96580 MINISTRY OF PLANNING AND INVESTMENT Vietnam Ministry of Planning and Investment FINANCING VIETNAM’S RESPONSE TO CLIMATE CHANGE: Smart Investment for a Sustainable Future APRIL 2015 ­ esilient low-carbon Laying the foundation for r development through the Climate Public ­ Expenditure and Investment Review 1 TABLE OF CONTENTS LIST OF FIGURES, TABLES AND BOXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ABBREVIATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 FOREWORD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1. ASSESSING VIETNAM’S CLIMATE CHANGE POLICY AND INSTITUTIONAL FRAMEWORK FOR CLIMATE CHANGE RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1.1 The development of climate change policy in Vietnam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 The National Climate Change and Green Growth Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Delivering Climate Change Policy through National Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 1.2 Coordination of climate change responses: The ministerial coordinating architecture . . . . . . . . . . . 35 Central Government Coordination: The NCCC and Line Ministries. . . . . . . . . . . . . . . . . . . . . . . . . . . 35 National and Provincial Coordination: Functional Definition and Capacity Building. . . . . . . . . . . . . . 36 1.3 Adaptation and mitigation objectives: Focus and balance in Vietnam’s climate change institutional framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Defining the Scope of Adaptation Policy Implementation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Mitigation Policy: From Targets to Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1.4 The planning, budgeting, and implementation cycle: Progress and key areas to be strengthened. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Key Aspects of Planning and Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Strengthening Climate Change Policy Implementation: SEDP 2016–2020. . . . . . . . . . . . . . . . . . . . . . 41 Strengthening National and Provincial Coordination: Data Sharing and Capacity Building. . . . . . . . 42 Opportunities for Strengthening the Annual Planning and Budgeting Cycle . . . . . . . . . . . . . . . . . . . 42 Country Management Systems and International Climate Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Longer-Term PFM Issues: Policy-Based Budgeting and Performance Accountability in Support of Climate Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 1.5 Progress in mainstreaming the climate change response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2. CPEIR METHODOLOGY AND CLIMATE CHANGE TYPOLOGY DEVELOPMENT. . . . . . . . . . . . . . . . . . 48 2.1 The scope of the CPEIR and the wider application of its methodology. . . . . . . . . . . . . . . . . . . . . . . . 49 2.2 Development of a typology linked to Vietnam’s climate change response policy. . . . . . . . . . . . . . . . 51 2.3 Applying the TCCRE and assessing climate change relevance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Four Steps to Assess the CC-relevance of Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 2.4 Linking expenditures in the TCCRE typology to policy objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3 3. CLIMATE CHANGE EXPENDITURE: TRENDS RELATIVE TO POLICY OBJECTIVES, CATEGORIES, AND TASKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 3.1 Central government climate change response expenditure analysis. . . . . . . . . . . . . . . . . . . . . . . . . . 60 Central Government Climate Change Response Spending by Five Line Ministries, NTP-RCC, and NTP-EE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Central Government Climate Change Response Spending: By CPEIR Typology. . . . . . . . . . . . . . . . . 63 Central Government Climate Change Response Spending: Investment vs. Recurrent. . . . . . . . . . . . 66 Central Government Climate Change Response Spending: Tracking against NCCS Strategic Objectives and VGGS Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Central Government Climate Change Response Spending: Sources of Climate Change Response Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 3.2 Provincial government climate change response expenditure analysis . . . . . . . . . . . . . . . . . . . . . . . . 74 3.3 Institutional strengthening and data compilation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4. MOVING FORWARD: INCORPORATING CLIMATE CHANGE POLICY IN THE PLANNING AND BUDGETING CYCLE AND ESTABLISHING A CLIMATE POLICY REVIEW. . . . . . . . . . . . . . . . . . . . . . 78 4.1 Climate change expenditures in the planning and budgeting cycle. . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Guiding the Priority Setting Process in the SEDP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Agreeing on Planning and Budget Allocation Guidelines for Climate Change Response Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Strengthening Planning and Project Guidelines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Monitoring and Evaluation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Climate Change Reporting and Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Strengthening Coordination of Planning and Budgeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 4.2 Planning and financing adaptation policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 National Vulnerability Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 The Role of SOEs in Adaptation Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Design Standards and Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 4.3 Planning and financing mitigation policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Climate Fiscal Policy, Mobilization of Public and Private Low-Carbon Investment and Development of the Concept of a Carbon Price Anchor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 The Role of SOEs in Mitigation Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Performance-Based Payments: REDD+ and Forest Management Related Activities . . . . . . . . . . . . . 89 4.4 Strengthening the ministerial architecture and intergovernmental coordination . . . . . . . . . . . . . . . . 89 5. A NATIONAL ACTION PLAN TO ESTABLISH A CLIMATE CHANGE BUDGET AND ANNUAL REVIEW: IMPLEMENTING THE CPEIR RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . 91 5.1 An overview of the results framework and action plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 5.2 Climate planning and budgeting reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Adoption and Issuance of the TCCRE Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Preparation of the 2016–2020 SEDP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 4 Preparation of Climate Change Response Expenditure Estimates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Reporting on All Climate Change Relevant Projects: A Basis for Monitoring Actual Climate Change Response Spending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Improving In-Year M&E and Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Preparation of the Pilot Climate Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 5.3 Climate policy and institutional coordination and strengthening. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Adaptation Policy Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Mitigation Policy Coordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 The Fiscal Environment and Climate Change Institutional and Policy Risks. . . . . . . . . . . . . . . . . . . . . 99 5.4 Action plan summary matrices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 ANNEXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 ANNEX I:  CASE STUDY—MAINSTREAMING CLIMATE CHANGE RESPONSE: INSTITUTIONS AND TARGETS IN THE FORESTRY SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 ANNEX II:  INTERNATIONAL EXPERIENCE IN CLIMATE CHANGE RESPONSE PLANNING, ALLOCATION, TRACKING, AND EVALUATION OF EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 II.1   Korea’s approach to climate change response management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 II.2   Tracking and evaluation of expenditures for climate change policy in France. . . . . . . . . . . . . . . . . . . 121 I.  A Cross-Cutting Policy Document to Support the Climate Change Agenda in France. . . . . . . . . . 121 II. Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 II.3 Tracking public expenditures contributing to the climate change policy of the Philippines . . . . . . . . 123 I.  Cross-Cutting Policy Defining the Climate Change Agenda in the Philippines . . . . . . . . . . . . . . . . 123 II.  Institutional and Financing Framework to Support the Climate Change Agenda. . . . . . . . . . . . . . 123 III.  Implementing and Monitoring the Climate Change Agenda. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 ANNEX III:  CPEIR TYPOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 III.1   National climate change and green growth policy objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 III.2   The link between the climate change expenditure typology and the climate change, green growth and disaster strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 ANNEX IV:  VALUE ADDED OF THE CPEIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 5 LIST OF FIGURES, TABLES, AND BOXES Figures Figure 1.1.  Membership of the National Committee for Climate Change (NCCC) and the Standing Office. . . 35 Figure 1.2.  Annual SEDP Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 2.1.  Mapping Policies to Climate Change Expenditures and Organizational Responsibilities. . . . . . 52 Figure 3.1.  Total Climate Change Appropriations (investment and recurrent) for Five Line Ministries, NTP-RCC, and NTP-EE, 2010–2013 (left Y axis: constant price 2010 VND billion; right Y axis: percent). . . . . 61 Figure 3.2.  Growth Rates of CC-Response Appropriations and Total Budget Appropriations (investment and recurrent) of Five Line Ministries (including NTP-RCC) from 2010–2013 (constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Figure 3.3.  Number of CC-Response Projects under Implementation (investment and recurrent) for Five Studied Line Ministries, NTP-RCC, and NTP-EE by CC-Relevance Category (not including road transport projects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Figure 3.4.  Total CC Expenditures (investment and recurrent) by Line Ministries from 2010–2013 (2010–2012 implemented, 2013 budgeted, by constant price 2010 VND billion) . . . . . . . . . . . . . . . . . . . . . . . 62 Figure 3.5.  Distribution of Annual Allocations of CC-Response Investment Projects by Project Size for Line Ministries from 2010–2013 (2010–2012 implemented, 2013 budgeted, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Figure 3.6. Adaptation CC-Response Spending (investment and recurrent) by Line Ministry (not including NTP-RCC and NTP-EE) (2010–2012 expenditures, 2013 budgeted, by constant price 2010 VND billion) . . . . 63 Figure 3.7.  Mitigation CC-Response Spending (investment and recurrent) by Line Ministry (not including NTP-RCC and NTP-EE) (2010–2012 expenditures, 2013 budgeted, by constant price 2010 VND billion) . . . . 63 Figure 3.8.  Adaptation and Mitigation (projects that contribute to both) CC-Response Spending (investment and recurrent) by Line Ministry (not including NTP-RCC and NTP-EE), (2010–2012 expenditures, 2013 budgeted, by constant price 2010 VND billion). Note the >10x difference in magnitude in the y-axis in Figure 3.4 and Figure 3.6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Figure 3.9.  Total Climate Change Expenditures (investment and recurrent) (VND 16,683 billion) for Five Line Ministries, NTP-RCC, and NTP-EE by TCCRE (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion). Note: From inner wheel to outer wheel (TCCRE category and task). See Annex III.2 for detailed typology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Figure 3.10.  Total MARD CC-Response Spending (investment and recurrent) (VND 12,811 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . 65 Figure 3.11.  Total MOT CC-Response Investment (VND 2,248 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Figure 3.12.  Total MONRE CC-Response Spending (investment and recurrent) (VND 1,044 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . 65 Figure 3.13.  Total MOIT CC-Response Spending (investment and recurrent) (VND 228 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . 66 Figure 3.14.  Total MOC CC-Response Investment Spending (VND 2 billion) by Pillar, Category, and Task of CPEIR Typology (implemented, by constant price 2010 VND billion) . . . . . . . . . . . . . . . . . . . . . . 66 Figure 3.15.  Recurrent CC-Response Spending for Five Line Ministries, NTP-RCC, and NTP-EE by Adaptation and Mitigation (planned, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Figure 3.16.  Total Climate Change Expenditures (investment and recurrent) by NCCS Strategic Objectives (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion). . . . . . . . . . . . . . 68 6 Figure 3.17.  Total Climate Change Expenditures (investment and recurrent) by VGGS Solutions (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . 68 Figure 3.18.  Total CC-Response Expenditures by Source of Funding (implemented, constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Figure 3.19.  ODA Commitments Towards CC-Response (in USD million). Note: 2013 data does not include all donor projects delivered in 2013. ODA data is not deflated because data of projects under implementation by year is not available.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Figure 3.20.  ODA Commitment by Pillar of CPEIR Typology (investment lending (loans) on left; technical assistance (grants) on right). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Figure 3.21.  NTP-RCC CC-Response Spending (VND 663 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Figure 3.22.  NTP-RCC by Adaptation and Mitigation (implemented, by constant price 2010 VND billion) . . . 72 Figure 3.23.  NTP-RCC: Planned vs. Outturn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Figure 3.24.  Financing by CPEIR Typology Task of SP-RCC Allocated and Selected Projects (constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Figure 3.25.  Total Financing for SP-RCC Projects by Geographic Region (allocated, VND billion) . . . . . . . . 73 Figure 3.26.  Provincial Climate Change Expenditure per Capita by CPEIR Pillar (aggregate of 2010–2012 implemented and 2013 planned by constant price 2010 VND million per person). . . . . . . . . . . . . . . . . . . . . . 74 Figure 3.27.  Growth Rates of CC-Response Appropriations and Total Budget Appropriations (investment and recurrent) of Studied Provinces from 2010–2013 (constant price 2010 VND billion). . . . . . . 75 Figure 3.28.  Total Climate Change Expenditure per Capita in Provinces by Adaptation and Mitigation (implemented, constant price 2010, in VND million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Figure 3.29.  A Comparison of CC-Response Allocations for 2010–2013 from MARD and the Three Provinces (Note: If MARD projects cover more than one province, the financing was pro-rated based on the number of provinces covered in the project). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Figure 3.30.  Total Bac Ninh CC-Response Spending (investment and recurrent) (VND 481 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . 76 Figure 3.31.  Total Quang Nam CC-Response Spending (investment and recurrent) (VND 850 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . 76 Figure 3.32.  Total An Giang CC-Response Investment Spending (VND 179 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Figure 5.1.  CPEIR Recommendations and Action Plan Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Tables Table 2.1.  Criteria for the Five Categories of CC-Response Spending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Table 5.1.  Draft Results Framework for a Climate Budget and Financing Action Plan: Key Activities, Objectives and Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Table 5.2.  Climate Budget and Financing Action Plan: Results Monitoring Framework. . . . . . . . . . . . . . . . . 108 Boxes Box 2.1.  Coverage and Tracking of CC-Response Expenditure Data: Treatment of SOEs and the Role of MOF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Box 2.2.  Recommendations from Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Box 3.1.  Recommendations from Chapter 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Box 4.1.  