World Bank Documentdocuments1.worldbank.org/curated/en/310111563222289120/...2013 budgets, and a...

i

Document of

The World Bank

Report No: ICR00004890

IMPLEMENTATION COMPLETION AND RESULTS REPORT

ON A DEVELOPMENT POLICY LOAN (IDA 58760)

IN THE AMOUNT OF SDR 63.5 MILLION (US$90 MILLION EQUIVALENT)

TO THE

SOCIALIST REPUBLIC OF VIETNAM

FOR

CLIMATE CHANGE AND GREEN GROWTH DEVELOPMENT POLICY

FINANCING

June 25, 2019

Environment & Natural Resources Global Practice

Vietnam Country Management

Unit East Asia Pacific Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

ii

CURRENCY EQUIVALENTS

(Exchange Rate Effective June 25, 2019)

Currency Unit = Vietnam Dong (VND)

US$ 1.00 = VND 23,297

FISCAL YEAR

January 1- December 31

iii

LIST OF ACRONYMS

AFD Agence Française de Development

AQM Air Quality Management

BAU Business As Usual

CC Climate Change

CC-GG Climate Change – Green Growth

CMU Country Management Unit

CPEIR Climate Public Expenditure and Investment Review

CPS Country Partnership Strategy

CPF Country Partnership Framework

DFID Department for International Development

DP Development Partner

DPF Development Policy Financing

DRM Disaster Risk Management

DWRM Department of Water Resources Management

FCPF Forest Carbon Partnership Facility

EE Energy Efficiency

ERPA Emission Reduction Payment Agreement

FIT Feed-In Tariff

GDP Gross Domestic Product

GNI Gross National Income

GEF Global Environmental Fund

GG Green Growth

GGAP Green Growth Action Plan

GHG

Greenhouse Gas

GIZ German Society for International Cooperation

GoV Government of Vietnam

GP Global Practice (WB units)

GRS Grievance Redress Service

IDA International Development Agency

ICZM Integrated Coastal Zone Management

IPF Investment Project Financing

IUCN International Union for Conservation of Nature

IWRM Integrated Water Resources Management

JICA Japan International Cooperation Agency

iv

MARD Ministry of Agriculture and Rural Development

M&E Monitoring and Evaluation

MOF Ministry of Finance

MONRE Ministry of Natural Resources and Environment

MOST Ministry of Science and Technology

MOIT Ministry of Industry and Trade

MOT Ministry of Transport

MPI Ministry of Planning and Investment

NAP National Action Plan

NCCC National Climate Change Committee

NCCS National Climate Change Strategy

NDC Nationally Determined Contribution

PCU Program Coordination Unit

PDO Program Development Objective

PDP Power Development Plan

PEMSEA Partnerships in the Environmental Management for the Seas of East Asia

PM Particulate Matter

PPA Power Purchase Agreement

PRAP Provincial REDD+ Action Plan

PSIA Poverty and Social Impact Analysis

PV Photovoltaic

REDD Reduced Emissions from Deforestation and Degradation

SEC Specific Energy Consumption

SEDP Socio-Economic Development Plan

SP-RCC Support Program to Respond to Climate Change

VGGS Vietnam Green Growth Strategy

Senior Global Practice Director: Karin Erika Kemper

Sector Manager: Christophe Crepin

Project Team Leader: Stephen Ling; Thu Thi Le Nguyen

ICR Team Leader: Stephen Ling; Thu Thi Le Nguyen

v

VIETNAM

CLIMATE CHANGE AND GREEN GROWTH IN VIETNAM

TABLE OF CONTENTS

Page #

DATA SHEET

A. Basic Information vi

B. Key Dates vi

C. Ratings Summary vi

D. Sector and Theme Codes vii

E. Bank Staff vii

F. Results Framework Analysis viii

G. Ratings of Program Performance in ISRs xvi

H. Restructuring xvi

1. PROGRAM CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN 1

2. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES 7

3. ASSESSMENT OF OUTCOMES 18

4. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME 30

5. ASSESSMENT OF BANK AND BORROWER PERFORMANCE 31

6. LESSONS LEARNED 34

7. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING 36

AGENCIES/PARTNERS

Annex 1 Bank Lending and Implementation Support/Supervision Processes 37

Annex 2. Beneficiary Survey Results 39

Annex 3. Stakeholder Workshop Report and Results 39

Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR 39

Annex 5. Comments of Co-financiers and Other Partners/Stakeholders 39

Annex 6. List of Supporting Documents 40

Annex 7. List of Related Bank Lending and Non-Lending projects in Vietnam 42

Annex 8. Status of Policy Actions, Pillars, Program Indicators, Implementation 43

Annex 9. Status of Indicative Triggers for DPF-2 and DPF- 3 63

vi

A. BASIC INFORMATION

Country: Vietnam Program Name: Climate Change and Green Growth in Vietnam

Program ID: P155824 L/C/TF Number(s): IDA-58760

ICR Date: 05/28/2019 ICR Type: Core ICR

Financing Instrument: DPL Borrower: SOCIALIST REPUBLIC OF VIETNAM

Original Total Commitment:

USD 90.00M Disbursed Amount: USD 87.60M

Revised Amount: USD 90.00M

Implementing Agencies: Ministry of Environment and Natural Resources, Socialist Republic of Vietnam

Co-financiers and Other External Partners:

B. KEY DATES

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 11/11/2015 Effectiveness: 11/28/2016 06/30/2017

Appraisal: 02/22/2016 Restructuring(s):

Approval: 06/24/2016 Mid-term Review:

Closing: 06/30/2017 06/30/2017

C. RATINGS SUMMARY

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Not Applicable

Quality of Supervision: Satisfactory Implementing Agency/Agencies:

Not Applicable

Overall Bank Performance:

Satisfactory Overall Borrower Performance:

Satisfactory

vii

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA): None

Problem Program at any time (Yes/No):

No Quality of Supervision

(QSA): None

DO rating before Closing/Inactive status:

Satisfactory

D. SECTOR AND THEME CODES

Original Actual

Sector Code (as % of total Bank financing)

Agriculture, Fishing and Forestry

Forestry 20 20

Irrigation and Drainage 10 10

Public Administration

Other Public Administration 40 40

Energy and Extractives

Other Energy and Extractives 20 20

Transportation

Other Transportation 10 10

Theme Code (as % of total Bank financing)

Environment and Natural Resource Management 140 140

Climate change 120 120

Adaptation 40 40

Mitigation 80 80

Environmental policies and institutions 20 20

E. BANK STAFF

Positions At ICR At Approval

Vice President: Victoria Kwakwa Victoria Kwakwa

Country Director: Ousmane Dione Achim Fock

vii

i

Practice Manager/Manager: Christophe Crepin Iain G. Shuker

Program Team Leader: Stephen Ling Christophe Crepin

ICR Team Leader: Stephen Ling

ICR Primary Author: Emine Velidedeoglu

F. RESULTS FRAMEWORK ANALYSIS

Program Development Objectives (from Project Appraisal Document)

Revised Program Development Objectives (if any, as approved by original approving authority) PDO was not revised.

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: Pillar 1. Policy Track 1.1 -PDO (a): Number of coastal provinces adopted their provincial

integrated coastal zone management program and are under early implementation.

Value

quantitative or

Qualitative)

0 provinces

5 provinces

0 provinces

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Partially Achieved. Even though no provinces have formally adopted provincial

integrated coastal zone management programs as directed by the policy delivered under

DPF-1, 24 out of 28 coastal provinces have issued and implemented strategies, plans, or

projects related to ICZM. 5 provinces have developed or are in the process of developing

their coastal inventories to inform the development of their ICZM programs. 9 provinces

have developed local data management systems on ICZM linking with the national data

management system. 19 provinces have established or are in the process of setting up

coastal setback lines.

Formal adoption of ICZM programs is delayed by the need for prior development and

The program development objective is to (a) improve inter-sectoral coastal planning and public investment finance

programming across selected key sectors in support of climate change and green growth action; (b) develop and

safeguard selected natural resources services; and (c) promote selected cleaner production systems.

ix

adoption of a Master Plan on Sustainable Exploitation and Use of Marine Resources, with

which provinces will have to ensure that their provincial programs are consistent. The

Master Plan was in turn delayed (now expected to be finalized by 2021) due to new

requirements under the Law on Planning, which was promulgated in 2017, after DPF-1.

