country criteria for CDM projects transferred to the new market mechanism following Article 6.1 In-country criteria for projects transition to the new mechanism in Vietnam .2 Recommended transition scenario.3 Process for CDM transition to the new mechanism in Vietnam. CONCLUSIONS AND RECOMMENDATION. Limitation and Recommendation .98 LIST OF TABLES Table 1.
Research questions and hypothesis. Research objectives and tasks. Summary emission reduction targets in the NDCs Vietnam. Emission reduction targets in the NDC Vietnam in 2022.
SDGs in Vietnam. Transition pathways for the CDM under Article 6. Scenarios for Host party assessment for CDM migration to Article 6. Purposes, key questions and targeted interviewees.
Top 10 project consultants in Vietnam. Top 10 CERs buyers in Vietnam. Set of sustainability indicators for CDM in Vietnam. Possible application for CDM activities transition .5 GHG emissions impact of international transfers of emission reductions from migrated CDM projects.
Summary on status of CDM activities. Number of eligible projects and potential contribution to Vietnam NDC under scenario 1. Number of eligible projects and potential contribution to Vietnam NDC under scenario 2. Number of eligible projects and potential contribution to Vietnam NDC under scenario 3.
Assessment of scenarios for potential transition of CDM to Article 6. 85 i LIST OF FIGURES Figure 1. Logical research framework. Outline of the CDM.
An example on a part of SDC report. Outline of the Article 6. Bottom-up approach and top-down approach in the research. The approach and method utilization in this study.
CDM project cycle and relevant stakeholders. Development progress of CDM projects in Vietnam. Distribution of registered projects by Host Parties by 31/12/2022. Distribution of expected CERs from registered projects by Host Parties by 31/12/2022.
Number of projected PA by project types. Volume of issued CERs of PAs by project types. Number of projected PoA and volume of CERs issued by project types. Institutional set-up for CDM in Vietnam.
Potential impact of transferring emissions internationally under CDM and Article 6. Uses and claims for ER credits. Roadmap for the development of the domestic carbon market. Number of full eligible projects for transition to A6.
Potential ER for 2021 – 2030 of full eligible projects. Process flow of transition of CDM activities to the Article 6.87 ii LIST OF ABBREVIATIONS Abbreviation Interpretation A6.4 Supervisory Body BAU Business–as-Usual CBDR Common but differentiated responsibilities CDM Clean Development Mechanism CDM EB CDM Executive Board CDM PA Project Activity CER Certified Emission Reduction Conference of the Parties serving as the meeting of the CMA Parties to the Paris Agreement Conference of Parties to the United Nations Framework COP Convention on Climate Change CP Crediting period DCC Department of Climate change DNA Designated National Authority DOEs Designated Operating Entities EE Energy efficiency ERs Emission reductions ET International Emission Trading ETS Emission Trading System GCC Global Carbon Council GHG Greenhouse gas GS Gold Standard IPCC International Panel on Climate Change ITMOs Internationally Transferred Mitigation Outcomes JI Joint Implementation KP Kyoto Protocol LDCs Least Developed Countries LEP Law on Environmental Protection LoA Letter of approval iii Abbreviation Interpretation LPS Large point source MONRE Ministry of Natural Resources and Environment MRV Monitoring, Reporting, Verification NCM National carbon market NDC Nationally Determined Contribution NPV Net Present Value OMGE Overall Mitigation in Global Emissions PA Paris Agreement PDD Project Design Document PIN Project idea note PoA Programme of Activity PPs Project participants SB Supervisory Body SD Sustainable Development SDG Sustainable Development Goal SIDS Small Island Developing States UNFCCC United Nations Framework Convention on Climate Change VCM Voluntary carbon market VCS Verified Carbon Standard VEPF Vietnam Environmental Protection Fund iv CHAPTER 1.1 General context Climate change nowadays has become a first order issue globally. The adoption of the Kyoto Protocol (KP) by the international community in the year 1997 is considered as a historic turning point as it is the first global agreement aiming mitigation of greenhouse gas (GHG) emissions. The KP introduced three flexible mechanisms to achieve cost-effective GHG reduction globally, thereby creating the ―international carbon market‖.