Recommendations from Chapter 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 7 ABBREVIATIONS AF Adaptation Fund AfD Agence Française de Développement (French Agency for Development) AP Action Plan APRF Adaptation Prioritization Framework ARD Agricultural and Rural Development ASBR Annual State Budget Report AusAID Australian Agency for International Development BAU Business as Usual CBDRM Community-based Disaster Risk Management CCA Climate Change Adaptation CCD Climate Change Delivery CCM Climate Change Mitigation CCR-FR Climate Change Response Financing Report CCVI Climate Change Vulnerability Index CCWG Climate Change Working Group CDM Clean Development Mechanism CIDA Canadian International Development Agency CIFs Climate Investment Funds COP Conference of the Parties CPEIR Climate Public Expenditure and Investment Review CTF Climate Task Force DANIDA Danish International Development Agency DFAT Department of Foreign Affairs and Trade of Australia DHMCC Department of Meteorology, Hydrology and Climate Change DP Development Partner DRRM Disaster Risk Reduction and Management DSENRE Department of Science, Education, Natural Resources and Environment EIA Environmental Impact Assessment EU European Union EVN Electricity Vietnam FM Financial Mechanism GCF Green Climate Fund GDP Gross Domestic Product GEF Global Environment Facility GFSM Government Finance Statistics Manual (IMF) 8 GGAP Green Growth Action Plan GHG Greenhouse Gas GoV Government of Vietnam ICB Inter-Ministerial Coordination Board IDD Investment Decision Document INDC Intended Nationally Determined Contribution IPCC Intergovernmental Panel on Climate Change JICA Japan International Cooperation Agency K-EXIM Korea Eximbank KPI Key Performance Indicators LCOA Low Carbon Options Assessment LEAP Long-range Energy Alternatives Planning LM Line ministry M&E Monitoring and Evaluation MACC Marginal Abatement Cost Curve MARD Ministry of Agriculture and Rural Development MIE Multilateral Implementing Entities MOC Ministry of Construction MOF Ministry of Finance MOIT Ministry of Industry and Trade MONRE Ministry of Natural Resources and Environment MOST Ministry of Science and Technology MOT Ministry of Transport MPI Ministry of Planning and Investment MRV Monitoring, Reporting and Verification MTEF Medium-Term Expenditure Framework  MTFF Medium-Term Fiscal Framework  NA National Assembly NAMA Nationally Appropriate Mitigation Action NCCC National Committee on Climate Change NCCS National Climate Change Strategy NDS National Strategy for Natural Disaster Prevention, Response and Mitigation NFDS National Forest Development Strategy NIE National Implementing Entity NPFPD National Plan on Forest Protection and Development NTP National Target Program NTP-EE National Target Program on Energy Efficiency and Conservation NTP-RCC National Target Program to Respond to Climate Change 9 ODA Official Development Assistance PEFA Public Expenditure Financial and Accountability PFM Public Financial Management PG Policy and Governance PM Prime Minister PPC Provincial People’s Committee REDD Reducing Emissions from Deforestation and Forest Degradation SCCF Special Climate Change Fund SEA Strategic Environmental Assessment SEDP Socio-Economic Development Plan SEDS Socio-Economic Development Strategy SOFC State-Owned Forestry Companies SO Standing Office of the National Climate Change Committee SOE State-Owned Enterprise SP-RCC Support Program to Respond to Climate Change ST Scientific, Technological and Societal Capacity TABMIS Treasury and Budget Management Information System TCCRE Typology of Climate Change Response Expenditure UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change VGGS Vietnam Green Growth Strategy VPCC Vietnam Panel on Climate Change WB World Bank 10 ACKNOWLEDGMENTS The Vietnam Climate Public Expenditure and Investment of Natural Resources and Environment (MONRE), the Review (CPEIR) has been developed and formulated in a Ministry of Finance (MOF), the Ministry of Industry and joint partnership by the Ministry of Planning and Invest- Technology (MOIT), the Ministry of Agriculture and Rural ment (MPI), the World Bank (WB) and the United Nations Development (MARD), the Ministry of Transport (MOT) Development Programme (UNDP) at the request of the and the Ministry of Construction (MOC), as well as from Government of Vietnam. The CPEIR has been led by: three provinces, An Giang, Bac Ninh and Quang Nam. These experts actively participated by providing data, taking MPI: Dr. Pham Hoang  Mai (Director General, part in the consultation process and providing valuable infor- DSENRE, MPI), Nguyen Tuan Anh (Deputy Direc- mation and perspectives in support of the classification and tor General, DSENRE, MPI) and Nguyen Thi Dieu analysis. This includes: Le Duc Chung and Bui Hong Phuong Trinh (Climate finance and green growth focal point, (PMU support staff, DSENRE, MPI), Pham Van Tan, (Dep- DSENRE, MPI) uty Director General, DHMCC, MONRE), Truong Duc WB: Christophe Crepin (Practice Leader, GENDR, Tri (Deputy Director General, DHMCC, MONRE), Pham WB) and Thu Thi Le Nguyen (Climate Change Special- Trung Luong (Deputy Director General, Planning Depart- ist, GENDR, WB) ment, MONRE), Vo Thanh Hung (Deputy Director Gen- UNDP: Dao Xuan Lai (Head of Sustainable Develop- eral, State Budget Department, MOF), Nguyen Van Thanh ment Cluster, UNDP Viet Nam), Andreas Wallin Karlsen (Deputy Director General, ISEA, MOIT), Hoang Van Tam (Program Officer, UNDP Viet Nam) and Andrew Spe- (Director, Environment Management Department, Indus- zowka (Green Growth Specialist, UNDP Viet Nam) trial Safety and Environmental Agency, MOIT), Huynh Dac Thang (Deputy Director General, Planning Depart- The development of the CPEIR involved the following key ment, MOIT), Tran To Nghi, (Deputy Director General, independent specialists and World Bank staff: William Allan Construction Management Department, MARD), Vu Duc (Public Financial Management Specialist), Jeremy Hills Hung (Deputy Director General, Planning Department, (Climate Change Specialist), Vu Xuan Nguyet Hong (Vice MARD), Ngo Hao Hiep (Deputy Director, Construction President at the Central Institute for Economic Manage- Management Department, Water Resources General Direc- ment (CIEM)), Tran Toan Thang (Policy Specialist, CIEM), torate, MARD), Nguyen Van Vu (Deputy Director, Forestry Nguyet Thi Thuy Hoang (Public Financial Management General Directorate, MARD), Hoang Quang Tuan (Deputy Specialist, Academy of Finance), Hai Do (Policy and Insti- Director, Forestry General Directorate, MARD), Nguyen tutional Specialist, Ho Chi Minh Academy of Politics and Dinh Chung (Expert, Planning Department, MARD), Tran Administration), Jennifer Sara (Sector Manager), Iain Shuker Minh Phuong (Deputy Director General, Planning Depart- (Practice Manager), Habib Rab (Senior Economist), Quyen ment, MOT), Tran Anh Duong (Environment Department, Hoang Vu (Economist), Lan Thi Thu Nguyen (Natural MOT), Trinh Quoc Cuong (Deputy Director General, Plan- Resources Economist), Franz Gerner (Lead Energy Special- ning Department, MOC), Do Hai Long (Deputy Director ist), Paul Vallely (Senior Transport Specialist), Anjali Acha- General, Department of Planning and Investment (DPI), rya (Senior Environmental Specialist), Dzung Huy Nguyen An Giang), Nguyen Phuong Bac (Deputy Director General, (Disaster Risk Management Specialist), Cuong Hung Pham DPI, Bac Ninh), and Truong Quang Dung (Deputy Director (Senior Water Resources Specialist), Laura Altinger (Senior General, DPI, Quang Nam). Economist), Ngan Hong Nguyet (Communications Offi- cer), Mai Thi Hong Bo (Senior Communications Officer), The team also expresses its sincere appreciation for the valu- Hoa Phuong Kieu (Program Assistant), Phuong Thu Nguyen able contributions, comments and suggestions from: (Program Assistant), Ngozi Malife (Program Assistant), Ashraf El-Arini (Environmental Specialist), Sara Trab Niel- • WB peer reviewers: Emmanuel Skoufias (Reviewer, sen (Climate Change Specialist), and George Henry Stirrett Lead Economist, LCSPP), Eduardo Ferreira (Reviewer, Wood (Natural Resources Management Specialist). Senior Financial Specialist, CCGPT), Philippe Ambrosi (Reviewer, Senior Environmental Economist, ECSEN), The work has also involved significant guidance and contri- Sang Dae Choi (Senior Economist, TWI), Giovani Ruta butions from experts and senior staff from MPI, the Ministry (Senior Environmental Economist), Kanta Kumari (Lead 11 Environment Specialist), Kirk Hamilton (Lead Econo- Energy and Climate), and Béatrice Lecomte (General mist), Stephane Hallegatte (Senior Economist, CCGFO), Secretariat, Department of Financial Affairs). and Ashley D. Taylor (Senior Economist, EASPI). The CPEIR has been supported through the UNDP proj- • UNDP peer reviewers: Koos Neefjes (Climate Change ect Strengthening Sustainable Development and Climate Plan- Policy Advisor, UNDP), Thomas Beloe (Climate Change ning and the Vietnam Climate Change Partnership financed Governance and Development Effectiveness Adviser, by DFID (UK Department for International Development) UNDP Asia Pacific Regional Center (APRC), Kevork and managed by the WB. The CPEIR is complemented by Baboyan (Governance and Public Finance Specialist, three background notes on (i) Vietnam’s climate change pol- UNDP APRC), and Johan Kieft (Head of the Green icies, institutions, and public financial management reforms; Economy Unit in the UN Office for REDD+ Coordina- (ii) the CPEIR methodology; and (iii) a CPEIR Typology tion in Indonesia). Guide of Climate Change Response Expenditure (TCCRE) • French Development Agency reviewers (AfD): Nguyen in Vietnam. The CPEIR report and background notes are Thi Thanh An (Project Officer, Vietnam Office), Jean- available on the website of the Ministry of Planning and Claude Pires (Deputy Director, Hanoi Office), Ophé- Investment established to track Climate Finance Options lie Risler (Project Manager, Climate Change Division), for Vietnam (http://cfovn.mpi.gov.vn), as well as on the web- and Olivier Grandvoinet (Project Manager, Sustainable sites of the World Bank (www.worldbank.org/en/country/ Energy & Transport Division). vietnam) and UNDP (www.vn.undp.org). • Adetef: Nicolas Drunet (Energy Policies, Sustainable Additional funding support by the Australian Department Development Department), and Alisa Rozanova (Bud- of Foreign Affairs and Trade (DFAT) to the World Bank is getary Reform, Public Management Department). greatly appreciated. • Ministry for Ecology, Sustainable Development and Energy, France: Pierre Brender (General Directorate for 12 FOREWORD Vietnam is already experiencing and will continue to con- and appraisal processes for domestic and foreign investment. front the serious consequences of climate change, underscor- The CPEIR also promotes increased coherence across sector ing the need for further action to safeguard Vietnam’s devel- policies and programs by fostering a link between the state opment gains. Not only highly populated urban areas and budget and climate change and green growth policies, which poor rural areas will be impacted; but key economic activ- helps assess the effectiveness of the institutional framework ities in agriculture, fisheries and other sectors, which repre- for climate change reporting and monitoring, measuring the sent important drivers of Vietnam’s job creation and poverty extent to which the GoV’s institutional capability meets Viet- reduction, are also at risk. Vietnam’s rapid economic growth nam’s needs for successful climate change response. underpins development progress but is increasingly carbon intense, which if unmitigated puts the country on a path to The report contributes to strengthen the initial phase of the become a significant emitter of greenhouse gases. implementation of Vietnam’s key climate change and green growth policies. It helps mainstream climate change response The Government of Vietnam (GoV) fully recognizes the in the formulation of the five-year Socio-Economic Devel- threats of climate change as well as the significant devel- opment Plan (SEDP) for 2016–2020, and the GoV’s state opment benefits associated with the implementation of budget estimate (post-2015 climate change and green growth well-structured climate change adaptation and mitigation financing response). The review also enables the GoV to responses. The GoV has launched a progressive policy and better align Vietnam’s goals and contributions with global institutional agenda, which includes the release of National targets and efforts, in support of Vietnam’s emerging role as Climate Change and Green Growth Strategies and Action an important player in regional and global discussions on cli- Plans as well as a variety of climate change programs linked, mate change. for example, to disaster risk reduction and reduced emis- sions from deforestation and forest degradation. To oversee We are pleased that this review is instrumental in informing and coordinate implementation of climate change action, the the government’s planning and financing for climate change GoV established the National Committee on Climate Change and green growth, thereby strengthening Vietnam’s resilience as well as, more recently, the Vietnam Panel on Climate against the impacts of a warming world, making communi- Change. In order to enhance the effective implementation ties less vulnerable, and tackling the emissions challenge as of these strategies and mobilization of resources for climate Vietnam continues its journey towards a greener and more change response and green growth, the Ministry of Planning prosperous future. and Investment, with support from the World Bank and the United Nations Development Program, has conducted a Climate Public Expenditure and Investment Review. The review, completed in early 2015, provides a thorough analysis of the organizational, institutional, investment, and financial Mr. Nguyen The Phuong structure for action on climate change, identifies achieve- Vice Minister ments and challenges in Vietnam’s current approaches, and Ministry of Planning and Investment recommends innovations in policy, institutions, and financ- ing to promote further climate actions. The CPEIR adds value to the development of the GoV’s cli- mate change and green growth resource planning and mobili- zation as it provides information for decision making, a model Victoria Kwakwa Louise Chamberlain of how to use the budget process for identifying, planning Country Director Country Director and tracking climate change expenditure, and offers a basis to World Bank, Vietnam United Nations integrate climate change and green growth into the selection Development Programme 13 EXECUTIVE SUMMARY Climate change impacts The time is right for a review and a carbon-intense of Vietnam’s climate change economy threaten Vietnam’s response to ensure ongoing development progress progress and to safeguard Climate-related hazards have adverse effects on national development gains growth and poverty reduction, affecting the poor and several sectors of the economy simultaneously. According The Government of Vietnam initiated the Climate Public to the Climate Change Vulnerability Index (CCVI), Viet- Expenditure and Investment Review (CPEIR) to advance nam is considered one of 30 “extreme risk countries” in the an understanding of the current policy and institutional world. The country already experiences increased tempera- architecture as well as to assess current spending on its tures, sea level rise, intensifying storms, and more frequent climate change response to help guide future climate floods and droughts, which cause loss of life and damages to change-related expenditures and policy implementation. the economy. The rural poor are at high risk given their reli- The report has three components: (i) a policy, institutional ance on natural resources as a livelihood, in particularly for and methodological review; (ii) an analysis of climate change agriculture. The Mekong River Delta and Red River Deltas response (CC-response) spending in five line ministries and already suffer from saltwater intrusion threatening agricul- three provinces; and (iii) recommendations and an action tural productivity and the millions of people relying on these plan. The main goal of the CPEIR is to provide an over- watersheds for their livelihoods. Urban populations living in view of the current CC-response activities and formulate rec- informal settlements are also at risk; particularly to heat and ommendations for how to improve priority setting, capacity humidity extremes, while residents living in coastal cities are building, coordination, expenditure management, and main- adversely affected by floods and storms. streaming of CC-response strategies into socio-economic development plans. This was done by assessing the landscape At its current rate of growth, Vietnam will become a major of policies, programs and initiatives and their alignment with global greenhouse gas (GHG) emitter. While Vietnam has the Socio-Economic Development Plan (SEDP) to identify historically been a minor contributor to global warming, potential coordination, supervision, and capacity gaps. The projections show a fourfold increase of total net emissions review also assessed the characteristics of climate spending between 2010 and 2030.1 Vietnam’s emission growth is one over the past four years, in particular against its main CC- of the highest in the world and its carbon intensity of GDP response actions under Vietnam’s National Climate Change is now the second highest in the region (after China); and Strategy (NCCS) and the Vietnam Green Growth Strategy it is still increasing.2 These increases are mainly driven by (VGGS). Recommendations and actions were devised to: the projected growth in the use of coal for power generation, (1)  help enhance strategic policies, coherence, priority set- which is predicted to account for more than 50 percent of the ting, and improvement of support to the National Climate energy mix by 2030. Change Committee (NCCC) for informed decision-making, and (2)  suggest ways to strengthen sector and fiscal policy 1. S  R Vietnam (2010). Vietnam’s Second National Communication under the development, increase alignment between spending and pol- United Nations Framework Convention on Climate Change. Hanoi: Socialist Republic of Vietnam, Ministry of Natural Resources and Environment, icy priorities, address gaps, and develop stronger financing page 56. mechanisms and resource mobilization across all available 2.  