While these new developments impact the timing of the approval of the ICZM Master

Plan, they also further strengthen the foundations of the policy reforms engineered by

the DPO, and reflect a further deepening commitments of the Government to this critical

and complex reform agenda. Meanwhile, development of the key building blocks for

ICZM in a large number of Provinces demonstrates meaningful progress in this result area

over a larger number of coastal provinces than the original target. These updates in the

policy reform agenda of the government would have been reflected in DPO 2 if the

operation had moved forward.

Data Source: ICZM Review Reports from provinces presented at the State of the Coast

Consultation Workshop on April 25, 2019 at MONRE, and Vietnam Sea and Island

Institute.

Indicator 2: Pillar 1. Policy Track 1.2 -PDO (a): Number of priority sectors and provinces for which

climate change and green growth investment programs are identified, reported to, and

information used by the NCCC to review progress in implementing priorities and to

develop recommendations.

Value

quantitative or

Qualitative)

0 sectors; 0

provinces

3 sectors; 8

provinces

0 sectors; 18 provinces

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Substantially Achieved. As of April 2019, MPI has identified climate change and green

growth investment programs in 18 provinces (13 in the Mekong Delta and 5 in the Central

Highlands). MPI is also in the process of identifying climate change and green growth

public investment programs in a further 5 provinces in the Central Coastal region. This

Government processes bringing together national and sub-national levels have helped

in (i) raising the awareness of government officials and leaders of the needs and the ways

to monitor the expenditures for CC&GG projects/programs to implement NDC actions

and fulfill the targets agreed in the Paris Agreement 2015; (ii) building capacity in

monitoring CC-GG expenditures to prepare for the NDC2 (the review and update

currently being undertaken with the planned submission for the first half of 2020); and

(iii) to inform recommendations on CC& GG investment for sustainable development of

x

Mekong Delta (in response to Resolution 120 on Mekong Delta’s Sustainable

Development, issued by the Government in 2018).

The envisaged reviews of key sector ministries have not been completed to date as MPI

decided to prioritize the provincial level given that recent expenditure reviews had been

conducted at the central level, including the CPEIR supported by the Bank covering 2010-

2013 budgets, and a subsequent review of 2014-2016 budgets of 5 key ministries, but

these are still part of the Government priorities as reference points in support of the post

2020 climate change action planning..

Data Source:: MPI reports on Climate and Green Growth Public Expenditure and

Investment Review in the Mekong Delta (CPEIR-Mekong), 2018; Climate and Green

Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR-

Central Highlands), 2018; and the Review of the National and International Financial

Mechanisms to carry out the NDC's tasks in Vietnam to 2030.

Indicator 3: Pillar 1. Policy Track 1.3 -PDO (a): Percentage increase in the number of projects and

programs meeting climate change and green growth policy objectives in selected sectors

and provinces.

Value

quantitative or

Qualitative)

0

15% increase

19.5% decrease (Mekong

Delta

8% increase (Central

Highlands)

Date achieved 01/29/2016 12/31/2019 12/31/2017

Comments

(incl. %

achievement)

Not Achieved. Although the number of projects within the provinces assessed showed

an aggregate decrease to 2017, the volume of investment involved showed an aggregate

increase of around 14%. This is considered to be a more meaningful indicator of success,

but wasn’t used in the original results framework as MPI felt at the time that it was too

ambitious.

Based on the review of the 13 Mekong Delta Provinces carried out by MPI, the number

of climate change and green growth public investment projects increased from 928 in

2015 to 1402 in 2016 but reduced to 825 in 2017 (an overall decrease of 11% from 2015-

2017). Despite that, the total budget allocated to climate change and green growth

investment projects increased from VND 8,210 billion in 2015 to VND 9,807 billion in

2017 (equivalent to a 19.5% increase from 2015-2017).

Based on the review of the 5 Central Highland Provinces carried out by MPI, the number

of climate change and green growth public investment projects increased from 290 in

xi

2016 to 313 in 2017 (an increase of about 8%). The total budget allocated to climate

change and green growth investment projects decreased slightly from VND 3,030 billion

in 2016 to VND 2,994 billion in 2017 (a decrease of about 1.2%). has also provided

training to provinces on the use of the CC and GG investment projects and program

identification and tracking framework. Participation included officials from DPI, DARD,

DONRE, DOIT, DOT, DOC, PPC Office. As a next step for provinces and line ministries to

report on climate change and green growth investments, MPI is discussing within the

ministry inclusion of a reporting template in the next cycle of budget call.

MPI has completed the assessment of the design of climate change and green growth

projects against the adaptation and resilience objectives. The review proposed a number

of key recommendations, which will be reported to the NCCC/Government as part of MPI

submission for development of the next five-year SEDP.

Data Source: MPI reports on Climate and Green Growth Public Expenditure and

Investment Review in the Mekong Delta (CPEIR-Mekong), 2018; Climate and Green

Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR-

Central Highlands), 2018.

Indicator 4: Pillar 2. Policy Track 2.1a -PDO (b): Number of provinces with water source protection

corridors delineated on maps and with an action plan to address threats to the integrity

of these protection corridors (in compliance with Decree 43 and the DPF 2 circulars)

Value

quantitative or

Qualitative)

0 provinces

6 provinces

20 provinces

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Achieved. Twenty provinces have established water protection corridors, including

geographic coordinates or detailed descriptions of the boundary. About 20 more

provinces are in the process of establishing these corridors. The provincial decision

establishing the protection corridors clarifies the protection purposes of each corridor,

for example to protect the resources from pollution as they are used for domestic water

supply, or to protect the river embankments from erosion or land encroachment as they

are channels for water running out. The decision also includes actions and assignment of

responsibility to different provincial departments for implementation.

Data Source: Provincial Decisions to establish the list of water source protection

corridors, including geographic coordinates, specific sites, and responsibilities and

actions to be taken by each provincial technical department and related commune’s and

xii

district’s people committee.

Indicator 5: Pillar 2. Policy Track 2.1b -PDO (b): Number of hectares of farms utilizing more advanced

and efficient irrigation practices for selected crops

Value

quantitative or

Qualitative)

50,000ha

400,000ha

320,000 ha

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Partially Achieved. 320,000ha of farms were utilizing more advanced and efficient

irrigation practices by the end of 2018 (almost 80% achievement of target). MARD has

indicated that the target of 400,000 ha by 2020 should be achieved. This indicator is

therefore considered on track to reach the original target.

The increased uptake of advanced, water-saving irrigation has been especially high in

regions that are particularly vulnerable to climate change, such as the Central Highlands

and Mekong Delta.

23 provinces have issued their own local policies to encourage advanced, water-saving

irrigation.The Master Plan on Irrigation to 2020 has also been revised to 2030 with the

use of advanced, water- saving irrigation as one of the solutions for implementing the

agriculture restructuring plan.

Data Source: MARD’s report at the national review of the implemenation of the irrigation

efficiency action plan in May 2018. The estimates of area are based on established

government reporting systems, under which information is passed and aggregated from

the commune to district, provincial and then central ministry level. Several operations

rely on these reporting systems, and they are generally considered robust, and free of

systematic bias.

Indicator 6: Pillar 2. Policy Track 2.2a -PDO (b): Percentage increase of coastal forest area

Value

quantitative or

Qualitative)

0

10% increase

4.5% increase.

xii

i

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Partially achieved. By the end of 2018, an additional 14,100 ha of coastal forests were

planted (as compared to the baseline of 310,695ha). This is an increase of 4.5%.

By 2020, a total increase of 21,600 ha of coastal forest is expected as compared to the

baseline (MARD’s Submission Note No-733 /BC-BNN-TCLN).The expected level by 2020

is 9,400 ha lower than the target originally set in the Program 120 on Coastal forest

Development and Protection (2015). The series target was set in accordance with the

government’s existing target, but this has subsequently been revised downward as

MARD has indicated that (i) the original target was too ambitious as they had

overestimated the land available for coastal forest planting; and (ii) planned plantation

ground are becoming more difficult for planting and survival of newly plannted seedling

due to increasing erosion or high tides. For some areas, it takes two to to three years to

prepare for sufficient mud siltation grounds before the planting can start. Hence

achievement under the indicator is still in line with government targets.

Data Source: MARD’s Report on the implementation of Plan 120 on coastal forest

protection and management submitted to the Government in January 2019.The

estimates of area are based on established government reporting systems, under which

information is passed and aggregated from the commune to district, provincial and then

central ministry level. Several operations rely on these reporting systems, and they are

generally considered robust, and free of systematic bias.