Clean Development Mechanism (CDM) is one of the three flexible mechanisms under the KP that allows Annex I countries meet their KP commitment effectively through purchasing Certified Emission Reduction (CER) generated from projects that are implemented at non-Annex I countries (mostly developing countries) while also assisting in achieving sustainable development (SD) in the host countries. The KP entered into force on 16 February 2005, its first commitment period was from 2008 – 2012. During the first commitment period, conflicts on responsibility of emissions reduction targets between countries had been increasing. In Doha, Qatar on 8 December 2012, the Doha Amendment to the KP was adopted for the second commitment period from 2013 to 2020, however it was not entered into force due to not enough countries ratified.
With international community‘s effort in find out an alternative agreement to KP, the 21st Conference of Parties to the United Nations Framework Convention on Climate Change (COP 21), the Paris Agreement (PA) on climate change was officially adopted by the consensus of 196 parties which was a legally binding international treaty on climate change. The PA 2015 was effective on 04 November 2016, aimed to keep the global temperature rise well below 2°C, and to pursue all efforts to limit the temperature increase to 1.5°C, compared to pre-industrial levels. Nationally Determined Contributions (NDCs) represent each country's efforts to reduce national emissions 1 and adapt to climate change, which are considered as the core of the PA to achieve these long-term goals. Article 6 of the PA provides two international carbon markets for Parties to achieve their NDCs (Gao et al.2 establishes cooperative approaches in the form of bottom-up bilateral or multilateral agreements while Article 6.4 provides a centralized mechanism, both to help Parties to trade ―emission reductions‖ or ―mitigation outcomes‖ to meet their NDCs if a robust accounting framework is applied.4 has been described as ―a successor to the CDM‖, since the procedures under mechanisms are similar to CDM (Mele et al.
CDM projects established under the KP can be transitioned to Article 6.4M) under certain conditions. With key favor arguments in ―trust building, preserving existing knowledge, providing a stimulus for new mitigation activities‖, CDM projects established under the KP mechanism will be further transformed under Article 6 of the PA (Dario Brescia et al. However, the KP and the PA are two different agreements, CDM activities cannot immediately transform to Article 6. In addition, SD and environmental integrity under requirements of Article 6 are crucial and more complex than under the KP.
Therefore, criteria for CDM transition must be considered carefully and comprehensively.2 The necessity of the research Over the past 20 years, Vietnam has actively participated in the effort of the international community to respond to climate change. In 1992, Vietnam signed the United Nations Framework Convention on Climate Change (UNFCCC) and ratified it on 16 November 1994. A few years later, Viet Nam signed the KP in 1998 and ratified it in 2002. Under KP, Vietnam belonged to the Non-Annex I party that received international financial support through the CDM.
In 2015, the PA was subsequently reached by the Parties to improve upon and replace the KP. Vietnam ratified the PA on 31 October 2016 and has submitted three NDCs. The latest one was submitted on 8 November 2022 in which the emission reduction target has been increased by more than 1.5 times compared to the previous one 2 submitted in 2020 for the purpose of achievement of the net-zero target by 2050. Accordingly, Vietnam have reduced its GHG emissions by 15.8% compared to the Business–as-Usual (BAU) scenario by 2030 with its own domestic resources.
This contribution can be raised up to 43.5% with international support through bilateral as well as multilateral cooperation and the implementation of new mechanisms under the PA (The Socialist Republic of Viet Nam, 2022). Vietnam has successfully participated in the CDM under the KP. As of December 2022, Vietnam has registered 258 project activity (PA) and 16 Programmes of Activities (PoA), ranking the fourth in the world in terms of number of registered CDM projects. There are totally 30,959,918 CERs issued from 82 registered PA and 3 registered PoA from the country, making it the fifth in the world in terms of number of expected CERs (UNEP DTU, 2022).
Though the general rules, modalities and procedures for the transition of CDM activities to Article 6.