World Bank (2014). Charting a Low Carbon Development Path for Vietnam. WB, sources of financing. On these aspects, the report reviewed ESMAP and DFID. 14 spending by five key central government ministries, the Ministry of Agriculture and Rural Development (MARD), Vietnam’s climate change Ministry of Environment and Natural Resources (MONRE), strategies and actions create Ministry of Industry and Trade (MOIT), Ministry of Con- struction (MOC), and Ministry of Transportation (MOT), a strong basis for a robust along with spending in three selected provinces, Bac Ninh, Quang Nam, and An Giang, located in the North, Central response, but gaps remain and Southern regions of Vietnam respectively. The Government of Vietnam recognizes the challenges it faces with increasing climate change, and has responded The CPEIR is carried out at a critical time as the Gov- strongly by pursuing development of a CC-response ernment of Vietnam prepares a new national climate policy and institutional agenda that aims to address change response support program and with the forth- its increasing climate vulnerability and promote a low- coming development of the SEDP for 2016–2020. The carbon, green growth development path. In June 2013, review comes after the National Climate Change Action the Central Executive Committee of the Party adopted Res- Plan and the Green Growth Action Plan (2012–2020) have olution 24/NQ-TW on Active Response to Climate Change, been issued by the Prime Minister, and just prior to the Improvement of Natural Resource Management and Environ- formulation of the five-year SEDP for 2016–2020, allow- mental Protection. The Resolution declared the fight against ing the recommendations to feed into its formulation and climate change as “one of the most important tasks of the implementation. The review also coincides with the end entire political system.” Earlier, two strategies were intro- of the NTP-RCC (after its second five-year phase) and the duced by the GoV: the National Climate Change Strategy current phase of the SP-RCC, both of which are scheduled (NCCS, 2011) and the Vietnam Green Growth Strategy to end after 2015. As the Government of Vietnam (GoV) (VGGS, 2012), each at the core of Vietnam’s CC-response. is preparing a new national climate change response sup- While the NCCS aims to build resilience to climate change port program to build upon and serve as a follow up to the effects and includes actions to mitigate GHG emissions, the two programs, the findings and recommendations of the VGGS specifically addresses low-carbon development, green CPEIR provide an important backdrop to ensure that pol- production, including technology innovation and restor- icy, investments, capacity, and knowledge barriers for cli- ing natural assets, and promotion of green lifestyles. Both mate change and green growth are adequately addressed. strategies were accompanied by action plans with specific In addition, the CPEIR provides the Government with an programs. Two related strategies are the National Strategy overview of its CC-response in order to set targets that are for Natural Disaster Prevention, Response and Mitigation aligned with global goals and efforts, and further strengthen (2007), and the National REDD+ Action Program (2012), national CC-response systems to meet the requirements each of which supports the development of a low-carbon and for direct access to new global climate finance such as the climate resilient economy.3 Green Climate Fund. The findings and recommendations of the CPEIR can also inform efforts by the GoV to build A number of other programs and initiatives have also its policy and financing base and technical capacity during been adopted to complement policy implementation. the intermediate period between a possible Paris UNFCCC Two key programs are (i) the National Target Program to COP_21 agreement in 2015 and the period after 2020, Respond to Climate Change (NTP-RCC), which stresses the when Vietnam will be expected to implement its Intended Nationally Determined Contributions (INDCs) to address  EDD: Reducing Emissions from Deforestation and Forest Degradation, 3. R its post-2020 emission reduction targets. 2012. 15 need for mainstreaming CC-response in social and economic development, and (ii) the Support Program to Respond to Implementation of national Climate Change (SP-RCC), a financing mechanism that action plans address key enables scaling up of CC-Response and coordination of pol- icy development and dialogue between the GoV and DPs. climate change issues, but Other important programs include (iii) the National Target Program for Energy Efficiency (NTP-EE), (iv) the national harmonization with sector Community-Based Disaster Risk Management Program and sub-national policies (CBDRM), and (v) the National Scientific and Technological Program on Climate Change, which aims to complement the is necessary NTP-RCC by supporting efforts that provide scientific and Mainstreaming CC-response policies into sector policies technological evidence for effective CC-responses. has progressed in some cases, but remains limited in oth- Combined, this policy and institutional framework ers. Efforts need to be strengthened in all sectors, but some make up the basic structure of Vietnam’s climate change more than others. Good progress has been made in areas such response (CC-Response). However, measures could be put as water, energy and disaster risk reduction and management in place to better monitor and evaluate how well the goals of (DRRM), while the forestry sector, roads and transporta- these policies are being realized, and ensure alignment across tion, and construction could particularly benefit from deeper policies and programs to work towards unified goals. Estab- integration. The planning process for the SEDP 2016–2020 lishing a more effective CC-response will require developing provides an opportunity to make progress in mainstreaming, more capacity, mobilizing more resources, and providing financing and advancing Vietnam’s CC-response in all areas. more support across national and sub-national levels of the Recent advances in budgeting and accounting provide sig- Government and other partners. nificant opportunities for streamlining data management, thereby underpinning efforts to improve coordination among Challenges encountered in the collection of informa- agencies and levels of government. tion regarding capital and recurrent expenditures on CC-response across ministries, departments and prov- The GoV has improved its planning and fiscal manage- inces underscore the need for a consolidated tracking sys- ment system over the past three decades, providing a tem. The most significant practical issue was that data on good basis for climate change mainstreaming, but it is public expenditure are not accessible for ready analysis because necessary to make specific improvements in the plan- they are held in a highly decentralized form at departmental ning and budgeting process to deepen integration. Public and divisional level in both ministries and provinces. In addi- Financial Management (PFM) has been modernized, which tion, the specific climate objectives of climate change relevant eases the process of making changes to ensure mainstreaming projects are often not sufficiently explicit to allow a coherent of CC-responses. Some potential entry points for improve- assessment of their extent or nature. It also became clear that ment include strengthening of: recurrent spending plays a small but significant (and likely • Strategic and annual priority setting to address climate increasingly important) role in the delivery of CC-response change issues effectively. activities. The data analysis thus involved detailed discussions of all projects at departmental and divisional level. These • Procedures for tracking and defining project objectives discussions helped to deepen the analysis and suggested the and performance relevant to CC-responses. need for continuing dialogue among GoV agencies and prov- • The annual planning and budget cycle to help estab- inces on the most effective way to incorporate and track CC- lish an effective climate change policy implementation response spending. framework. 16 Adaptation policy is Mitigation policy has considered an immediate become a domestic priority priority and is furthest and the present policy advanced in practical framework offers specific implementation, but more targets for GHG mitigation, needs to be done to but these are often ensure harmonization conflicting and difficult to with DRRM achieve due to disincentives Mainstreaming climate change in disaster sectors has Reducing GHG emissions requires overall and sector- been significant, but could be strengthened, and fur- specific target setting and mainstreaming of mitigation ther integration with climate policy is necessary. The in many sub-sectors. The GHG emission mitigation targets GoV has carried out a significant amount of work to estab- across policies and programs have proven diverse (in units, lish scenarios of climate change impacts in different regions baseline and time-scale), as well as partially overlapping or to help formulate and implement adaptation responses, but repetitive, and partially unrealistic. They are thus difficult to the use, uptake, and integration of the scenarios and cli- compare and need to be better aligned. For example, both the mate risk information needs to be strengthened and taken NTP-EE targets and the targets in Decision 1775/QD-TTg into account when planning a CC-response. The National on the management of GHG emissions and carbon markets Strategy for Natural Disaster Prevention adopted in 2007 are not aligned with the VGGS targets. National targets and its action plan (introduced in 2009) promulgated should be translated into sector-specific targets, which has national, sector and provincial socio-economic development been done, for example, in the agriculture and rural devel- planning frameworks. As a result, the majority of current opment sector (MARD Decision 3119/QĐ-BNN-KHCN). SEDPs at the national and provincial level, as well as sec- However, delivering sub-sector targets will require main- tor master plans for the period 2011–2020, have included streaming low-carbon approaches into sub-sectors. DRRM. However, it has not taken into account the poten- tial impacts of climate change. In addition, the Law on Natural Disaster Prevention on Control (2013), which A strong coordinating identifies natural disaster prevention and control activities, does not prioritize financing for DRRM. It is important body to manage to harmonize the implementation of this strategy with the CC-response is key to adaptation programs and actions of the NCCS, National Action Plan on Climate Change (NAPCC) and NTP- successful implementation RCC. Improving alignment can help unify and strengthen The GoV established the National Committee on Climate the approach to reducing vulnerability to the impacts of Change (NCCC) in 2012, to lead, coordinate, harmonize, climate change. and monitor climate change and green growth, but its 17 oversight role needs to be enhanced. Chaired by the Prime four-step process was used to categorize each climate change Minister, with ministers of all key ministries as members, the relevant expenditure element (investment and recurrent) in NCCC is responsible for coordination between ministries the CC-response typology and then assess the proportion of and oversight of the implementation of the NCCS, VGGS CC-response expenditure and its focus on adaptation or mit- and other related programs and initiatives. The Ministry of igation. Assessing CC-relevance at a detailed level plays an Natural Resources and Environment (MONRE) supports important role in analyzing CC-responses. This process was the NCCC through the Standing Office (SO) of the NCCC applied to the analysis of the selected ministries and prov- and is the technical focal point for CC-response policy. The inces and its application is further recommended for all enti- Ministry of Planning and Investment (MPI) supports the ties involved in CC-relevant general government spending. Inter-ministry Coordination Board (ICB) for the VGGS The CC-response cannot be tracked directly from Treasury through a secretariat. The NCCC should guide the design transactions data, but it can be assessed from total spending and functioning of a comprehensive and well-coordinated cli- by project or recurrent spending classified as being relevant mate finance mechanism in Vietnam. to climate change. A Typology of Climate The share of Government Change Response financing for CC-response Expenditure assists with was constant from 2010 to tracking and monitoring 2013, while the total amount spending on climate change has decreased slightly The CPEIR employed a Typology of Climate Change The analysis of CC-response spending allocations4 in Viet- Response Expenditure (TCCRE), which offered a unify- nam in the five line ministries and three provinces from ing framework to map current CC-spending in Vietnam. 2010–2013 offered valuable and detailed insight into the To assess the range of activities related to CC-spending, it GoV’s commitment to respond to climate change. Direct was necessary to develop a TCCRE to categorize projects in and indirect CC-response spending accounts for a substantial groups that corresponded to (i) international classifications share of the budgets of the line ministries during this time of CC-response spending; (ii) the policy objectives and ele- period (18 percent) and remained fairly constant, though the ments included in the NCCS and VGGS; and (iii) the activ- total amount of the studied allocations experienced a slight ities defined in current sector and provincial CC-relevant decrease from 2010 to 2013 (by 11 percent in real terms). The projects. The typology constitutes a climate change program rate of decline reflects an overall decrease in public spending, classification that allows elements of GoV and Development which is largely attributed to the government’s fiscal tight- Partner (DP) spending on climate change objectives to be ening. The total amount of CC-response spending from the clearly identified and tracked, and climate change out- five line ministries accounts for 0.1 percent of the country’s puts and outcomes evaluated relative to cost. Applying the GDP. As a reference, the WB’s 2014 Charting a Low Carbon TCCRE enabled a detailed outline of the distribution of Development Path for Vietnam Study found that a move from effort, strengths and weaknesses, and the potential impact a business as usual (BAU) to a low-carbon development path of spending by the ministries and provinces surveyed. The would require an incremental investment cost of one percent typology contains three hierarchical pillars: Policy & Gov- ernance (PG), Scientific, Technological and Societal Capacity (ST), and Climate Change Delivery (CCD).  he climate change-response expenditure included in this analysis does not 4. T constitute financing directed towards the additional cost of development as a The TCCRE is designed to assess the extent to which result of climate change. The costs of the CC-relevant project are accounted for the climate change funded project contributes to adap- as CC-response expenditure based on the criteria developed for the TCCRE in Chapter 2 (e.g., 100 percent of the project is attributed if projects explicitly tation, mitigation, or both CC-response objectives, and state a predominant CC objective or are fully dedicated to exclusively deliver- provides a basis for estimating CC-response spending. A ing CC-related benefits, or sit within a GoV program dedicated to CC). 18 of annual GDP during 2010–2030 (which does not account response spending has also financed projects that contribute for the additional cost of adaptation). to both adaptation and mitigation objectives, totaling about 10 percent of CC-response spending. The GoV’s CC-response allocations for the five line ministries primarily consist of investment projects that have climate resilience co-benefits. The majority of CC- response projects being implemented, 58 percent on average Both ministerial level and and 42 percent of the annual CC-response allocations, can provincial budgets have be characterized as having “low” or “marginal” relevance to the CC-response, as classified by the TCCRE. These projects been focused on Climate consist of activities where indirect adaptation and mitigation benefits may arise but where these are not explicitly listed in Change Delivery project objectives or stated results. The bulk of spending at the ministerial level is focused on concrete climate change delivery (CCD) activities (89  percent). The large share targeted to CCD is mainly CC-response is focused on due to funding of large infrastructure development projects large-scale infrastructure under MARD and MOT. The GoV’s CC-response spend- ing has provided limited finance towards some tasks that projects that build resilience, are essential for further developing Vietnam into a climate- resilient low-carbon economy. For example, saline intrusion, but a growing budget is water quality and supply and improving resilience in fisher- dedicated towards low- ies and aquaculture has received little attention, and only a very small part of the budgets in the five ministries has been carbon action dedicated to concrete mitigation such as low-carbon energy generation (0.02 percent of VND 4 billion) and efficiency The allocations largely consist of MARD and MOT measures (0.45 percent of 76 billion). projects, which in total occupy 92 percent of 2010–2012 CC-response expenditures and 2013 appropriations. The Only a small proportion of CC-response expenditures majority of these projects are directed towards large irriga- have been allocated to Scientific, Technological, and tion and road transport projects that have climate resilience Societal Capacity (ST), and Policy and Governance (PG). co-benefits. While MONRE’s CC-response budget is rela- While ST accounts for 9 percent, PG accounts for only 2 per- tively small, MONRE is the lead agency for the NCCS and cent of CC-response spending. Most of the work under ST Action Plan as well as for the NTP-RCC, enabling it to facil- and PG is carried out under MONRE’s relatively small bud- itate the close coordination of policymaking and capacity get, with 61 percent supporting ST and nearly the remainder building required across ministries. MOC, MOT and MOIT of the budget focused on PG, while only a very minor part play an important role in mainstreaming, in particular in is aimed at CCD tasks in water management and treatment. promulgating policies, regulations and standards that facil- The heavy emphasis on CCD tasks, particularly those related itate a CC-response in their respective sectors. to water resources, highlights the need for robust appraisal, monitoring and evaluation methodologies and for strong Given the focus on irrigation and transport proj- institutional coordination to ensure value for money spent. ects, CC-response expenditure allocations are heavily focused on adaptation, but there is a growing amount of All three provinces studied in the CPEIR have given pri- financing directed towards mitigation from the recur- mary emphasis to CC-delivery activities and have climate