Indicator 7: Pillar 2. Policy Track 2.2b -PDO (b): Percentage reduction of the annual rate of net

emissions (accounting for reduction in emissions and increase in sequestration as a result

of changes in forest cover and forest quality) in selected priority provinces (measured in

tons of CO2e/year)

Value

quantitative or

Qualitative)

0

7 percent

reduction

relative to forest

reference level

of 2000-2012

reference

period)

Measurement will be

conducted in 2021

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

Partially Achieved. The next measurement for verification of sequestration (which is a

significant technical undertaking) is expected to take place in 2021, following the end of

the current phase of SP-RCC.Therefore there is no verified data that can be used to

xiv

achievement) measure the percent emission reductions as compared to baseline. However, forest

plantation and enrichment is under progress in three selected north central region

provinces under the target program for sustainable forest, and it is therefore expected

that there has been considerable progress under the indicator, even if the level of

achievement has not been quantitatively assessed against the target at this time.

Data source: North Central Region Emission Reduction Project’s draft Project Appraisal

Document at WB’s Decision Meeting in March 2019.

Indicator 8: Pillar 3. Policy Track 3.1a -PDO (c): Number of city Air Quality Management (AQM) plans

adopted

Value

quantitative or

Qualitative)

0

3

5

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Partially Achieved. Five provinces have adopted a plan for improvement of air quality.

These provinces are Hai Phong, Can Tho, Nam Ha, Hoa Binh and Yen Bai.

The target has been exceeded according to the literal definition of the indicator. It is only

rated as partially achieved as, given the delay in the issuance of the Circular on the

content of AQM plans (following the same, recently-resolved constraint in the enabling

policy framework that also impacted indicator 9), these are not yet compliant with

MONRE guidelines. Although the plans include actions for sound AQM planning, they

could be strengthened through evidenced-based source apportionment. The planned

guideline from MONRE expected after the recently issued Decree 40 will provide

guidance for further strengthening.

Data Source: Provincial Decisions to issue air quality management plan.

Indicator 9: Pillar 3. Policy Track 3.1b -PDO (c): Percentage of enterprises in 6 sectors/industries that

are part of and report to the emission registry (in conformance with the reporting criteria

defined in the Circular on emissions inventories)

Value

quantitative or

Qualitative)

0

60 %

0

xv

Date achieved 01/29/2016 12/31/2019 04/30/2019

Comments

(incl. %

achievement)

Not Achieved. Although the governing Circular was drafted, the emissions registry has

not been established due to constraints in the enabling policy framework. Therefore, no

sectors/industries have reported to it. The enabling legislation constraint was just lifted

with the issuance of Decree 40 (in May 2019), and hence the registry is expected to be

established soon.

Indicator 10: Pillar 3. Policy Track 3.1c -PDO (c): Percentage of NOx emission reductions in light-duty

road transport in target year as compared to a business-as-usual (BAU) case.

Value

quantitative or

Qualitative)

Projected trend

under BAU case in

target year

6.85% reduction

7.49%

Date achieved 01/29/2016 12/31/2019 12/31/2018

Comments

(incl. %

achievement)

Achieved. NOx emission reductions reached 7.49% in 2018. Data Source: Vu Anh Tuan (2019) – Report commissioned by MOT based on MOT data.

The estimates are expected to have relatively low margins of error as the calculations

are based on vehicle numbers taken from the national vehicle registry, which should be

effectively comprehensive, and coefficients of vehicle usage in rural and urban areas

based on a survey of 50,000 users.

Indicator 11: Pillar 3. Policy Track 3.2a -PDO (c): Percentage energy saved in selected end-use sectors

as compared with BAU case

Value

quantitative or

Qualitative)

Projected trend of

annual energy use

of selected end-

use sectors to

2019, under BAU

scenario

3.2 percent

energy saved for

selected

industrial

segments,

cumulated to the

target year)

Measurement will be

carried out in 2020.

Date achieved 01/29/2016 12/31/2019 4/30/2019

Comments Partially Achieved. MOIT plans to survey energy consumption in industries in 2020 at

the end of the current SEDP and SP-RCC. Therefore it is not possible at this stage (earlier

xvi

1 Source: http://evnhanoi.vn/tin-tuc-evnhanoi/tin-trong-nganh-dien/5517-khoang-2500-mw-dien-mat-troi-bo-sung-vao-he-thong-

dien-trong-thang-6

(incl. %

achievement)

than planned end of the DPO series) to report on the quantitative achievement against

the target at present.

However, MOIT and DOIT have clearly focused on promoting implementation of new

energy efficiency policies through awareness raising and technical capacity building,

including training DOITs and enterprises on monitoring and reporting of energy

consumption and energy efficiency efforts. It is evidenced that industries, especially

those listed as energy intensive, are in the process of applying energy saving measures,

including the use of low-energy lighting systems, inverters, improvement of production

processes and technology, reduction of machine idling times, etc. Energy management

ISO 50001 is applied by a number of factories and initial data show encouraging

performance.

Data Source: MOIT’s Energy Efficiency Plan and related websites.

Indicator 12: Pillar 3. Policy Track 3.2b -PDO (c): Percentage increase in installed capacity of grid-

connected non-hydro renewable energy

Value

quantitative or

Qualitative)

0 (270 MW)

250% (960 MW)

905% (2,714.8 MW)

Date achieved 01/29/2016 12/31/2019 05/30/2019

Comments

(incl. %

achievement)

Achieved. As a result of the policies from the DPF series, the total new installed capacity of grid-connected non-hydro renewable energy is 2714.8 MW, mostly coming from solar. The percentage increase (over the baseline) is 905%, exceeding the target by more than 2.5 times. For solar, it is expected that PPAs accounting for 2,500 MW of additional installed capacity will be signed by the end of June 2019. The details for each RE technology is given in Annex 8. Data Source: Electricity Vietnam (EVN) Official Website1.

Indicator 13: Pillar 3. Policy Track 3.2c-PDO (c ): Expected Greenhouse Gas (GHG) emissions reduction

associated with electricity generation and consumption to 2030 as compared to the

baseline emissions pathway in Vietnam's (intended) Nationally Determined Contribution

xvi

i

Value

quantitative or

Qualitative)

0

To be finalized by

end of 2016

24.9 million tons of CO2

equivalent (cumulative) by

2030 as compared to

baseline

Date achieved 01/29/2016 12/31/2019 05/30/2019

Comments

(incl. %

achievement)

Achieved. Cumulative GHG emission reductions associated with the 2,714.8 MW of

increased installed capacity of grid-connected non-hydro renewable energy are

estimated to be 24.9 million tons of CO2equivalent by 2030. If the additional solar

investments do materialize by the end of June 2019 (see indicator above), the emission

reductions will increase to 46.6 million tons of CO2 equivalent. Although the target value was

not calculated by approval of DPF-1, the fact that installed capacity for renewable energy

greatly exceeded the targets indicates that the emissions reductions would also have

done so.

Data Sources: World Bank estimate using capacity factor data for wind, biomass, and solid waste to energy from “Analysis of future capacity scenarios for Vietnam report” (Green Innovation and Development Centre, October 2017) and for solar from “National assessment of development potential of grid- connected solar photovoltaic (PV) projects in Viet Nam until 2020 with a vision to 2030” in Hanoi on January 24, 2018. Emissions factor data for wind and biomass from “World Bank Tool for GHG Accounting for Generation and Energy Efficiency Operations”. Emissions factor data for waste-to-energy from IPCC 2006 Guidelines for National Emission Inventories Volume 2, Chapter 2, Table 2.2. Given the lack of data related to energy savings in the industrial sectors, the indicator only includes the emission reductions from the renewable energy investment.

G. RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived

GEO IP Actual Disbursements (USD millions)

H. RESTRUCTURING (IF ANY) Not Applicable

1

1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

1. This ICR report provides an evaluation of the first operation in an originally intended programmatic series of three Development Policy Financing (DPF) operations designed to provide support to the Socialist Republic of Vietnam for its climate change and green growth reform agenda as a contribution to improving sustainability and quality of growth. It was built from the experience and platform provided by a first DPF series (from 2012-2014) and related Bank engagements. The DPF engagements has been a key contributor to the government’s strategy for continuing and building on the momentum of climate policy reforms and the convergence between green growth and climate change policies that were initiated under the first DPF series.