rent budget. From 2010–2013, the share of total CC- budgets growing at a faster pace than their total budgets. response expenditure directed toward adaptation was about This finding is consistent with the relatively limited capacity 88 percent, while the share directed toward mitigation at provincial level for ST and PG and the need for central accounted for only two percent. By 2013, the mitigation and sector inputs on policy and scientific support. As spend- budget increased to 3.9 percent, mainly due to increases in ing from sub-national governments account for the majority recurrent spending through the NTP-EE. Recurrent CC- of total capital spending by the GoV, this further highlights 19 the need for planning, budgeting, tracking, and monitoring appropriate climate change adaptation and mitigation mea- CC-response expenditure at the local level. Building capac- sures. The very small portion of CC-response expenditure ity in sub-national governments for applying the TCCRE to dedicated to PG activities predominantly finances the devel- these expenditures is therefore necessary. opment of action and sector plans. MONRE’s financing for ST and PG is under the recurrent budget.5 Financing of the recurrent The NTP-RCC has played a significant role in the recur- rent budget. It has provided strong technical inputs to Viet- budget is key as it funds nam’s CC-response by supporting mostly recurrent spending mitigation response as well (of which it accounts for about 40 percent in total) that pro- actively targets activities to improve the country’s enabling as Scientific, Technological environment and capacity to deliver CC-response investment. About 51 percent of the NTP-RCC expenditure is directed and Social Capacity (ST) towards developing ST, and about 31 percent directed at PG. and Policy and Government (PG) activities CC-response spending is not The GoV’s CC-Response spending is dominated by fully aligned with NCCS and investments (92 percent), while recurrent spending is much lower; though recurrent spending has increased as VGGS policy objectives a share of overall spending in recent years. In the period Tracking CC-response spending against the NCCS and from 2010 to 2013 the recurrent budget of the five line min- VGGS policy objectives illustrates that the expenditures istries saw a slight decrease, but with the overall share for (in the studied line ministries and NTPs) are targeted mitigation tasks growing. MONRE and MARD contribute towards food and water security (63 percent) and sustain- most to the recurrent budget (26 and 20 percent respectively). able infrastructure (74 percent). In addition, approximately The recurrent budget only accounts for about 8 percent of 17 percent of CC-response financing was not capable of being central government expenditure. In 2011 there was a small tagged in accordance with VGGS policy objectives, confirm- upturn in the recurrent budget overall; however, funding has ing that financing directed towards some resilience activities steadily dropped since then, with the share for mitigation is not captured within the VGGS policy framework, whose tasks growing from 7 percent in 2010 to 22 percent in 2013. main objective is to promote low-carbon green growth. The MOIT’s financing—though not large—is mostly focused on linkage between expenditures and NCCS and VGGS pol- mitigation, which is predominantly funded under the recur- icy objectives has the potential to provide key longitudinal rent budget with a focus on energy efficiency activities. information in CC-response oversight. A high-level picture of expenditure against relevant policies is a useful tool to refine Increased attention on financing for ST and PG is import- and strengthen Vietnam’s CC-response. ant as they support enabling activities that develop the capacity for delivering CC-response activities. 94 percent of financed ST activities are project and programs that develop science and technology as a foundation for policy formula- tion, impact assessment, and the subsequent identification of 5. Data on MOC recurrent expenditures is not available for the CPEIR. 20 Vietnam has mobilized its own FM projects with national strategic climate change and green growth objectives indicates that allocations are largely cov- resources for CC-response, but ered under the NCCS strategic objective “suitable proactive response actions to sea-level rise in vulnerable areas,” and are Development Partner funding generally not captured under the VGGS as they consist of also plays an important role adaptation activities. Given the narrow scope of financing across the NCCS strategic objectives, and that the SP-RCC CC-response spending is mostly financed by domestic has been identified as a financing source for the implemen- sources, but DPs have contributed 31 percent of total tation of the GGAP, this highlights the need to review the CC-response expenditures implemented by the five line planning and review processes for project selection under the ministries and through the NTP-RCC and NTP-EE. Offi- SP-RCC FM. cial development assistance (ODA) for CC-response has risen strongly over the past decade and has provided substantial, although variable, support to mitigation and adaptation proj- To move forward, the CPEIR ects. The main emphasis has been to support CCD activities. However, both loan and grant assistance during the CPEIR’s recommendations offer a study period show a relative increase in PG activities. The number of short-term and NTP-RCC is an example of the influence DP funding can have on CC-response through the State Budget given its con- long-term initiatives across siderable emphasis to enabling activities that support main- streaming of climate action and capacity development. Given the planning and budget that the ODA data analyzed in the CPEIR is derived from cycle two sources (MPI and from the line ministries), this illus- trates the need for a more streamlined and consistent CC- These recommendations are underpinned by the find- response reporting structure. ings and the analyses of the review and, together with its proposed Action Plan, are based on a framework that Development partner financing has also triggered a ded- is organized around two pillars. As described below, each icated GoV SP-RCC Financial Mechanism (created in pillar includes a set of components, objectives and underly- 2010) to finance CC-response projects. A review of the ing activities that will guide its implementation and help the selected projects to date shows that financing has been mostly GoV improve its CC-response across a diversity of sources. directed towards activities with an emphasis on improving Implementation of the CPEIR recommendations, facilitated the resilience of coastal areas and riverbanks. The SP-RCC by the formulated National Action Plan, should help the financial mechanism (FM) has selected 61  projects for a GoV improve its climate change response and its ability to planned allocation of approximately VND 17,900 billion mobilize, allocate and use climate financing effectively across (over the lifetime of the activities), of which the SP-RCC FM a diversity of sources (See Annex IV for a synopsis of the value has planned to finance 80 percent and provinces the remain- added by the CPEIR). By doing so, Vietnam will boost inclu- ing 20 percent. Thus far, 16 projects (of around VND 4,400 sive green growth, competitiveness and poverty reduction billion) are being financed, with approximately VND 815 while providing leadership and contributing to the knowl- billion committed for 2013 and 2014. Tracking SP-RCC edge base for addressing this global challenge. 21 Pillar A: Climate Planning demonstrate how the typology can be used to review and guide the management of CC-response policies at city, and Budgeting Reform provincial and national levels. The review identifies areas that have not received climate change financing, or have The Socio-Economic received limited financing. Alongside more detailed analysis, Development Plan is a it can highlight whether a CC-response is mainstreamed into projects that have opportunities for adaptation or mitigation major opportunity for delivery or climate change co-benefits. It provides opportu- nities to investigate some of the weaknesses and strengths of mainstreaming CC-response CC-response spending coverage. It is also clear that develop- in development planning ing comprehensive mapping and monitoring of CC-response efforts from all financing sources must be improved and A major effort is needed to establish CC-response as a cen- expanded in order to strengthen the planning and budgeting tral element of the forthcoming five-year SEDP. Improving process, avoid overlaps, and encourage complementarities. forward planning of the national climate change frameworks The broader implementation of the TCCRE can help the through the 2016–2020 SEDP is paramount to establish a stra- GoV manage its CC-response program, establish account- tegic direction for CC-response plans and expenditure. Main- abilities, and strengthen channels for financing the program. streaming CC-response into sector and provincial programs can have a major effect on the GoV’s CC-response. It will also further uncover the CC-response potential in each of the major Enhanced use and sectors). This will facilitate the development of detailed guide- lines for each ministry and province on the approach to be strengthening of climate taken in the preparation of action plans and CC-relevant proj- ects and programs for the 5 year and annual plans and budget reporting is necessary submissions. The SEDP process also provides an opportunity to progressively ensure to review and establish joint activities to develop multi-sectoral and area-based planning and projects to address high-priority improvement in the vulnerable regions and issues. To introduce CC-response most effectiveness of the delivery effectively in the 2016–2020 SEDP, it is critical that MPI and MONRE build on the findings of this CPEIR, particularly of CC-response spending with regard to mainstreaming CC-response into sector and Effective and strategic reporting is essential to CC- provincial programs that can have a major effect on climate response policy credibility. The GoV should regularly pre- change response. pare and release a Climate Report to show how CC-response money has been spent, giving a broad assessment of achieve- The Typology of Climate ment against the stated objectives. Such a report is an essen- tial component of climate change policy implementation. Change Response The availability of regular and timely data on CC-response expenditures, through application of the TCCRE, would Expenditure (TCCRE) greatly enhance the relevance and significance of the report can assist Vietnam with and would buttress political and administrative executive control and direction of the overall CC-response program. continued monitoring, Over time, reports should become more comprehensive including assessments from all sectors and provinces to fully budgeting and planning for reflect policy developments and achievements in relation to CC-response the GoV’s adaptation and mitigation goals. The Treasury and Budget Management Information  System (TABMIS) The mapping and analysis of current climate- can help incorporate all climate change relevant projects in relevant activities conducted in the context of the CPEIR the State Budget, and can use its accounting, reporting, and 22 bank reconciliation facilities to track spending and ensure the NCCC’s oversight role so it can better assist with syn- full financial accountability of all transactions processed chronization of overall program and project priority setting through the system. As such, the pilot work on channeling mechanisms, and ensure strengthened alignment between ODA through TABMIS that is in place for National Target financing mechanisms, budgeting, and mitigation and adap- Programs (NTPs) should be accelerated to all DP programs. tation policy delivery. The GoV should review its current capacity, and speed Strengthening the information flow to the NCCC on up the development, of a CC-response linked monitoring achievement of policy objectives, complemented by a and evaluation (M&E) system and development of strate- harmonized M&E system, can reduce the risk of frag- gic key performance indicators (KPIs) to assess impact. mentation, improve targeting of resources and maximize Designing an M&E system for climate change is a complex mitigation and adaptation benefits. This will help ensure process due to the cross-cutting and mainstreamed nature that all relevant information is provided to the key agencies. of CC-response. However, a cohesive M&E system can be The NCCC’s role should therefore be significantly strength- initiated with an early emphasis on capacity enhancements ened. Setting up appropriate technical capacity, combined and a focus on strategically important indicators at all lev- with strengthened high-level coordination, helps set prior- els of implementation. In the long term an effective M&E ities at a technical and evidence-based level in all program system will require sustained effort, supported by MPI and activities, as well as allow for high-level assessment of the MONRE. M&E on CC-response spending is currently overall balance of the CC-response program (with scientific inhibited by limited definition of project objectives, lack of support from the VPCC), combined with identification of verifiable KPIs, compounded by a highly decentralized man- technical and financial gaps. Enhancing the capacity of the agement of many national CC-response programs. Effective NCCC’s Standing Office (SO) can also make coordination and strategic M&E is essential to CC-response accountability more effective, and improve the provision of higher qual- and long-term planning. Combined with the further imple- ity information for the NCCC. This could be achieved by mentation of the TCCRE, progressive implementation of an (i) establishing a harmonized M&E system, including cli- M&E support system will help address these issues. mate finance tracking and indicators linked to policy objec- tives; (ii) building capacity in the SO to collate and present information; and (iii) building the capacity of CC-response Pillar B: Climate Policy and Institutional focal points in provincial entities, in order to report climate Coordination & Strengthening change progress, planning and constraints to the SO. It is also important to (iv) create common reporting templates to Strengthening the role reflect progress in the NCCS, VGGS, and related strategies, programs and initiatives; and (v) develop succinct progress of the NCCC for policy reports of the CC-response in sectors and provinces. coordination and priority setting between adaptation Monitoring and Evaluation and mitigation policies will (M&E) and climate reporting help enhance linkages to the is necessary to enhance planning and budget cycle CC-response efforts The role of the NCCC will be vital in the oversight of Developing and harmonizing an M&E system, accom- the NCCS, VGGS and other climate-related programs panied by synchronized priority setting criteria, will to ensure that they are coordinated and their implemen- improve coherence of targeting, planning, funding allo- tation is harmonized. Harmonizing priorities across key cation, and reporting for CC-response. The GoV should adaptation and mitigation policies and programs and link- review current capacity and initiate the development of a ing these with the budget and planning cycle is essential for CC-response M&E system, including the development of setting priorities. It will require significant strengthening of strategic key performance indicators to assess the impact of 23 CC-responses at both the policy and program level. A unified adaptation indicators. This should lead to a more compre- M&E is essential to CC-response credibility and long-term hensive yet practical M&E system built on international planning, and will usefully support the oversight and target practices in a locally tailored way. Strengthening the national setting role of the NCCC. The NCCC’s supervision role cov- platform on DRRM and adaptation would improve knowl- ers the NCCS and VGGS, but M&E and reporting by the edge exchange and coherence of responses, and help establish SO should be harmonized with closely related programs on clear priorities. For example, regulations and standards for DRRM and energy efficiency. The role of the SO is vital for climate proofing of infrastructure can help build resilience channeling high-quality, verified and succinct information and should be addressed in the SEDP process. to the NCCC, to enable the NCCC to realize its oversight, prioritization and coordination role. The SO needs to receive high-quality information, meaning that systems and capaci- Clear targets on greenhouse ties at focal points in ministries and provinces must also be strong. gas emissions (GHG) and energy sector reform Climate change adaptation are necessary to ensure planning, financing, and mitigation goals are reached policy implementation Mitigation policy implementation and GHG emission targets should be evidence-based and linked to global processes need efforts. While mitigation often involves complex policy improvement to effectively issues that need to be resolved progressively, the window of opportunity is limited and immediate actions are necessary respond to growing climate to capture the full potential of clean technologies and to avoid inefficient infrastructure lock-ins. As a result, imple- change risks menting mitigation policies will be subject to complex policy Harmonizing adaptation and DRRM will support a more discussions, and a high degree of uncertainty will affect the effective response to building resilience. While a consider- type and amount of direct public expenditure that will be able amount of work has already been done to establish basic needed to develop effective GHG mitigation policies. The scenarios of climate change and assess vulnerabilities and CPEIR recommends a review and consolidation of the GHG risks that Vietnam’s different regions and sectors face, vul- emission targets, especially for the period from 2020 in the nerability studies should be extended to all relevant sectors context of UNFCCC negotiations, with clear indication of and provinces in order to identify and secure assets against what Vietnam can contribute voluntarily and what can be climate change-related vulnerability. This process should be achieved with international financial and technical sup- formalized and institutionalized to ensure that progressive port. For the GoV to meet its demonstrated commitment to resilience building is aligned to revised versions of the climate low-carbon growth, a national Monitoring, Reporting, and change scenarios as they are generated. Both climate-derived Verification (MRV) system needs to be developed to iden- vulnerability and DRRM responses across a number of line tify, track, and report GHG emissions. Key tasks for imple- ministries cover adaptation responses, but a more effective menting mitigation policy are to: (i) review current mitiga- response to vulnerability should be instigated that increases tion activities and develop consolidated mitigation targets for alignment of adaptation and DRRM approaches both in post-2020 and an implementation roadmap for low-carbon higher-level policy objectives as well as in institutional coor- options; and (ii) establish a consistent fiscal policy framework dination. Adaptation and DRRM teams should jointly to encourage reduction of fossil fuel use. In addition, the role develop more integrated vulnerability assessments and link of REDD+ as part of an overall coherent framework for mit- project-level M&E systems to high-level assessment against igation needs to be determined. 