2. Approval of the proposed second operation by the Government of Vietnam (GoV) was delayed for reasons outside the scope of the DPF series itself, resulting in the need to prepare an ICR for the first operation alone. The government approached its legally mandated debt ceiling (at the end of 2016, Vietnam’s public debt-to-GDP (Gross Domestic Product) ratio reached 63.6 percent, close to the legally mandated ceiling of 65 percent of GDP), and following Vietnam’s graduation from the International Development Agency (IDA) on July 1,2017, it faced a higher cost of borrowing at IBRD terms. This has impacted the Bank lending portfolio as well as the other development partners (DPs) supporting climate policy lending, Japan International Cooperation Agency (JICA) and Agence Française de Development (AFD). Further DPF support in line with the broad design of the original series is still expected, but due to the delays will now be processed as a stand-alone operation, as the series has lapsed due to limitations on the time allowed between consecutive operations.

3. The macroeconomic framework was deemed adequate at the time of appraisal for the Climate Change and Green Growth Development Policy Financing (CC&GG DPF) in mid-2016. Macroeconomic stability and sustainability had been broadly maintained, although at the time, rapidly rising public debt and low (and declining) forex reserves were of some concern. In the years prior to appraisal, although inflation had moderated significantly, the authorities had maintained policy interest rates unchanged since late 2014, which had contributed to low and stable rates of core inflation. The countercyclical fiscal policy introduced in the aftermath of the global financial crisis was appropriate to offset weak domestic demand, but called for a credible medium-term fiscal consolidation plan to to address the rising public debt level. The fiscal deficit had peaked at 7.4 percent of GDP in 2013, and while significant reduction had been achieved and the risk of acute debt distress was still deemed low, the fiscal deficit remained elevated at 5.5 percent as of 2015.

4. Thirty years of rapid and inclusive economic growth had raised Vietnam’s status to that of a lower-middle-income country, creating opportunities for people and businesses. Its GDP growth per capita had averaged 5.5 percent a year since 1990, yielding per capita gross national income (GNI) of US$1,980 in 2015. Growth had been inclusive: incomes had risen across the income distribution, while growth in inequality had declined. Growth had bolstered shared prosperity and achieved strong gains in poverty reduction: the percentage of people living in extreme poverty (US$1.9 per day) stood at less than 3 percent. Key social indicators had improved substantially: the population was better educated and had a higher life expectancy and a lower maternal mortality ratio than that of most countries at a similar income level. Access to basic infrastructure including electricity, clean water and modern sanitation had also risen drastically, from less than half to more than 75 percent of the population. Despite rapid and significant reductions in poverty, significant pockets remained, particularly in vulnerable coastal areas and the Mekong River and Red River deltas, where populations are highly exposed to impacts associated with climate change, including sea level rise.

5. The effects of climate change on Vietnam’s development achievements and future growth objectives

2

required strengthened resilience planning and financing to stem impacts, particularly among the poor who are often disproportionately affected. Vietnam does and will increasingly experience significant impacts from climate change, largely attributed to high and increasing exposure to gradual-onset impacts associated with rising sea levels, ocean warming and increasing acidification, combined with sudden-onset impacts from tropical cyclones and increasing heat extremes. Climate risks to coastal economies are aggravated by the loss of mangrove forests, excessive drainage and groundwater extraction, and overfishing. Droughts, salinization, extreme temperatures, and changes in growing seasons and floods2, compounded by sub-standard housing in exposed areas and a lack of assets to buffer shocks3, strongly impact the livelihoods of poor rural and urban households. Over the preceding 25 years, extreme weather events had resulted in 0.4 to 1.7 percent of GDP loss4. By 2050, a 1–3 percent loss in real GDP was predicted from climate change impacts.

6. At the same time, Vietnam urgently needs to curb its own GHG emissions growth. Although Vietnam’s GHG emissions are moderate in absolute terms, they are disproportionate to the size of its growing economy. From 2000 to 2015, CO2 emissions nearly quadrupled and, between 2000 and 2010, carbon intensity of GDP increased by 47 percent. This leaves Vietnam as the 13th most carbon intensive economy in the world and the 4th amongst low and middle-income countries in East Asia (vs. 33rd and 5th respectively for total emissions).5 The growth in GHG emissions and related air pollution is mostly associated with increasingly coal-based power generation and an expanding transport sector. There is a high risk of long-lived investment in polluting technologies locking the country into a high emissions trajectory for decades to come, particularly in relation to the continued reliance on coal to meet much of the country’s growing energy demand.

7. The National Climate Change Strategy (NCCS) and Vietnam Green Growth Strategy (VGGS) set out a vision for re-orienting Vietnam’s economy towards quality of growth, resilience, advanced and efficient technologies, and increasing parity and mature relations with other advanced economies. The 2016-2020 Socio-Economic Development Plan (SEDP)6 demonstrated government commitment to climate change and green growth goals through its emphasis on accelerating reforms that strengthen the country’s resilience to climate change and promote a low carbon, green growth development path. The SEDP recognized that actions taken during the 2016–2020 period have and will continue to help the government scale up policy implementation, building on the achievements of the 2011-2015 SEDP period, while laying the groundwork for the implementation of specific climate commitments articulated in the NDC for the post-2020 period.

8. The operation supported the government’s Support Program to Respond to Climate Change (SP-RCC), 2016-2020, which provides a platform for policy reform to effectively implement climate change and green growth actions prioritized in the NCCS and VGGS, 2016–2020 Socio-Economic Development Plan (SEDP), and Nationally Determined Contribution (NDC). As such, the SP-RCC supports a very broad policy agenda that is organized under 8 headings: (i) disaster preparedness and climate monitoring, including development of hydromet and climate information services; (ii) food and water security, including water resources management and climate-smart agriculture; (iii) sea level rise and disaster risk in vulnerable areas, focusing on

2 World Bank. 2015. Climate Change and Poverty in Vietnam. Projections for a 50-year return period under a high climate scenario, assuming no protection, along with an overlay of flood models and present socioeconomic data suggest that 40 percent of today’s Vietnamese poor will be exposed to flooding 3 World Bank. 2015. Climate Change and Poverty in Vietnam: A Qualitative Analysis. Analysis was undertaken in Bac Ninh, Hoa Binh, Kon Tum, An Giang, and Kien Giang Provinces. 4 World Bank. 2016. Vietnam Systematic Country Diagnostic 2016- Priorities for Inclusive and Sustainable Growth. 5 Trends in global CO2 emissions: 2016 Report. European Commission, Joint Research Centre (JRC), Directorate C - Energy, Transport and Climate; PBL Netherlands Environmental Assessment Agency. 6 The SEDP serves as Vietnam’s five-year development plan, elaborating the objectives of the 2011–2020 Socio-Economic Development Strategy (SEDS) for the 2016–2020 period and identifying specific measures and resources that are needed for its implementation.

3

increasing the resilience of coastal areas and the Mekong Delta; (iv) sustainable forest management and biodiversity, including REDD; (v) reducing GHG emissions, focusing particularly on the energy and transport sectors; (vi) government capacity for climate change response; (vii) resilient community development; and (viii) climate finance, including mobilization of public and private investment. Bringing the climate change and green growth reform agendas together has also allowed for broader linkages to be built across line ministries and around both agendas. For example, whilst focusing primarily on mitigation, the VGGS has also supported dialogue on adaptation and resilience, particularly related to water resources and forests.

9. The CC&GG DPF series was designed to build upon the experience and lessons of the earlier 3-operation Climate Change DPF series, which supported the 2011-2015 phase of SP-RCC. Lessons included the need for: (i) sustained programmatic and multisectoral engagement on climate, particularly given the incremental steps needed to effect policy reform in Vietnam; (ii) an effective cross-sectoral platform to capture synergies between the efforts of separate ministries; and (iii) high-level engagement supported by targeted TA.

10. Rationale for Bank Assistance. Climate change was a priority under the Bank’s FY12-16 Country Partnership Strategy (CPS), which supported the government’s 2011–2015 and the 2016–2020 SEDP and was organized around three pillars: (a) competitiveness; (b) sustainability; and (c) opportunity. By strengthening Vietnam’s climate resilience and promoting a low-carbon and green growth development path, the DPF series was intended to contribute directly to the sustainability pillar of the CPS, which promoted investments and policies to increase the sustainability of Vietnam’s development and to improve resilience in the face of economic and climate shocks.