24 Mitigation efforts in Vietnam cannot be achieved without energy sector reform, including phasing out indirect sub- A concrete National Action sidies on fossil fuels for power generation as well as trans- Plan sets the path for port, accompanied by support measures for low income households and certain businesses that must cope with strengthening Vietnam’s short-term energy price increases. These reforms will pro- mote energy efficiency and investment in renewable energy. CC-response to build The bulk of energy investment and trade is executed through a low-carbon, climate energy SOEs, and the CPEIR recommends increased trans- parency in cost structures and strengthened independent resilient future energy market regulation. To make the above recommendations a reality, steps need to be taken in the form of a national action plan, Strengthening the climate with emphasis on immediate actions to establish a basic CC-response platform for the next SEDP. The proposed finance architecture would action plan contains two main sets of activities that corre- spond to the Pillars articulated above, and which are pro- allow coordination and posed to be implemented in the short-, medium-, and long- mobilization of resources for term. The first component specifies activities required in the immediate future to identify strategic priorities for the SEDP CC-response activities and and the planning, budgeting and financing cycle. The second component specifies those activities required for policy coor- identification of key policy dination and institutional strengthening to support adap- fiscal risks and gaps tation and mitigation actions, target setting, and financing mechanisms. The climate financial architecture should be strength- The CPEIR recommends that the GoV takes eight steps ened and unified as a result of stronger planning and to implement the CPEIR recommendations on a pilot budgeting, strategic M&E development, and more effec- basis (with the entities that have already been involved in tive inter-ministerial coordination. The development of the CPEIR). These steps should be initiated immediately as a climate budget, tracking of actual spending, basic M&E, part of the upcoming annual and five-year 2016–2020 SEDP and effective coordination of all these activities will provide planning and budgeting cycle. The recommended steps are: a basis for better identifying financial gaps and overlaps. Rather than a multitude of programs and strategies com- • Refining the TCCRE guide and training/capacity- peting for available funds, it should be possible to review building in line ministries and provinces the budget result and the Climate Report to narrow the • MPI begins establishing strategic guidelines for climate scope of financing mechanisms to more specific targets and change spending and mainstreaming climate change sources of funds. The existence of a more comprehensive policies in the 2016–2020 SEDP mechanism will, in itself, help to attract funding sources and provide a basis for strengthening and designing suitable • MPI issues the revised TCCRE guide requiring climate financing mechanisms. As such, the financing framework change tags, objectives, indicators, and milestones for all should be harmonized to focus clearly on adaptation and climate change relevant projects mitigation policy implementation goals and to strengthen • MPI progressively generates CC-response expenditure or establish appropriate mechanisms for financing linked estimates for all climate change relevant projects in pilot to these goals. entities 25 • Preparation by the Government of a pilot draft memo- expected outputs and outcomes of proposed activities to randum on climate budget for the annual State Budget implement the CPEIR recommendations. It describes their Report linkages with other activities (to help identify priorities and • MOF directs all piloted line ministries and provincial sequencing) and the risks that need to be taken into account finance departments to report on total spending for all for effective implementation. The second template includes CC-relevant projects all of these activities in a National Action Plan, together with other ongoing CC-response activities, which will be the basis • MPI and MONRE strengthen monitoring and evalua- for more detailed work plans for each of the responsible agen- tion (M&E) processes on CC-relevant projects during cies and units. These units will specify milestones and a time- project implementation line for completion of each activity. All activities are tagged • Preparation of a pilot Climate Budget Report with the TCCRE element that they will contribute to, since implementation of the CPEIR will itself be a component of Two templates are provided to assist the GoV to develop Vietnam’s CC-response strategy. its response. The first, a Results Framework, highlights the 26 INTRODUCTION 27 Vietnam is vulnerable to the impacts of climate change— drainage and damage to sanitation and water supply facilities. those which are already occurring and those that will Ho Chi Minh City is projected to be among the cities in the only intensify in the coming decades. The country experi- region most affected by a sea-level rise and increased storm ence increases in temperature and sea levels, stronger storms, surges. floods and droughts. For example, under an average emis- sions scenario, the average annual temperature will rise by At current rates of growth, Vietnam will become a major about 2–3oC by the year 2100 compared to the last decades greenhouse gas (GHG) emitter. Over the last decade, Viet- of the 20th century; sea levels will rise between 42 and 72 cm, nam accounted for the fastest growth in GHG emissions in depending on the coastal region; and the highest daily rain- the region. Vietnam’s emissions growth was one of highest fall will increase by up to 150 percent in parts of the northern in the world and significantly higher than other countries mountainous region.6 Vietnam is exposed to climate-related in the region such as China, Malaysia, Thailand, Indonesia, natural hazards due to its geography and topography, and Cambodia, and the Philippines. Vietnam’s carbon intensity economic development and a population increase, in partic- of GDP is now the second highest in the region (after China) ular in cities in the Mekong River Delta and along the coast, and it is still increasing.9 Official projections of Vietnam’s are increasing exposure as well as risks, whilst climatic shocks energy emissions show a fourfold increase between 2010 and and stresses are increasing. 2030, and total net emissions will grow threefold over that period.10 These increases are mainly driven by the projected Climate-related hazards will have adverse effects on growth in the use of coal for power generation, as its share in growth and poverty reduction, affecting several sectors the power generation mix is expected to triple from 17 per- of the economy simultaneously. The agricultural sector is cent in 2010 to 58 percent in 2030. Fossil fuels for power gen- expected to be significantly impacted by climate change, par- eration and transport are comparatively low in Vietnam as a ticularly in the Mekong River Delta, which is Vietnam’s most result of price controls and indirect subsidies, which partly productive agricultural area and essential for food security explains the relatively high energy and carbon intensity and and rice exports.7 The Mekong River and Red River Deltas low investment rate in non-hydro renewable energy.11 already experience saltwater intrusion, which is projected to worsen with rising sea levels. The aquaculture sector, which A number of climate change adaptation and mitigation accounts for five percent of the country’s GDP, will also activities can be “no-regret” measures that promote be affected by increasing tropical cyclone intensity, salinity growth while supporting poverty alleviation efforts. intrusion, and increasing temperatures. Capture fisheries are Adaptation measures often reduce both immediate and long- expected to be impacted by warmer oceans and ocean acidi- term exposure to climate related hazards and disaster risks. fication associated with rising atmospheric and ocean carbon Independent of the exact extent of long-term climate change dioxide concentrations, and substantial reductions in catch effects, such no-regret or low-regret measures protect lives and potential are anticipated.8 livelihoods. Adaptation investments often involve large capi- tal expenditures that may be labor-­intensive and thus facilitate The urban poor are one of the most vulnerable groups to job creation. Low-carbon measures such as renewable energy climate change, particularly those who live in informal generation, improving energy efficiency, and providing sus- settlements. A significant portion of Vietnam’s urban popu- tainable transport options can strengthen Vietnam’s energy lation lives in informal settlements, making them vulnerable security and increase competitiveness. They can also reduce to excessive heat and humidity stresses. Coastal cities in par- local air pollutants that have substantial health costs and that ticular are exposed to climate change related risks, includ- often disproportionately affect the poor. Acting early to avoid ing increased tropical storm intensity, storm surges, sea-level investment in technology and infrastructure that will “lock rise, and sudden-onset river flooding. These cities encoun- ter floods associated with a sea-level rise and also increased  orld Bank (2014). Charting a Low Carbon Development Path for Vietnam.   9. W rainfall intensity, and face significant risks due to the lack of WB, ESMAP and DFID. 10. SR Vietnam (2010). Vietnam’s Second National Communication under the United Nations Framework Convention on Climate Change. Hanoi, Socialist MONRE (2012). Climate Change and Sea Level Rise Scenarios for Vietnam. 6.  Republic of Vietnam, Ministry of Natural Resources and Environment, World Bank (2010). Economics of Adaptation to Climate Change: Vietnam. 7.  page 56. Washington, D.C. 11. U NDP (2014). Green Growth and Fossil Fuel Fiscal Policies in Vietnam— World Bank (2013). Turn Down The Heat: Climate Extremes, Regional Impacts, 8.  Recommendations on a Roadmap for Policy Reform. Hanoi, United Nations and the Case for Resilience. Development Programme. 28 in” high carbon economic structures, such as coal fired power The CPEIR uses a policy-based approach and innova- plants, is also important. tive tagging system to provide a unified framework that identifies the full range of activities and expenditures To accelerate the climate change response (CC-response) involved in CC-­ response delivery. This analysis focuses process through the State Budget and create conditions to on budget and institutional practices of five line ministries better mobilize other sources of funds, the Government (MONRE, MOIT, MARD, MOC, and MOT) and three sought advisory services from the World Bank (WB) and provinces (An Giang, Bac Ninh, and Quang Nam) repre- the United Nations Development Programme (UNDP) to senting the three regions of Vietnam, which face significant conduct a Climate Public Expenditure and Investment exposure to climate change and different ecosystems, devel- Review (CPEIR). This review comes after the national Cli- opment, and climatic challenges. The CPEIR offers a set of mate Change Action Plan and the Green Growth Action analytical findings, recommendations, and an accompanying Plan (2012–2020) have been issued by the Prime Minister, action plan to implement the recommendations. and just prior to the formulation of the five-year Socio-Eco- nomic Development Plan (SEDP) for 2016–2020, allowing The report consists of five chapters: the recommendations to feed into its formulation and imple- mentation. The GoV initiated the CPEIR to: Chapter 1 offers an assessment of the current climate change policy and the institutional framework for i. Assess options for tagging and tracking climate change and CC-response in Vietnam. green growth relevant expenditures in the budget against Chapter 2 provides a summary of the CPEIR methodol- existing national policy frameworks with reference to ogy and of the development of a climate change typology international standard typologies; linked to Vietnam’s CC-response policy. ii. Provide analytical tables and charts showing climate Chapter 3 includes an analysis of the CC-response spend- change expenditure trends and focus through the selected ing relative to policy objectives and categories of climate channels for the period 2010–2013; change activities and sources of financing. iii. Clarify alignment of recent climate change and green Chapter 4 offers recommendations to incorporate cli- growth response spending under the national budget, mate change policy in the planning and budgeting cycle with government climate priorities and policies; and to establish a CC-policy review. iv. Review the existing climate finance architecture and Chapter 5 consists of a national action plan to implement some elements of the fiscal policy framework to help the CPEIR recommendations, including through the improve existing capacity and consolidate the set-up establishment of a climate change budget and its annual and strengthening of fiduciary procedures for resource review. mobilization; v. Assess the policy, institutional and governance structures at The report is complemented by three background notes national and local levels to recommend steps to further on (i)  Vietnam’s climate change policies, institutions, and integrate climate change response objectives in gov- public financial management reforms; (ii) the CPEIR meth- ernment planning, budgeting, monitoring and review odology and (iii) a CPEIR Typology Guide of Climate processes; and Change Response Expenditure (TCCRE) in Vietnam. The report and background notes are available on the website vi. Suggest appropriate directions for further development in of the Ministry of Planning and Investment that was estab- light of the Vietnam context and international experi- lished to track Climate Finance Options for Vietnam (http:// ence and recommend improvements in the planning and cfovn.mpi.gov.vn), as well as on the websites of the World delivery of the Government climate change response Bank (www.worldbank.org/en/country/vietnam) and UNDP program. (www.vn.undp.org). 29 1. ASSESSING VIETNAM’S CLIMATE CHANGE POLICY AND INSTITUTIONAL FRAMEWORK FOR CLIMATE CHANGE RESPONSE 30 Key Findings from Chapter 1 in technical and policy requirements in each case and the importance of reflecting achievements regularly in a har- 1. Vietnam has responded strongly to the challenges of cli- monized and strengthened strategy, planning, budgeting mate change through rapid development of national, sec- and evaluation cycle. The government system of planning tor and sub-national policies and programs and a high- and budgeting is critical for developing a reliable and timely level coordinating structure (the National Climate Change overview of the way that CC-response policy is financed and Committee—NCCC). implemented at all levels of government, and key areas for 2. The NCCS and VGGS and related national action plans strengthening this process are identified. Finally, climate address the key CC-response policy issues. However, along change mainstreaming is considered at the sector and local with sector and sub-national policies, their implementa- level and areas in which mainstreaming can be enhanced are tion needs to be harmonized in order to align climate identified. A coordinated improvement of both procedural change adaptation and mitigation objectives at national, and organizational elements of the institutional framework sector and sub-national level. is seen as essential to establishing an effective and efficient 3. Organizational strengthening is necessary to further sup- CC-response policy, leading to increased effectiveness and port the NCCC to perform its task of oversight and coor- flows of climate financing and related expenditures. dination of CC-response policy planning, prioritization, implementation, monitoring and reporting. 