11. The series is a significant component of the Bank Group’s broader climate change engagement strategy in Vietnam. The DPF series helped the government provide leadership on a transformative climate change and green growth agenda to address increasingly complicated trade-offs across sectors, institutions, and administrative and geographic boundaries. The DPF strategically engaged senior government leadership on the reform of policies and focused on areas of climate actions supported by the World Bank Group and other DPs’ investment programs for a low-carbon, climate-resilient economy, which explicitly aimed to help the Government implement its policy reform agenda and deliver climate results at a large scale. This includes investment programs such as support to energy efficiency financing in the industrial sector and promotion of climate resilience in the Mekong Delta Region. The policies promoted under the DPF aimed to leverage the evidence-based analytical policy dialogue, capacity strengthening, and climate- relevant information that the Bank had supported over previous years. Annex 7 summarizes related Bank lending and non-lending in Vietnam.

1.1 Original Program Development Objectives (PDO) and Key Indicators (as approved):

12. The program development objective is to (a) improve inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action; (b) develop and safeguard selected natural resources services; and (c) promote selected cleaner production systems.

13. The following program results and indicators (Table 1) were agreed during appraisal and included in the Program Document for DPF-1:

4

Table 1: Program Results and Indicators

BASELINE (January 2016) TARGET (December 2019) Pillar 1: Improving inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action.

Pillar 2: Developing and safeguarding selected natural resources services

Pillar 3: Promoting selected cleaner production systems

1.1: Number of coastal provinces that have adopted their provincial integrated coastal zone management programs and are under early implementation

Baseline :0 provinces

Target: 5 coastal provinces (20% of provinces)

1.2: Number of priority sectors and provinces for which climate change and green growth investment programs are identified, reported to, and information used by the NCCC to review progress in implementing priorities and to develop recommendations.

Baseline: 0 sectors and 0 provinces

Target: 3 sectors; 8 provinces

1.3: Percentage increase in the number of projects and programs meeting climate change and green growth policy objectives in selected sectors and provinces

Baseline: 0 percent increase

Target: 15 percent increase

2.1 a: Number of provinces with water source protection corridors delineated on maps and with an action plan to address threats to the integrity of these protection corridors (in conformance with Decree 43 and the DPF-2 Circulars)

Baseline: 0 provinces

Target: 6 provinces (10 percent of provinces)

2.1 b: Number of hectares of farms utilizing more advanced and efficient irrigation practices for selected crops

Baseline: 50,000 ha

Target: 400,000 ha

2.2 a: Percentage increase of coastal forest area

Baseline :0 percent Target: 10 %

2.2 b: Percentage reduction of the annual rate of net emissions (accounting for reduction in emissions and increase in sequestration because of changes in forest cover and forest quality) in selected priority provinces (measured in tons of CO2e/year)

Baseline: 0 [reference is the average annual rate of net emission (forest reference level) based on reference a 2000-2012 period]

Target: 7 percent of reduction of annual rate of net emission in the selected priority provinces relative to forest reference level

3.1 a: Number of city air quality management (AQM) plans adopted

Baseline: 0 Target: 3

3.1 b: Percentage of enterprises in 6 key sectors/industries that are part of and report to the emission registry (in conformance with the reporting criteria defined in the DPF-2 Circular on emissions inventories)

Baseline: 0 percent Target: 60 percent

3.1 c: Percentage of NOx emission reductions in light-duty road transport in target year as compared to a business-as-usual (BAU) case

Baseline: Projected trend under BAU case in target year

Target: 6.85 percent reduction

3.2 a: Percentage energy saved in selected end-use sectors as compared with business-as-usual (BAU) case

Baseline: Projected trend of annual energy use of selected end-use sectors to 2019 Target: 3.2 percent

3.2 b: Percentage increase in installed capacity of grid-connected non-hydro renewable energy

Baseline: 0 percent (270 MW)

Target: 250 percent (960 MW)

3.2 c: Expected GHG emissions reduction associated with electricity generation and consumption to 2030 as compared to the baseline emissions pathway in Vietnam’s Nationally Determined Contribution

Baseline: 0 Target: To be finalized by end of 2016

5

1.2 Revised PDO

The PDO and indicators were not revised.

1.3 Original Policy Areas Supported by the Program (as approved):

14. The operation supported government policy reform priorities identified under the SP-RCC (2016-2020). Through the DPF engagement, the Bank has been a key partner in guiding the development, implementation and progress monitoring of the SP-RCC, which in keeping with the economy-wide CC&GG objectives, covers a broad range of activities. To maintain a manageable and effective focus, however, the DPF series incorporated policy tracks and results indicators from a selected subset of the SP-RCC policy matrix. This was identified and developed with line ministries and in discussion with DPs through a cross-ministerial program preparation process coordinated by the Ministry of Natural Resources and Environment (MONRE) and involving the Ministry of Agriculture and Rural Development (MARD), Ministry of Industry and Investment (MOIT), Ministry of Science and Technology (MOST), Ministry of Transport (MOT), Ministry of Planning and Investment (MPI), and Ministry of Finance (MOF). The selection was based on those areas with great potential for transformational change through policy-level interventions, which captured synergies between sectors and between climate change and green growth, and where the Bank could leverage complementary sector engagements. These revolve around (i) coordinated planning and financing of CC-GG investments, (ii) the critical role of robust natural resources management to withstand climate change, and (ii) the nexus between resource efficiency, climate mitigation and environmental health7. The operation supported six priority policy tracks: two under each of three pillars aligned with the PDO (see the table 2 below). These were not the same as the policy areas supported under the earlier Climate Change DPF series but assessed where the reforms of the first series needed to be extended or complemented. For instance, the earlier focus on disaster risk management was replaced with more emphasis of coastal resilience and forest, the focus on broad IWRM measures shifted to water resources protection and irrigation efficiency, and the focus on development of advisory services shifted to a wider set of regulatory activities for energy efficiency, renewable energy investment, and air quality management (AQM).

Table 2: Original Policy Areas Supported by the Program

PILLARS/Policy Tracks Rationale

Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action

Policies under this pillar aimed to support the GoV’s efforts to improve inter-sectoral planning and financing for climate change and green growth. The two policy tracks aimed to tackle both key area- based cross-sectoral obstacles that arise in development across the long low-lying coast of Vietnam in the face of climate impacts and actions that support better inter-sectoral mobilization of resources for climate change and green growth. Both policy tracks recognize the need for effective cross-sectoral coordination of planning and financing to address Vietnam’s key climate change and green growth challenges.

Policy Track 1.1: Enabling Area-Based Adaptation and Resilience in Coastal Areas

Policy Track 1.2: Improving Mobilization of Resources for Climate Change and Green Growth

Pillar 2: Developing and Safeguarding Selected Natural Resources Services

Policies under this pillar aimed to support the GoV’s efforts to enhance the enabling environment to increase selected natural

7 In practice, this means that the DPF series places less emphasis on the DRM and capacity-building aspects of the SP-RCC. Although important parts of the national climate change and green growth agenda, these areas were judged to be less policy focused and more effectively addressed through several other Bank IPF operations.

6

Policy Track 2.1: Improving Water Protection and Use Efficiency

resources services for climate change and green growth. This pillar includes policy tracks that deliver integrated and mainstreamed climate change and green growth responses into both public and private natural resource investments in water and forest sectors. Both policy tracks include policy actions that promote linkages between climate change and green growth. Improved forest management is an effective way of achieving climate, environmental, and employment objectives. Both water and forest resources underpin conventionally measured economic growth by providing inputs to agriculture, manufacturing, and services and by increasing the productivity of agriculture and the reliability of infrastructure services through climate control. Forest products are also an important source of rural livelihoods.

Policy Track 2.2: Enabling the Development of Forest Resources Services

Pillar 3: Promoting Selected Cleaner Production Systems

Policies under this pillar aimed to support the GoV’s efforts to shift to selected cleaner production systems for climate change and green growth action. The reforms aimed to support innovation, convergence, and integrated AQM policies in Vietnam by acting on no-regret priorities in selected sectors, generating co-benefits between initiatives that address local air pollution and greenhouse gas emissions. The pillar also supported reforms that remove the barriers for moving sustainable energy to scale. As the pollution sources that cause local air pollution, an important challenge targeted under the government’s Green Growth Strategy, and climate change are often the same or are closely related, they require many of the same or similar interventions, and given that air pollution source structure is usually complex and covers many sectors, there is a strong interdependency between the two policy tracks. Therefore, some reforms supported within policy track 3.1 (initially transport) and 3.2 (energy efficiency in the industrial sector and renewable energy) were expected to be integrated through the development and implementation of full-scale air quality planning.

Policy Track 3.1: Engaging in AQM with an Initial Focus on Planning, Inventory, Industrial permitting, and Cleaner Transport

Policy Track 3.2: Engaging in Low GHG Emissions Energy Production

1.4 Revised Policy Areas (if applicable): N/A

1.5 Other significant changes

15. The first policy operation (DPF-1) was designed as part of a programmatic series of three operations to support the Government’s SP-RCC from 2016 to 2020. This ICR is assessing results as of early 2019 of the planned series but following only one operation (DPF1). During preparation of the DPF-2 operation, which was at pre-appraisal-stage with several prior actions completed, fiscal constraints led to significant delay in the ability of the Government and the Bank to proceed with the negotiation and approval of the DPF-2, which cause the programmatic series to lapse due to limitations on the time between successive operations (DPF-2 could not be negotiated and submitted to the Board within 24-months following the Board approval of DPF-1). The policy reform dialogue however remained strong under the umbrella framework of the SP-RRC leading to the decision to continue the engagement under a new DPF operation which is now therefore currently being prepared.

16. The series was designed in coordination with JICA and AfD, who also committed to providing policy lending to the 2016-2020 phase of SP-RCC. JICA provided two budget support operations of ¥10 billion each in 2016 and 2017. AfD has delivered €100 million in budget support to SP-RCC in two disbursements as originally planned, although with a delay of more than one year (two tranches of €50 million disbursed in March and April 2019).

https://vi.wikipedia.org/wiki/%C2%A5

7

2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance

17. The expected series of operations contained a selective and cohesive subset of six policy tracks and ten prior actions defined to achieve targeted results. All prior actions of the DPF 1 have been completed (see table 3 below).

Table 3: Status of Prior Actions for the first DPF

Policy Track Prior Action Status

DPF-1 Prior Actions



The government has developed and adopted the National Action Plan setting priorities for the integrated management of coastal zones Evidence: The Recipient, through its Prime Minister, has issued Decision Number 914/QD-TTg dated 27th May 2016, adopting the National Coastal Zone Action Plan setting priorities for the integrated management of coastal zones. (MONRE)

Delivered


The government has established CC and GG as a priority direction for implementation under the SEDP 2016–2020 Evidence: The Recipient, through its Prime Minister, has issued Decision Number 40/2015/QD-TTg dated September 14, 2015 governing the principles, criteria and norms for allocation of state budget funds for development investment during the period of 2016 to 2020, and has submitted Socio-Economic Development Plan 2016-2020 to the National Assembly to establish climate change and green growth as a priority under this plan. (MPI)

Delivered



The government has developed and adopted a policy guiding the establishment and management of water source protection corridors Evidence: The Recipient, through its Prime Minister, has issued Decree Number 43/2015/ND-CP dated May 06, 2015 regulating identification and management of water source protection corridors. (MONRE)

Delivered

The government has developed and adopted a policy on advanced and efficient upland irrigation Evidence: The Recipient, through its Minister of Ministry of Agriculture and Rural Development, has issued Ministerial Decision Number 1788/QD-BNN- TCTL dated May 19, 2015 adopting an action plan to develop advanced irrigation and water saving for upland crops in support of the restructuring of water resources sector. (MARD)

Delivered

8



The government has developed and adopted a policy on the development of coastal forests Evidence: The Recipient, through its Ministry of Agriculture and Rural Development, has submitted to the Prime Minister, a draft decree governing the management, protection, restoration and development of coastal forests to address climate change. (MARD)

Delivered

The government has developed and adopted guidance for the preparation of provincial forest carbon action plans Evidence: The Recipient, through its Minister of Ministry of Agriculture and Rural Development, has issued Ministerial Decision Number 5414/QD-BNN- TCLN dated December 25, 2015 approving the guidelines for Provincial REDD+ Action Plan (PRAP) preparation to govern the preparation of provincial forest carbon action plans. (MARD)

Delivered



The government has developed and adopted the NAP on AQM Evidence: The Recipient, through its Prime Minister, has issued Decision Number 985a/QD-TTg dated June 1, 2016 adopting the National Air Quality Management Plan and Decision No. 16/2019/QD-TTg dated March 28,2019 on roadmap for exhaust gas emission of in-used and importer vehicle. (MONRE)

Delivered

The government has adopted regulations on vehicle emissions standards and on fuel quality Evidence: The Recipient, through its Ministry of Transport, has issued Circular Number 33/2015/TT- BGTVT dated July 24, 2015 promulgating the national technical regulation on Euro 4 standard for new assembled, manufactured, and imported vehicles, and, through its Ministry of Science and Technology, has issued Circular Number 22/2015/TT-BKHCN dated November 11, 2015 on the issuance and implementation of national, technical regulations on gasolines, diesel fuel oils, and biofuels. (MOT)

Delivered


The government has developed and adopted new energy efficiency labeling standards for non-ducted air conditioners Evidence: The Recipient, through its Minister of Ministry of Industry and Trade, has issued Ministerial Decision Number 13550/QD-BCT dated December 10, 2015 announcing the minimum energy performance and labelling standards for non-ducted air conditioners

Delivered

The government has developed and adopted procedures for the development of projects, for setting an avoided cost tariff, and a standard PPA for biomass and procedures for the development of projects and a standard PPA for waste-to-energy Evidence: The Recipient, through its Ministry of Industry and Trade has issued: (a) Circular Number 29/2015/TT-BCT dated August 31, 2015 governing contents, sequence and procedures for preparing, appraising and approving biomass energy development and utilization plans; (b) Circular Number 32/2015/TT- BCT dated October 08, 2015 governing project development and standard power purchase agreements for power generation projects using solid wastes; and (c) Circular Number 44/2015/TT-BCT dated December 9, 2015 governing project development, setting an avoided cost tariff, and standardized power purchase agreements for

Delivered

9


biomass power projects.

18. Despite the delay in approval of further operations under the series, the reform process under the policy tracks has continued to move forward, strengthening the respective legal frameworks. Of the 21 indicative policy triggers for DPF-2 and DPF-3 originally identified in the DPF-1 Program Document, 14 are delivered, 4 have been partially delivered, and the remaining 3 have progressed well but their issuance has been delayed due to their inclusion in larger pieces of legislation or to the need to first issue enabling legislation, which will ultimately provide a stronger legal basis for action. In particular, the new Planning Law issued in 2017 and aiming at strengthening the linkage between master planning and the socio-economic development strategy, and between national, sub-national and sectoral planning, has impacted planning processes. For instance, the development of coastal functional zoning (original DPF-3 trigger), will now be subsumed into the preparation of a boarder Integrated Coastal Resources Master Plan. On air quality management, MONRE has prepared ministerial circulars to guide cities and provinces to prepare their multi-sectoral air quality management plans, and to develop an emission permitting system. However, their adoption was held up due to the need to first approve a (Government level) Decree under the Law on Environmental Protection, which provides the legal force for MONRE to mandate the implementation of these new systems. This has now been issued. In general, where these legal complications have arisen, alternative or complementary policy actions have moved ahead.