4. Adaptation and mitigation responses raise different techni- 1.1 The development of climate cal and policy challenges, but both can be improved through change policy in Vietnam strengthening technical capacities and harmonized Vietnam’s continuing economic progress is threatened monitoring and evaluation (M&E) of the results of by its exposure to climate change. Vietnam is one of the CC-response spending. “extreme risk” countries according to the 2014 Climate 5. Diverse GHG mitigation targets have been issued by the Change Vulnerability Index (CCVI) of Maplecroft,13 an GoV. Consolidated national targets for GHG reduc- index of the vulnerability to climate change over the next tion for the post-2020 period must be defined and com- 30 years that evaluates exposure to extreme climate-related municated to the UNFCCC. events, the sensitivity of populations, and the adaptive capac- 6. Some progress has been made to mainstream the sector and ity of countries. provincial climate change response but gaps remain, partic- Vietnam’s economic growth is carbon intensive. While ularly in policy and institutional capacities and processes. Vietnam has historically been a minor contributor to global More direction is needed in the planning, budgeting warming, official projections show a threefold increase of and implementation cycle. total net emissions between 2010 and 2030. The forestry sec- The primary focus of this chapter is to review Vietnam’s tor is expected to become a carbon sink but emissions will climate change response (CC-response) policies, plan- rise, in particular in the energy sector.14 Vietnam’s economy ning mechanisms and associated institutional set-up at is both energy intensive and intensive in GHG emissions per the national, sector and provincial level. It outlines the unit GDP in comparison with neighboring countries.15 development and present status of Vietnam’s climate change Vietnam’s climate change and related policies have devel- policy framework and organizational responsibilities.12 It first examines the main CC-response policies of the GoV, oped strongly over the past decade. Action to initiate a including areas for strengthening. It then focuses on key national response to climate change started in the late 1990s elements of the institutional framework that coordinate and and Vietnam’s Initial Communication to the UNFCCC was support the CC-responses. The chapter then examines adap- published in 2003. The CC-response has developed rapidly tation and mitigation policy responses. It outlines differences Maplecroft (2014). Climate Change and Environmental Risk Atlas 2014 http:// 13.  maplecroft.com/portfolio/new-analysis/2013/10/30/31-global-economic- output-forecast-face-high-or-extreme-climate-change-risks-2025-maplecroft-  ollectively these elements comprise the broad institutional framework (the 12. C risk-atlas/. “rules of the game”) in the sense applied in institutional economics following SR Vietnam (2010). Vietnam’s Second National Communication under the 14.  Douglass North (1992) (Transaction Costs, Institutions, and Economic Perfor- United Nations Framework Convention on Climate Change. mance, ICEG, 1992). Specific elements of the institutional framework are World Bank (2014). Charting a Low Carbon Development Path for Vietnam. 15.  identified as appropriate in the text. WB, ESMAP and DFID. 31 since 2008 with the National Target Program to Respond to The VGGS establishes renewable energy and energy effi- Climate Change (NTP-RCC: Decision 158/2008/QĐ-TTg, ciency as important parts of sustainable development and 2008; and 1183/QĐ-TTg, 2012 for the period 2012–2015), shifts the economy towards a low-carbon green trajectory. followed by the National Climate Change Strategy (NCCS: Green growth is seen as an important part of sustainable eco- Decision 2139/QĐ-TTg, 2011) and the Vietnam Green nomic development. For Vietnam to avoid the “middle income Growth Strategy (VGGS: Decision 1393/QĐ-TTg, 2012). trap” a shift away from labor- and resource-intensive economic These two strategies form the overarching policy frame and activities is needed, as has been demonstrated by South Korea.16 have been prioritized and made concrete in the National Further economic progress requires new, technological- and Action Plan on Climate Change (NAPCC) and the Green knowledge-intensive industries and more innovative and Growth Action Plan (GGAP), both for the period up to dynamic private and state-owned institutions. Green growth 2020, whereas sector and provincial CC-response and green for middle-income countries requires increased innovation, growth action plans have either been completed or will be R&D and increased output-per-unit-input.17 Green growth formulated. In addition, the National Action Program on also contributes to social benefits, including poverty reduction, REDD+ 2011–2020 was issued in 2012 (Decision 799/ and makes a “significant contribution to the implementation QĐ-TTg, 2012). There are also a number of other related of the national climate change strategy.”18 Low-carbon devel- policies, including the National Strategy for Natural Disas- opment offers an opportunity for new and sustained growth in ter Prevention, Response and Mitigation to 2020 (2007); Vietnam.19 The VGGS proposes more efficient use of natural the Law on Natural Disaster Prevention and Control (2013); capital, reduction of GHG emissions and an improvement in the National Forestry Development Plan 2011–2020 (2012); environmental quality. The Green Growth Action Plan (GGAP, and the National Target Program on Energy Efficiency and 2014) presents 66 activities, which are grouped under four Conservation (NTP-EE). The main climate change and themes: (1) Institutional improvement and formulation of green green growth policies are discussed below and coordination growth action plans at the local level; (2) Reducing GHG emis- through the National Climate Change Committee (NCCC) sions intensity and promoting the use of clean and renewable is discussed in section 1.2. Section 1.3 addresses the bal- sources of energy; (3) Greening production; and (4) Greening ance between adaptation and mitigation objectives, and sec- lifestyle and promoting sustainable consumption. The priority tion 1.4 discusses the planning, budgeting, and implementa- activities for 2013–2015 include completing the institutional tion cycle. Sector CC-responses are discussed in section 1.5. framework to enhance the economic restructuring process in accordance with the VGGS, and formulating the green growth The National Climate Change and Green financial policy framework. Most climate relevant actions in the Growth Policies GGAP are on mitigation of GHG emissions and climate change adaptation is not highlighted. The NCCS aims to establish a clear structure and iden- tify specific tasks to be accomplished to achieve CC- Financial sources for implementation of the main poli- response objectives. Ten strategic tasks are identified in the cies on climate change are not specified in detail. Cap- NCCS, including adaptation and mitigation tasks. The stra- ital resources for implementation of the NAPCC must tegic phases of the NCCS are linked to an industrialization come from the State Budget and international sources, but trajectory as well as socio-economic advancement, stress- Decision 1474/QĐ-TTg is not more specific than that. The ing that after 2025 Vietnam will focus on reducing green- GGAP must be financed by “resources from the state budget house gas (GHG) emissions. For the period 2011–2015, it in the SP-RCC” (Decision 403/QĐ-TTg, 2014). In addition, identifies priority programs, including the NTP-RCC; the the NCCS and the VGGS are not explicitly identified in the National Scientific Program on Climate Change; hydro- planning and budgeting cycle as part of an integrated Govern- meteorological observation and forecasting; water resources ment CC-response program. management and climate change adaptation in the major deltas; management of GHG emission reduction activities and GHG emission inventory; CC-responses in megacities; Tran, Van Tho (2013). The Middle-Income Trap: Issues for Members of the 16.  sea dyke and river embankment reinforcement; healthcare; Association of Southeast Asian Nations. ADBI Working Paper 421. Tokyo: Asian Development Bank Institute. Available: http://www.adbi.org/ and community-level response. These same ten priorities are working-paper/2013/05/16/5667.middle.income.trap.issues.asean/. highlighted in the National Action Plan on Climate Change Van Arkadie, Brian, et al. (2010). Joint Country Analysis of Vietnam. Paper for 17.  UN Vietnam. 2012–2020 (NAPCC; 2012), which lists 65 specific pro- 18. Vietnam National Green Growth Strategy (2012). grams and projects, many of which focus on strengthening World Bank (2014). Charting a Low Carbon Development Path for Vietnam. 19.  observation systems and adaptation activities. WB, ESMAP and DFID. 32 Present national policies explicitly link climate change environmental protection” stated that the response to cli- to green growth in order to promote sustainable eco- mate change to date was “passive and confusing” and that nomic development. The NCCS focuses on adaptation and the CC-response was “one of the most important tasks of also includes mitigation, in particular as it will be enabled the entire political system.” The resolution provided a suite by international financing. The VGGS stresses mitigation of clear and specific objectives by 2020 in adaptation, natu- actions, with a focus on low-carbon and green growth. The ral resource management and environmental protection, as low-carbon green growth approach in the GGAP provides a well as general objectives by 2050. It also reaffirms the CC- potential virtuous circle, increasing access to energy for the response priority from the highest level and calls for renewed poor, creating green jobs and boosting the economy, while efforts from all relevant entities. reducing GHG emissions. As stated in a review of low- carbon growth in Asian countries, “low-carbon growth is Delivering Climate Change Policy not just about climate change mitigation. It also makes tre- through National Programs mendous sense to sustainable development planning”.20 The An active CC-response has been initiated through four Republic of Korea’s green sector policies, including short-term key programs with significant support from external macro-economic policies and longer-term industrial policies, donors. Key CC-response programs include: (i) the National are leading to a reduction in carbon intensity. Korea pursues Target Program to Respond to climate change (NTP-RCC); green growth within a climate change umbrella, and policy (ii) the Support Program to Respond to Climate Change commitments are supported by an allocation of two percent (SP-RCC); (iii) the National Scientific and Technological Pro- of GDP. Vietnam, similar to the Republic of Korea, pur- gram on Climate Change aiming to support the NTP-RCC; sues climate change mitigation within green growth activi- and (iv) the National Target Program on Energy Efficiency ties through the VGGS and GGAP as part of a sustainable and Conservation (NTP-EE). These ongoing programs have development trajectory, and the allocation of domestic public helped establish a CC-response policy capacity, but they need resources to green growth appears justifiable. to be fully integrated into the GoV institutional structure. The NCCS and VGGS provide complementary as well The NTP-RCC (Decision 158/2008/QĐ-TTg) is a as partially converging policy actions, which can sup- 15-year, three-phase program, which stresses the need port and drive an effective CC-response. The VGGS low- for mainstreaming CC-responses into social and eco- carbon development objectives are consistent with the miti- nomic development, while pursuing broader sus- gation aspects of the NCCS but are elaborated further. The tainable development and taking into account gen- VGGS also has objectives linked to green production, effi- der equality and poverty reduction. The NTP-RCC, cient use of natural resources and a “new rural model with approved in 2008, highlights that responding to climate lifestyles in harmony with the environment” which may change is a task of the whole institutional system, all sec- support adaptation. However, the convergence of the VGGS tors, provinces and people. The first phase of the NTP- and NCCS in terms of adaptation could be further clarified. RCC (2009–2010) focused on scientific analysis and ini- Harmonizing the implementation of these strategies and tial planning, the second (2011–2015) on further analysis, related sector and provincial action plans would optimize cli- detailed planning, capacity building and development of mate change planning, budgeting, M&E and delivery. How- (sector and provincial) action plans. The institutional, leg- ever, this harmonization will need a clear definition of tasks islative and resource constraints included weak monitor- and a strong M&E framework covering all CC-relevant activi- ing and reporting, limited program implementation in line ties. Such harmonization could happen in the context of the ministries and limited available resources. As a National SEDP (2016–2020) planning process. Target Program an actual budget is allocated—in the case The need for driving forward a comprehensive CC- of the NTP-RCC from domestic sources (mainly loans response has recently been re-emphasized. In June 2013, from the SP-RCC, discussed below) and grant money from the Central Executive Committee of the Party further Denmark. The focus of the NTP-RCC is on adaptation committed to a more active response to climate change. (e.g. hydro-­meteorological infrastructure and provincial Resolution 24-NQ/TW on “Active response to climate climate change action plans) rather than mitigation. The change, improvement of natural resource management and next phase of the NTP-RCC (2016 onwards) would benefit from a greater focus on prioritized tasks under the (sector and provincial) action plans and greater use of climate change  DB-ADBI (2012). Study on Climate Change and Green Asia: Policies and 20. A Practices for Low-Carbon Green Growth in Asia. scenarios into adaptation planning. However, M&E of the 33 current program and a review of the contextual progression financing architecture there is a need to improve techni- in CC-­response is needed to support this shift (see Chapter 3). cal and budget planning in relation to project selection, the selection criteria should be revised, including the co- The Support Program to Respond to Climate Change financing ratio, and monitoring and reporting should be (SP-RCC) is a financing mechanism that enables scaling improved. The GGAP (Decision 403/QĐ-TTg, 2014) states up CC-responses, for example financing of the NTP-RCC that it will be funded partly from the SP-RCC funds, which (mainly soft loans). It was also set up to serve as a plat- offers an opportunity to bring together the climate change form for coordinated CC-policy development and dia- response and the green growth agendas. logue between the Government and international devel- opment partners. Through annual cycles, DPs (including The National Scientific and Technological Program on JICA, AfD, WB, CIDA, AusAID, and Korea EXIM Bank) Climate Change aiming to support the NTP-RCC pro- and the Government agree on climate change related policy vides scientific and technological evidence on which to actions, which upon delivery trigger budget transfers to Viet- base adaptation and mitigation responses and to integrate nam. Most of these transfers are subsequently allocated to climate change into strategic plans and implementation climate relevant actions. The SP-RCC’s institutional struc- procedures. The program was set up in 2011 in response to ture was initially linked to that of the NTP-RCC but later one action in Decision 1244/QĐ-TTg on major directions created its own Program Coordination Unit based in the in science and technology, i.e. “research into climate change Department of Hydro-Meteorology and Climate Change response solutions and technologies for early warning and fore- (DHMCC) in MONRE. The SP-RCC has played a role in cast of natural disasters; new technologies for environmental harmonization and coordination between the international protection and natural disaster prevention and control.” The community and the Government through discussions on the outcomes of the program focus on the technological mea- policy matrix, which usually also includes DPs who do not sures across climate change projections, adaptation and GHG fund the SP-RCC. The SP-RCC process and impacts have emissions reduction, as well as mainstreaming climate change been reviewed. The findings show that it has been effective into socio-economic development. From 2011 to 2013 nearly at bringing together DPs and line ministries, and that policy 50 projects have been approved, many relating to CC adapta- dialogues and coordination have improved over the years but tion in the food security sector. The program is mainly funded that these can be enhanced. SP-RCC funds go into central by the NTP-RCC, is directed to support the NTP-RCC and budget support, and although most funds are allocated to is administered by MONRE instead of the Ministry of Sci- climate change actions, some believe that the link between ence & Technology (MOST), which has overall responsibility policy actions and disbursement of SP-RCC funds should be for Decision 1244/QĐ-TTg. strengthened. The National Target Program on Energy Efficiency and In 2010, the Government approved a climate change Conservation (NTP-EE) was the first national energy sav- Financial Mechanism (FM) funded by public funds and ing and conservation effort. However, its overall energy particularly targeting the fiscal space provided by the targets are not harmonized with VGGS targets. The SP-RCC (Instruction 8981/VPCP-QHQT, 10/12/2010). NTP-EE (also called the Vietnam National Energy Efficiency Based on this instruction, MONRE, in coordination with Program, VNEEP) for the period 2006–2015 was approved MOF and MPI, led an inter-ministerial process to develop in 2006 (Decision 79/2006/QĐ-TTg). The NTP-EE was the project selection criteria for financing from the SP-RCC, first to call for coordinated efforts to improve energy efficiency, as approved in Decision 1719/QĐ-TTg (2011). The appli- reduce