Table 4. Summary of Indicative Triggers for DPF-2 and DPF-3 Status (at the time of DPF-1 Approval)

PILLARS/Policy Tracks DPF-2 Indicative Triggers DPF-3 Indicative Triggers



Specific guidance directing provinces in the development of provincial integrated coastal zone management programs (Delivered)

Coastal functional zoning to guide provinces in the development of functional zoning under provincial integrated coastal zone management program (Progressing with some delay due to integration into Coastal Zone Master Plan – see details providing earlier)


Establishment of a CC and GG investments projects and program identification and tracking framework (Delivered)

The review of the design of a selected number of major CC and GG projects and programs against adaptation and resilience objectives (Work completed and will be formally submitted as part of a larger review of progress against SEDP)



Guidelines for protecting the quality and function of water sources, including drinking water intakes (Partially Delivered; the protection of river banks & beds will now be given higher legal force through a Decree which is at the final stage of approval by the Prime Minister)

The list of all priority water source protection corridors identified and adopted at provincial level (Delivered)

Policy on incentive to encourage the development of small irrigation systems, and more advanced and efficient irrigation system (Delivered)

Guidelines for encouraging efficient irrigation for selected priority crops (Delivered)

Policy Track 2.2: Enabling the Development of Forest

Technical guidance for the development of coastal forests in coastal provinces (Delivered)

Guidelines for review forest types in coastal provinces including appropriate system serving the monitoring and reporting on

10

PILLARS/Policy Tracks DPF-2 Indicative Triggers DPF-3 Indicative Triggers

Resources Services coastal forests (Delivered)

Report on the development and adoption by at least three provinces of forest carbon action plans (Delivered)

The updated National forest carbon action plan (Delivered)



Guidance on complete AQM planning and on emission inventories for implementation of the NAP at provincial/ city level (delayed due to need to issue enabling Decree No. 40/2019/ND-CP)

An emission permitting system for implementation of the NAP at industrial sector level (Delivered)

The road map for the regulation of exhaust gas emissions from in-used motorcycles, mopeds in cities and provinces (Delayed due to need to amend Law on Road Transport)

The road map for the regulation of exhaust gas emissions from in-use vehicles (cars, trucks, buses) (Delivered)


New energy efficiency labeling standards for household refrigerators (Delivered)

Energy savings and efficiency benchmarks in plastics and pulp and paper sectors (Delivered)

Energy savings and efficiency benchmarks in the steel and beverage sectors (Delivered)

A support mechanism (including FIT) for grid-connected wind power (Decision No. 39/2018/QĐ-TTg) and a master plan for the development of wind power (Partially Delivered; master plan no longer being developed due to new regulations under new Planning Law)

A support mechanism (including FIT) and a standard PPA for solar energy (Decision No. 11/2017/QĐ-TTg), and a master plan for the development of waste-to-energy (Partially Delivered; master plan no longer being developed due to new regulations under new Planning Law)

19. Under Pillar 1, progress with the reforms has contributed to the improvement in coastal planning and mobilization of resources for climate change and green growth in key sectors. Guidance on coastal function zoning will now be given more weight through development of a Coastal Zone Master Plan.

Policy Track 1.1 “Enabling Area-Based Adaptation and Resilience in Coastal Areas”: Under DPF-1, the National Coastal Zone Action Plan has provided a framework with priority actions for MONRE to coordinate integrated coastal zone management planning in Vietnam. The originally planned DPF-2 Indicative Trigger, which formalized procedures to guide provinces on the development of provincial integrated coastal resource management programs, was adopted as a MONRE Circular8 on December 29, 2017. The planned DPF-3 indicative trigger on guidance for provinces on coastal functional zoning under their respective programs is now part of the larger Integrated Coastal Zone Master Plan, which will provide more emphasis on linkage to sectoral and sub-national planning. Policy focus on coastal management is further strengthened with the country’s recent emphasis on developing the Blue

8 This was originally planned as a MONRE Decision. A Circular provides a stronger legal basis in Vietnamese law.

11

Economy9. The policies require coastal provinces to establish the ICZM steering committees to provide oversight and coordination of activities on the coast, map activities of different sectors in coastal areas, develop zoning plans for exploitation of coastal resources, pilot co-management of fishery resources, establish coastal set back zone taking into account climate change impacts and sea level rise scenarios, and carry out marine and biodiversity monitoring. Engagement of the Bank under the DPF, together with expertise under associated TAs and lending have helped improve the quality of the policy and buy-in from different stakeholders, especially from provincial actors who are the key implementors of the policy.

Policy Track 1.2 “Improving Mobilization of Resources for Climate Change and Green Growth”: Under DPF-1, the 2016-2020 SEDP placed new emphasis on climate change. The originally planned DPF-2 Indicative Trigger did materialize as a DPF-2-ready Prior Action through an MPI Decision adopted on July 16, 2018, establishing a regulation on the identification, classification and reporting of its public climate change and green growth-related investment allocations. The originally planned DPF-3 indicative trigger on the “review of the design of a selected number of major CC and GG projects and programs against adaptation and resilience objectives” has been completed at the technical level, but its formal issuance is delayed as it will serve as an input into MPI’s assessment of the 2016-2020 SEDP, expected in early CY 2020.

20. Under Pillar 2, envisaged triggers for the original DPF series have been delivered, strengthening protection and green growth potentials for key water and forest resources.

Policy Track 2.1 “Improving Water Protection and Use Efficiency”:

Water Source Protection: Under DPF-1, Decree 43 required provinces to issue lists of designated water source protection corridors. The originally planned DPF-2 trigger on protecting the quality and function of water sources has been partially delivered with the adoption of regulations on the identification of sanitary protection zones for sources of water supply as MONRE Circular 24 on September 9, 2016. A second planned Circular regulating the protection of beds, banks, and alluvial grounds of rivers has been developed but incorporated into a wider PM Decree strengthening the legal impact but also inducing delay in its issuance: it is currently in the final stages of approval within the government, expected by end of CY 2019. The indicative DPF-3 trigger, disclosure of the list of all priority water source protection corridors, has already been met. Provinces are required to provide detailed descriptions of the protection sites including the length of the corridor, where the section of the river or stream protected is with geographical coordinates and commune name, and to specify implementing responsibilities of provincial departments and districts and communes. Communes are responsible for establishment of demarcation of the protection corridor on the ground. DONRE is responsible for disseminating information on the protection corridors and to monitor their establishment and the demarcation.

Water Use Efficiency: The action plan on advanced irrigation and water savings for upland crops, the DPF-1 prior action, sets the objectives and prioritizes actions (including planning, investment, research and technical guidance) for irrigation efficiency improvements for high value crops with identified markets, such as cashew nut, coffee, pepper, vegetables, and fruits, while tailoring interventions to locales where crops are most productive and especially vulnerable to climate change. The plan requires MARD to prioritize efficient irrigation systems for upland crops amongst irrigation investments, to provide agricultural extension services for good practices, such as drip and sprinkler irrigation, and to establish farmer demonstration sites for climate smart agriculture

9 Resolution 36 of the Central Party Committee issued on October 22,2018 establishes Blue Economy as a key priority for the period up to 2030.

12

approaches. The originally planned DPF-2 indicative trigger, “the policy on incentive to encourage the development of small irrigation systems, infield irrigation systems, and more advanced and efficient irrigation systems”, has been adopted in the form of a Government Decree on May 16, 2018, which lays out a variety of incentives and financial support available to farmers’ organizations for small-scale water storage and more efficient technologies. MARD has also issued legal Guidelines for application of efficient water use practices for a number of priority crops (DPF-3 indicative trigger), including coffee, grapes, tea, oranges sugarcane, dragon fruit, grapefruit, and others, as originally planned in the policy matrix of the DPF series.


Coastal Forests for Resilience: The DPF-1 prior action, Government Decree governing the management, protection, restoration and development of coastal forests to address climate change. The policy specifies the use of provincial budget for coastal forest inventory, study and applying techniques for protection and development of the forest. It also covers operating costs of the management units for the forest protection. Budget from the central government covers forest protection and plantation, addressing erosion and preparation of planting ground from siltation. The policy encourages investments from individual and private sectors in these activities and provide incentives including getting full benefit from their investment or exemption from land fee. Ecotourism and recreation activities on coastal forest areas are required to pay for forest environment service. The originally planned DPF-2 indicative trigger on technical guidelines including cost norms for the development of coastal forests was adopted by MARD in April 2016. The originally planned DPF-3 indicative trigger, a MARD Decision for review and adjustment of provincial forest masterplan including coastal forest system, was integrated into Decree 156 under the Law on Forestry and issued in November 2018.

Reduced Emissions from Deforestation and Degradation (REDD)+: The MARD Decision on the Guidelines for Provincial REDD+ Action Plan preparation (DPF-1) provided instructions and a framework for provinces to develop actionable plans to protect and develop forests in a manner that sustains incomes and contributes to the reduction of greenhouse gas emissions. Priority activities focus on forest deforestation and degradation reduction, sustainable management and increase of carbon sequestration. So far, Provincial REDD+ Action Plans (PRAPs) have been developed for fourteen provinces (DPF-2 indicative trigger), six of which are under the World Bank supported Emission Reduction Program. The original DPF-3 trigger, the National REDD+ Action Program, was adopted by the Prime Minister in April 2017.

21. Under Pillar 3, while the government has made considerable progress to enhance the enabling environment for renewable energy and energy efficiency, a stronger legal and regulatory basis is needed before specific regulations on Air Quality Management (AQM) can move forward as planned.