energy losses, and to conserve energy across all sectors cation of these criteria in the context of a call for proposals of the economy. The program is now implementing phase two to line ministries and provinces led by MONRE resulted in (2011–2015; Decision 2406/QĐ-TTg), aiming to save five to the selection of 63 projects. However, the number of proj- eight percent of total energy consumption in 2012–2015 com- ects subsequently had to be limited to 16 priority projects, pared to projected increases in national electricity demand. due to limited fund availability. Funds have been allocated To achieve this target, a number of energy efficiency and con- in the 2013 and 2014 budget, as a result of the joint (MPI, servation actions are proposed as well as a reduction per unit MOF and MONRE) circular on “guiding implementation output in selected industries (steel, cement and textile). The of the Financing Mechanism” (Joint Circular TTLB-BT- energy saving target is not fully aligned with the VGGS target NMT-BTC-BKHDT of 5/3/2013). To make the Financial of reducing GHG emissions by eight to 10 percent compared Mechanism (FM) more strategic within the overall climate to BAU (2011–2020), but it does make a major contribution 34 to achieving the VGGS target. However, the targets have dif- MOF, MARD, MOC, MOT and MOIT) and experts (the ferent time horizons, indicators (total energy/GHG), and base- full list is shown in Figure 1.1). Members of the NCCC have lines (projected energy demand compared to BAU), which is clearly defined responsibilities, as promulgated in Decision posing challenges for M&E. 25/QĐ-UBQGBĐKH (2012). Line ministries, provinces and implementing bodies must provide a report every six months to analyze, assess and synthesize the management and imple- 1.2 Coordination of climate mentation of strategies, and to analyze objective and subjec- change responses: The tive reasons affecting the implementations of strategies. These reports are consolidated into six-monthly and annual reports ministerial coordinating by the Standing Office (SO) for submission to the NCCC. The SO of the NCCC within MONRE is also tasked to architecture develop and implement programs, to lead and cooperate with line ministries and activities on climate change, and to Central Government Coordination: The NCCC and Line Ministries review and monitor the implementation of the national strat- egy and action plan on climate change, the NTP-RCC, as The mission of the National Committee on Climate well as other strategies, programs, and projects related to cli- Change (NCCC) is to lead, coordinate, harmonize and mate change. In addition, the VGGS will be coordinated by monitor climate change and green growth program imple- the Inter-Ministerial Coordinating Board (ICB) which falls mentation, including international co-operation. The under the NCCC, although the exact nature of this inter- NCCC is the highest-level inter-ministerial body on climate linkage is currently not defined. The ICB will be supported by change and was created by Decision 43/QĐ-TTg (2012). The a standing office which is managed by MPI (see Decision 1393/ NCCC Chair is the Prime Minister, with a Deputy Prime QĐ-TTg, 2012). The first activity of the GGAP is to formu- Minister and the Minister of MONRE as first and second late and approve the operation charter and working plans for Vice Chairs. Members include several Ministers (from MPI, the ICB. The NCCS, ICB and their standing offices should Figure 1.1. Membership of the National Committee for Climate Change (NCCC) and the Standing Office21 National Committee for Climate Standing Of ce of National Change (NCCC) Committee for Climate Change Chairman: Prime Minister Head of Standing Office: Vice-Director of Dept. Meteorology, Hydrology and Permanent Vice-Chairman: Vice-PM Climate Change (MONRE). Vice-Chairman 2: Minister of MONRE 21 DO NOT DELETE ME - I AM FOR THE FOLIO FOR THE FIGURE HIDE ME BEHIND FIGURE 1.1 Members of NCCC Minister—Head of Gov. Office Minister of MOH Minister of MPI Minister of MOIT Minister of MOF Representative of CTSE under National Assembly Minister of MOST Representative of Central National Front Minister of MOFA Vice-Chairman of South-West Steering Committee Minster of MARD Chairman of Science, Technology and Social Academy Minister of MOD Chairman of Science & Technology Society Minister of MOP Vice-Minister of MONRE Minister of MOC Experts and researchers in climate change Minister of MOT  rom Priambodo et al. (2013). Status of Climate Finance in Vietnam: country assessment report. GIZ, Castlerock & Adelphi. 21. F 35 consider consistent reporting formats for the NCCS and VGGS and also have the capacity to report relevant information. While pursue joint reporting on converging policy objectives between the the structures exist, effectiveness can be enhanced through NCCS, VGGS and related programs and actions. (i) establishment of a synchronized and harmonized M&E sys- tem that includes climate finance tracking as well as verifiable The NCCC was active in 2013 but predominantly in sup- indicators linked to policy objectives; (ii) building capacity in port of ongoing activities; as such it is too early to assess the NCCC’s SO on strategic management of the informa- the NCCC’s impact. The NCCC developed a work plan for tion, appraisal of the CC-response, and implementing high- 2013 and met, including in a joint SP-RCC review meeting level climate change related M&E; and (iii) building capacity in October 2013. The work plan for 2013 included 19 tasks, of climate change focal points in line ministries to track CC- of which 10 were led by MONRE, such as continuation of responses through the planning, budgeting, delivery and out- implementation of the NCCS and NAPCC, implementa- come cycle and thereafter reporting that to the NCCC’s SO. tion of the Vietnam—Netherlands Strategic Partnership, Other measures include (iv) building the capacity of CC- the promotion of DP’s involvement, the NTP-RCC, and response focal points in the Department of Natural Resources formulating the revised policy matrix for the SP-RCC. The and Environment, the Department of Industry and Trade, annual NCCC report provides a description of the activities the Department of Agriculture and Rural Development and as well as various comments. It also provides recommenda- other relevant provincial entities to report on climate change tions to the NCCC. Although program development is well progress, planning and constraints in an effective manner; reported, due to the general nature of the report there is a (v) creating common reporting templates which provide a lack of climate change related expenditure data and lack of harmonized CC-response overview related to NCCS and detail on progress towards particular policy objectives. Also, VGGS and related strategies, programs and initiatives; and lessons learned that can inform new initiatives are largely (vi)  strengthening SO capacities to develop an overview of missing. This lack of a systematic review of expenditure and the overall CC-response and progression in sectors and pro- policy delivery is possibly due to the lack of data in the sub- vincial portfolios, for submission to the NCCC. Effective missions from the reporting line ministries, project imple- information delivery to the NCCC can help improve the delivery menters and localities. Thus the architecture and function of of NCCS, VGGS and related CC-responses, between sectors and the NCCC and Standing Office has been determined, and it across provinces. This is essential for improved targeting. has the potential to support and further align the responses to climate change. However, the effectiveness and success of the National and Provincial Coordination: Functional NCCC will be largely predicated on effective reporting from Definition and Capacity Building the Standing Office to the NCCC, which requires inputs from provinces and line ministries. Decentralization policies since the turn of the century have covered an ever broader range of activities and Strengthening the information flow to the NCCC require local capacity strengthening. Decentralization pol- on achievement of policy objectives, including cli- icies reach into seven major areas, including planning, public mate change planning and budgeting processes and investment, state budget, land and natural resources, state- CC-response impacts, in a harmonized M&E system can owned enterprises (SOEs), public services, and administrative reduce the risk of fragmentation, improve targeting of organization and personnel. However, constraints related to resources and maximize mitigation and adaptation ben- the nature of the decentralization process and its governance efits. The effectiveness of NCCC oversight and specifically and coordination as well as local capacity constraints have of targeting is largely defined by the quality of the informa- limited delivery on many of the intended objectives. There tion that flows to it from the climate change focal points in is often a lack of clear definition of the functions of lower line ministries and provinces and which is collated by the level authorities relative to the line ministries. Decentraliza- SO. Such information requires good M&E and reporting to tion has created challenges for provincial authorities respon- the SO, as well as adequate capacity within the SO for col- sible for local planning and implementation of a very broad lation and presentation of information to the NCCC. The range of national priorities (for example separate climate SO must develop, lead, coordinate, review and monitor CC- change, disaster risk reduction and management (DRRM) responses and capacity needs for strategic assessments, sector and Green Growth Action Plans). Moreover, line ministries and social vulnerability/impact assessments and appraisals, as still maintain a significant portfolio of CC-related activities, well as technical skills in CC-response activities. In addition, and specifically with regard to infrastructure investment the the focal points, localities and project implementers must central Government has not yet decentralized many of the 36 key functions to the provinces or large cities.22 Provincial priority-setting processes. These differences and the best way Coordination Committees have been established to coordi- of linking adaptation and mitigation objectives and actions nate development of provincial level action plans on climate to the planning and budgeting cycle have not yet been fully change, and most provinces have also established an office articulated. Priority has been given to adaptation, which can for climate change that is officially linked to the PPC, but be promoted in particular through resilient infrastructure. usually based in the Department of Natural Resources and Mitigation actions are diverse and include specific invest- Environment (DONRE). The provincial authorities play an ments in the energy sector and broad policy action in the for- important role in investment project formulation, planning estry sector. Given this diversity, it is important to establish and budget allocation processes and therefore in the main- harmonized CC-response reporting linked to the planning streaming of climate change. The connection between these and budgeting cycle, especially to monitor whether set pri- provincial coordination offices, the provincial People’s Com- orities are indeed being pursued. A planning and budgeting mittees responsible for certain projects and the NCCC’s SO is cycle that reflects priorities from the NCCS and VGGS (and vital for comprehensive M&E and reporting on the national related national action plans) should also be linked to a har- CC-response. However, the 2013 NCCC report provides monized M&E process. only a top-down view of the main policies and programs and includes minimal synthesis of provincial CC-responses Defining the Scope of Adaptation Policy (except 11 projects under SP-RCC). M&E and reporting on Implementation the provincial response (including action planning and bud- Adaptation and availability of climate information will geting on climate change, green growth, energy efficiency and continue to be a very high priority for Vietnam’s CC- DRRM); project design, implementation and delivery, including response. It is important to channel resources toward the mainstreaming of climate change across provincial sectors; prog- most vulnerable regions and sectors. A considerable amount ress according to key CC-response indicators; implementation of work has already been done to establish scenarios of the challenges; and lessons learnt can be improved by strengthening effects of climate change in different regions of Vietnam. capacities of the local structures and focal points. With 63 prov- Based on national and international studies MONRE pub- inces this is a substantial task. It may therefore be beneficial lished an official scenario in 2009, which was updated in to develop a number of capacity “nodes” in selected provinces 2012.23 The climate change scenarios should guide minis- that can then be supported to consistently extend the capac- tries, sectors, provinces and cities to formulate and implement ity, improving reporting and M&E in other provinces. their climate change responses. MONRE is planning regular updates as a basis for national and sub-national planning 1.3 Adaptation and on climate change. However, use and uptake of the climate change scenarios can be strengthened through (i) better links mitigation objectives: between climate risks and probable impacts, and guidance on how to apply the climate change scenarios to project and Focus and balance in budget planning; (ii) building capacity in sectors and espe- Vietnam’s climate change cially provinces, for mainstreaming the use of climate change scenarios; and (iii) officially requiring the use of the climate institutional framework change scenarios for mainstreaming actions in provincial socio-economic and sector plans. Climate change adaptation and mitigation policy objec- tives have been identified, but opportunities remain for Approaches to disaster risk reduction and management harmonization of budget planning and M&E. Reso- (DRRM) have been implemented well but further inte- lution  24, the NCCS and VGGS provide the overall CC- gration with the CC-response strategies can help unify response policy framework, covering both adaptation and and strengthen the approach to reducing vulnerabilities. mitigation actions. However, adaptation and mitigation The DRRM policy framework has been set through a range requirements differ in terms of both technical tools and of initiatives. In June 2013 the Law on Natural Disaster Pre- vention and Control was adopted (Order 07/2013/L-CTN). 22.  See Vu Thanh Tu Anh (2012). Decentralization of Economic Management The National Strategy on Disaster Prevention, Response and in Vietnam from the Institutional Perspectives. http://www.fetp.edu.vn/en/ policy-papers/discussion-papers/decentralization-of-economic-management- MONRE (2009 and 2012). Climate Change: Sea Level Rise Scenarios for 23.  in-Vietnam-from-the-institutional-­perspectives/. Vietnam, MONRE, Hanoi. 37 Mitigation to 2020 (Decision 172/2007/QĐ-TTg) promul- regional aspects of climate change policy may impede efficient use gated mainstreaming and integration of disaster risk reduc- of resources for climate change adaptation. A regional component tion (DRR) within national, sector and provincial socio- in the reporting and M&E system of CC-responses will increase economic development planning frameworks. Relevant line the effectiveness of progress tracking. ministries that are represented in the Central Steering Com- mittee for Flood and Storm Control developed action plans Strengthening adaptation planning and project selection for the integration of DRRM within their sectors. In addi- can be improved and prioritized to provide a stronger tion, all 63 provinces have developed DRRM action plans. focus on poverty reduction and related co-benefits. Rec- Harmonization of DRRM and climate change adaptation ognizing that adaptation investment is a priority, MPI has actions, as well as strengthened coordination (especially taken steps toward strengthening priority-setting by begin- between MARD and MONRE), can help build a less frag- ning to integrate the use of the Adaptation Prioritization mented and more effective response to reducing vulnerabil- Framework (APRF) in the SEDP process.25 The APRF is ity to climatic hazards. There are significant linkages and designed to incorporate relevant climate change adaptation convergent policy objectives between the CC-response and actions into the normal project design and appraisal proce- DRRM, such as in the areas of forecasting and early warn- dures of the SEDP in a relatively simple and practical way. ing.24 The coordination and mainstreaming of DRRM has The SEDP and annual planning and budget processes need to improved and links to climate change are strengthening. The use the APRF effectively. Other financing mechanisms need to recent DRRM and climate change adaptation (CCA) coor- ensure that poverty co-benefits of the CC-response are prioritized dination forum in October 2013 was a positive step but the through appropriate appraisal and selection processes. coordination approach needs to be institutionalized in order Climate change relevant projects are not clearly identi- to harmonize policy objectives and projects/interventions as fied or linked to specific climate change objectives under well as improve M&E. Strengthening the link between the the present planning and budgeting system. While the CCA-response and DRRM is possible, for example through: majority of climate change relevant investments are adapta- (i) more systematic use of climate change scenarios and other tion, others contribute to mitigation or to both objectives. hydrological and meteorological data, for example in climate The current process does not clearly identify those projects change impact and disaster risk assessments; (ii) identifica- to enable tracking of spending. The lack of a clear system for tion of priority geographical areas, hazards and sectors for identifying and classifying climate change projects is a barrier to both climate change adaptation (CCA) and disaster risk making links between CC-response policy and the planning and reduction and management; and (iii) increase in the capac- budgeting cycle. (See also Chapter 2.) ity to develop and implement projects that reduce the social dimensions of vulnerability. The regulatory environment can play a critical role in adaptation and mitigation. Setting standards or appropri- Strategic and efficient ways of increasing resilience often ately raising these, for example infrastructure and housing require integrated regional programs, including cen- design standards, in order to meet adaptation and mitigation tral and provincial activities. The Mekong Delta area, objectives will often require modifying official regulations to for instance, is a highly populated area that is highly vul- ensure compliance by private and public sector actors. There nerable to sea-level rise and associated saline water intrusion, was little opportunity for the CPEIR to investigate existing but addressing these issues requires coordinated efforts by regulations, but a review of regulatory frameworks, including multiple central government sectors and across provincial design standards from a climate change perspective, should boundaries. An Giang province (see Chapter  3) has estab- be undertaken. lished a provincial action plan to implement national strat- egies on climate disaster preparedness and community- Mitigation Policy: From Targets to Delivery based DRRM. Ideally, these should be coordinated with sec- tor policies and other Mekong Delta provinces. In addition, Targets for reducing GHG emissions need to be recon- regional structures such as the South West Steering Commit- sidered, especially after 2020. Mitigation of GHG tee could have a stronger role in cross-provincial initiatives if emissions requires overall and sector-specific target they have sufficient capacity. The lack of a strategic overview of setting and mainstreaming of mitigation in many sub-  itchell, T. & van Aalst, M. (2008). Convergence of Disaster Risk Reduction 24. M MPI (2013). Adaptation Prioritization Framework for Socio-Economic Devel- 25.  