Policy Track 3.1: Engaging in AQM with an Initial Focus on Planning, Inventory, Industrial permitting, and Cleaner Transport: Following the launch of the National Action Plan on AQM (DPF-1), the MONRE Pollution Control Department progressed in the finalization of two DPF-2 regulations on cities’ AQM planning and industrial emission inventories and registration. The National Action Plan on AQM aims to better control of emission sources, especially those from the industry, power and transport sectors, improved ambient air monitoring with more air quality monitoring stations in urban areas, identifying PM2.5 and PM10 sources in big cities for mitigation measures. It requires MONRE to disclose air pollution data and big cities to carry our source apportionment of PM2.5 and PM10 and develop multi-sectoral cost effective AQM plans. The National Action Plan on AQM emphasizes continued policy development to regulate air quality planning, monitoring, PM10 and PM2.5 emission and national regulations and

13

standards. In line with this, the government has recently amended the legal framework10 requiring cities having the population of more than 200,000, craft villages and localities where there are many air pollution sources to do assessment of the ambience air pollution and identify reasons and measures for improvement. Data on air quality of a number of cities including Hanoi is being disclosed. MOT is tasked to increase air quality control in transport sector. In addition to the application of EURO4 emission standard since 2017, a DPF-1 prior action, a roadmap of emissions standards for in-use and used cars was approved by the Prime Minister in March 2019. In-use cars manufactured after 2008 will be inspected starting January 1, 2020, for EURO-2 standard, and those manufactured between 1999-2008 will be inspected starting January 1, 2021, for Level 2 standard. The planned DPF-3 trigger to regulate emission permitting system for the major emitting industrial sectors is included in the recently issued Decree 40. The emission permit is required to constitute a part of the certificate confirming the completion of environmental protection facilities of industrial infrastructure before putting into operation. In order to move forward with the planned DPF-2 trigger on regulating emissions from in-use motorcycles and mopeds, the government has assigned MOT to lead preparation of an amendment of the Law on Road Transport to include a legal basis for the inspection of in-use motorbikes, which is expected to be submitted to the National Assembly for consideration in 2021. The planned DPF-3 indicative trigger on emissions regulations for in-use and second-hand imported cars was recently adopted in March 2019.

Policy Track 3.2: Engaging in Low GHG Emissions Energy Production:

Energy Efficiency: Minimum energy performance standards and labeling schemes for new household air conditioning (DPF-1 prior action) and refrigerators (DPF-2 indicative trigger) are both in effect. These cover large and growing electricity consuming segments of the residential sector in Vietnam. The standards and labeling policies are the first mandatory minimum energy performance standards on both new and imported air-conditioners and refrigerators in Vietnam and are the first phase of a roadmap that calls for a regular update of the standards every five years. The DPF also supported industrial sector EE benchmarks for high energy consuming sectors (steel, beverage, plastics, and paper). All planned Circulars have been adopted over the past two years. These benchmarks provide specific energy consumption (SEC) quotas for new, expanded, and renovated facilities as well as a schedule for existing facilities to comply with respective SEC levels. The policies also provide the reporting template for each enterprise and the process for provincial Departments of Industry and Investment (DOITs) to monitor implementation (these reports will be subject to regular energy audits by certified energy auditors). The provision of energy performance data by enterprises and the ability of DOITs to properly understand the data provided to them remains a challenge; however, parallel efforts to enhance the capacity of these stakeholders is being provided by technical assistance from several development partners, including the World Bank.

Renewable Energy: A biomass energy avoided cost tariff was established under DPF-1. The planned solar PV support mechanism and standard power purchase agreement (PPA) (part of DPF-2 indicative trigger) were adopted in 2017. A revised support mechanism for wind (part of DPF-3 indicative trigger) was also recently approved in November 2018 which is expected to address some of the shortcomings of the original FIT approved in 2014. The support mechanisms included Feed-in Tariffs (FITs) for utility-scale solar PV and wind, exemptions for import duties for goods used as fixed assets for the projects, exemption and reduction of land use charges, and a net metering regulation for solar rooftop FITs. Master plans for waste-to-energy and wind (part of DPF-2 and DPF-3 indicative triggers, respectively) are no longer being approved due to new

10 Decree 40/2019/ND-CP dated May 13, 2019 amending a number of decrees guiding the implementation of the Law on Environment Protection.

14

requirements under the Law on Planning, however, there has been steady progress in strengthening the investment framework for renewable energy, as supported through the DPF and related Technical Assistance (TA).

2.2 Major Factors Affecting Implementation:

22. The government commitment to the policy reform program has been strong, and progress has continued despite the reduction in associated lending. The development of the current phase of the SPRCC recognized that climate change is a complex threat, requiring short- to longer-term action, and that while earlier engagement laid the foundation to address climate challenges and capitalize on green growth opportunities, a sustained effort was critical during the 2016–2020 period. The SP-RCC program was approved by the Prime Minister under Decision No. 2044/QD-TTg dated October 24, 2016, and the policy matrix is reviewed and endorsed annually by formal decisions of the Prime Minister in addition to reviews of progress by the National Climate Change Committee (NCCC). This ensures that there is strong accountability at the highest levels of government for the policies being discussed, identified and developed under the program.

23. The program was underpinned by extensive analyses carried out by the Bank (see annex 7) and other Development Partners, particularly JICA and AfD, but also including the German Corporation for International Cooperation (GIZ), United Nations Development Program (UNDP) and the Asian Development Bank (ADB). Bank support provided largely through a Programmatic ASA (Vietnam Climate Resilience and Green Growth – P148188) early in 2015 included mobilizing global knowledge and technical expertise to support priority ministries (especially MONRE, MPI and MARD) to provide inputs into policies and to enhance their implementation readiness. For example:

Reforms to integrated coastal zone management supported under the program were rooted in over twenty years of knowledge generation, capacity building, and good practices on ICZM in Vietnam supported by DPs (including the Bank, ADB, the Partnerships in the Environmental Management for the Seas of East Asia (PEMSEA), GIZ, and the International Union for Conversation of Nature (IUCN), among others).

Technical assistance was provided to the development of protocols for classification of expenditures by their contribution to climate change and green growth.

Necessary support for efficient irrigation was informed by the Bank’s Irrigated Agriculture Improvement Project.

Support was provided for careful consultation with coastal provinces to ensure their full understanding of and buy-in to the framework for managing and sustainable use of coastal forest.

Priorities for improvement of air quality management were informed by the Bank’s Exploring a Low Carbon Development Path in Vietnam Report (2015) which highlights the benefits of addressing local air pollution and GHG emissions in concert, and the necessity to focus on the transport sector. Other materials were used to highlight the importance of including research on PM2.5 in the AQM National Action Plan.

Low carbon transport policies have been supported by sectoral TA, including an assessment of mitigation options aimed to feed into MOT’s roadmap for emissions reduction.

The content of energy policies was informed by a Programmatic ASA for Clean and Sustainable Energy, an industrial energy efficiency project, and grants from the Partnership for Market Readiness, including recipient-executed work on efficiency benchmarks for key industrial sectors and Bank-executed work on pathways for low carbon energy development.

24. The design of SPRCC emphasized cross-sectoral policy dialogue and coordination, and both the Bank of JICA provided support to MONRE to strengthen that function. Cross-sectoral policy dialogue was key to a

15

number of policy reforms. For example, MONRE worked closely with MOT, MOC and MOIT and business associations during development of the AQM National Action Plan, and with MARD to coordinate policy actions on ICZM and coastal forests. A small SP-RCC Program Coordination Unit (PCU) within MONRE was supported by JICA and to a lesser extent the Bank to strengthen coordination, monitoring and reporting functions. Collaboration and coordination between the three DPs supporting SP-RCC was strong and included semi-annual joint review missions, alongside technical assistance and support missions carried out individually by each DP with their different areas of focus. From the Bank side, participation of different GPs in the policy dialogue and in work on related technical assistance added value to the program.

25. Risks identified during preparation were relevant, and mitigating measures were largely effective. The risks that were cited in the DPF-1 Program Document were based on lessons learnt from the first phase of SPRCC and Bank’s first Climate DPF series and provided a strong foundation to support implementation. Measures included provision of extensive and ongoing technical assistance to address risks associated with the complexity of the policy agenda and limited institutional capacity, provision for structured consultation

World Bank Documentdocuments1.worldbank.org/curated/en/310111563222289120/...2013 budgets, and a...

Documents

Transcript of World Bank Documentdocuments1.worldbank.org/curated/en/310111563222289120/...2013 budgets, and a...