and Climate Change Adaptation, DFID. opment, MPI, Hanoi. 38 sectors. The GoV has set overall mitigation targets in the reporting and verification (MRV) of emissions is being sup- VGGS. The intensity of GHG emissions should be reduced ported by several international DPs. This work and the trans- by eight to 10 percent by 2020, as compared to the 2010 fer of information from provincial authorities and line minis- level, and there should be a one to 1.5 percent reduction in tries to the national GHG inventory is vital to assess progress energy consumption per unit of GDP per year. A signifi- made towards national mitigation targets as well as targets cant instrument for achieving this is the NTP-EE (Decision in specific NAMAs. It is also important for making future 1427/QĐ-TTg, phase 2012–2015) which identifies a five policy adjustments as a result of monitoring. Monitoring of to eight percent reduction of the total energy consumption GHG emissions is also a core element in the National Com- by 2015, compared to projected energy demand increases as munications and biannual update reports by Vietnam to the per the National Power Development Plan 2011–2020, and UNFCCC. a 10 percent reduction per unit output in the steel, cement and textiles sectors by 2015. The GoV has also addressed Indirect subsidies on the use of fossil fuels for power pro- the mitigation challenge in the “Plan for GHG emission duction and transport and the absence of a substantial management—management of carbon trading activities for price on carbon makes it very difficult to achieve mit- the world market” (Decision 1775/QĐ-TTG, 2012). This igation targets and affects the fiscal space available for includes targets for 2020 for energy and transport (eight both adaptation and mitigation actions. The VGGS and percent GHG emission reduction compared to 2005); agri- the GGAP commit to the phase-out of fossil fuel subsidies, culture, including livestock (20 percent GHG emissions but this is very challenging. In 2010, the GoV introduced an reduction compared to 2005); forestry (20 percent increase environmental protection tax, but it took substantial time to in absorption of GHG compared to 2005) and the waste be operationalized and tax rates are very low. Indirect sub- sector (five percent GHG emission reduction compared to sidies are estimated to be several percent of annual GDP, 2005). The VGGS also provides targets for the period after and act as disincentives for investments in energy efficiency 2020. These targets are diverse and in several cases diffi- and low-carbon technologies, including non-hydro renew- cult to compare, partially overlapping or repetitive, and able power generation. Subsidies on fossil fuels include any partially unrealistic. Monitoring and reporting on climate government intervention that reduces the cost of fossil fuels change mitigation is thus complex. In addition, in the con- below what it would be without that intervention, accord- text of UNFCCC negotiations Vietnam needs to know ing to an internationally accepted definition. Indirect subsi- what its emissions reduction targets are for the period from dies occur as energy prices are controlled and inputs such as 2020 onwards. A review is therefore needed, especially for post coal, land and credit into for example power production are 2020 GHG emission targets, with clear indication of what below international prices. These subsidies result in foregone Vietnam can do with domestic means and what can only be government revenue and the building up of debt. There are achieved with international financial and technical support. many advantages of reforming fossil fuel fiscal policies, apart Furthermore, national targets should be translated into from increased government revenue, including enhanced sector-specific targets, which has been done in for example national energy security, improved supply to customers, addi- the agriculture and rural development sector (MARD Deci- tional GDP growth (over the medium term), increased social sion 3119/QĐ-BNN-KHCN). Delivering sub-sector targets equality (because subsidies benefit the better off more than will require mainstreaming low-carbon approaches into many the poor), and reduced GHG emissions and local pollution. areas of activity. The specific mitigation aspects and achieve- Increased energy prices for electricity and coal are unpopular ments must be reported back into the climate change coordina- with consumers and businesses. However, as subsidies would tion system for this to lead to policy adjustments at a later date. be phased out and a price on carbon would be imposed, several measures are proposed to support energy consump- NAMAs (Nationally Appropriate Mitigation Actions) tion by poor households and energy efficiency measures in may offer opportunities for technology transfer and par- certain businesses, taking advantage of the additional fiscal tial financing under the UNFCCC and are being devel- space.26 Reform of the energy sector, including SOEs, is both oped in Vietnam, requiring major efforts on monitor-  NDP (2012). Fossil Fuel Fiscal Policies and Greenhouse Gas Emissions in 26. U ing and reporting on emissions. Decision 1775 is geared Vietnam: Subsidies and Taxes in Vietnam’s Energy Sector, and Their Effects on towards participation in (international) carbon markets Economic Development and Income Distribution in the Context of Responding and development of off-set mechanisms, aiming to support to Climate Change. Hanoi, United Nations Development Programme. UNDP (2014). Green Growth and Fossil Fuel Fiscal Policies in Vietnam— technology and financial transfers, especially to local enter- Recommendations on a Roadmap for Policy Reform.. Hanoi, United Nations prises. Formulation of NAMAs and systems for monitoring, Development Programme. 39 critical and challenging, and recommendations to this effect range of actions and for MRV. However, coordination with include in particular the need for increased transparency in cost actions under the National Forest Development Strategy structures and strengthened independent energy market regu- 2006–2020 (NFDS) and the National Plan on Forest Protec- lation. The NCCS includes studies on appropriate systems tion and Development (NPFPD) could improve. For exam- for energy pricing to promote energy efficiency and renew- ple, the approach of payments for ecological services to local able energy production, as well as the establishment of a new forest managers is a mechanism to deliver the NFDS and energy pricing system by 2015. Due to time limitations it NPFPD objective of income generation and sustainable live- seems unlikely that the NCCS will be able to deliver this lihoods in the forestry sector, and is very similar to some of within the timeframe, and the commitment is not reinforced the approaches under the international and national REDD+ in the NAPCC. Moreover, the management of the various efforts. REDD+ should be considered as part of the drive to mitigation actions, indirect subsidies and the environmental achieve the objectives of the NFDS, as well as a component tax are carried out by different agencies and lack a consistent of the overall mitigation portfolio of Vietnam, rather than fiscal policy framework to ensure that activities are mutually a separate and isolated undertaking. REDD+ should not be supportive. Nevertheless, in order to help deliver the “Plan undertaken in isolation of other national mitigation initiatives for GHG emissions management” (Decision 1775) Vietnam but be harmonized and coordinated, and should also feed into a has started work to prepare to apply market-based instru- common M&E system to help inform mitigation progress (and in ments to selected sectors, leading towards development of a some cases adaptation co-benefits). broader-based carbon pricing system over time.27 The ques- tion of mitigation thus raises a series of issues that go beyond management of public expenditures and which require an 1.4 The planning, budgeting, examination of very complex policy issues and institutional and implementation cycle: responsibilities. The possibility of reducing the indirect subsidies on fossil fuels and introducing a carbon price should be part of Progress and key areas the Government’s economic reform strategy and different options should be examined. to be strengthened Key Aspects of Planning and Budgeting Vietnam has progressed with REDD+ preparations and implementation, and is sharing its experiences with other The basis for policies and strategic priorities are set over countries. Harmonization with both forestry sector and long-term horizons and implemented through a well- mitigation policy and targets can help to improve report- defined, annual investment and recurrent planning and ing on REDD+ and increase its effectiveness. REDD+ budget cycle with some explicit reference to climate action. in Vietnam is governed by the National Action Program on Vietnam applies a system of five-year planning within a REDD+ 2011–2020 (Decision 799/QĐ-TTg, 2012). Broad 10-year strategic horizon. The current framework includes the guidance on REDD+ preparedness and implementation in Socio-Economic Development Strategy (SEDS) 2011–2020 Vietnam is given by the NCCC. Internationally-supported and Socio-Economic Development Plan (SEDP) 2011–2015. activities have led to lessons learnt on for example the role of They cover structural reforms, environmental sustainability, free, prior and informed consent, a results-oriented benefit regional development, social equity, and emerging issues of distribution system and participatory carbon monitoring.28 macro-economic stability. The current strategic framework is Potential international financial flows from developed to based on three pillars: (i)  strengthening Vietnam’s competi- developing countries for full REDD+ implementation fall tiveness in the regional and global economy, (ii) enhancing under the UNFCCC and may become as high as USD 30 bil- the sustainability of its development, and (iii)  broadening lion per year. Benefits can accrue to Vietnam through policy access to social and economic opportunity. There are also actions across the forestry sector as well as specific actions on three cross-cutting themes: (i) strengthening governance, for example sustainable forest management. REDD+ requires (ii) promoting gender equality, and (iii) improving resilience in meeting international results-based criteria and capacities at the face of external economic shocks, natural hazards and the the central as well as local levels for implementation of a wide impact of climate change. 27.  A DB (2014). Market Readiness Proposal for the Government of Vietnam . Pre- The GoV has steadily improved its planning and fiscal pared by Get2c, EcoTawa, Grutter Consulting and Teta for ADB. management system over the past three decades, pro- U N-REDD (2012). Lessons learned: Vietnam UN-REDD programme. From: 28.  http://www.un-redd.org/AsiaPacific_Technicalreports/tabid/106605/ viding a good basis for climate change mainstream- Default.aspx#Vietnam. ing. Decentralization of management processes has been 40 a feature since Doi Moi reform efforts in 1986, impacting the Government and especially MPI and MONRE to review public financial management (PFM).29 The GoV has mod- climate change related priorities, and could lead to stronger ernized its PFM system and brought many elements in line mainstreaming of climate change in sector and provincial with international good practices. In August 2013, the GoV plans. Some opportunities are outlined below. completed a Public Expenditure Financial and Accountabil- ity (PEFA) assessment of its PFM system.30 Also in 2013, the • Enhanced implementation of strategic priorities and WB completed a fiscal transparency review on progress made policies included in the SEDP will require further by Vietnam toward improving fiscal transparency and public strengthening of climate change project reporting in access to fiscal information. These reports demonstrate that the annual planning and budgeting process. A major significant progress has been made in improving PFM. Fur- strength in terms of tracking public spending has been the ther strengthening of PFM processes and defining the roles of establishment of TABMIS, which is a tool to control, mon- key agencies more clearly will support mainstreaming climate itor, and review expenditure by all climate change related change policy in wider development. programs. Strengthening financial reporting at project level is vital to better management of projects, including A range of basic and feasible improvements of the plan- those of CC-relevance. (See Chapter 4.) ning and budgeting process can help to improve cli- • Strengthening annual planning and budgeting pro- mate change policy mainstreaming. The PFM modern- cedures can facilitate harmonization and delivery of ization that has occurred in Vietnam means that additional the CC-response framework. A CC-response affects all changes of relevance to climate change will not need to be agencies that are concerned with energy production or very radical. In the following sub-­ sections some changes use, or are involved in design or recovery efforts against are reviewed that are expected to be feasible and that could the effects of climate change, and is not the responsibil- strengthen climate change policy implementation. This sec- ity of a single agency. Thus, consideration of CC-relevance tion looks first at the need to strengthen planning proce- needs to be addressed during the annual planning and bud- dures and fiscal reporting processes, primarily by focusing on geting cycle. (See Chapter 2, which outlines both a classi- better project definition and appraisal, and ensuring that all fication of CC-­ relevant expenditures and procedures to CC-relevant projects at all levels of government are included. assess CC-relevance.) Secondly, it emphasizes the role that comprehensive climate change spending data shared by all levels of government can • Procedures for defining climate change project objec- play in improving coordination between national and local lev- tives and tracking performance need strengthening. els. This section also looks at the need to use Vietnam’s mod- Modern, policy-based planning and budgeting requires ernized budgeting and accounting system more effectively to that agencies (i) define their programs and activities in capture ODA-financed projects and to identify financing gaps. relation to clearly defined objectives and outcomes, and Finally, the section examines issues relating to longer-term (ii) they establish verifiable progress indicators (see inter- development of PFM toward integrated planning and budget- national examples in Annex II). Vietnam has initiated ing and full transparency and accountability.31 work along these lines in National Target Programs (NTPs) in partnership with DPs. However, CC-relevant projects examined during this review32 through their Strengthening Climate Change Policy Implementation: investment decision documents (IDDs), and that were SEDP 2016–2020 admitted to the annual SEDP/budget appraisal process, Strategic and annual priority setting needs to change to do not have clearly defined objectives or expected outputs address climate change issues effectively. The forthcoming and outcomes/milestones against which progress can be formulation of the SEDP 2016–20 offers opportunities for monitored and evaluated in relation to climate change. Establishing a climate policy M&E and reporting sys- Vu Thanh Tu Anh (2012). Decentralization of Economic Management in 29.  Vietnam from the Institutional Perspectives. tem will require strengthening project appraisal, design 30.  The report was initiated as a self-assessment under the guidance of the procedures and mainstreaming climate change into the PEFA Secretariat and with the support of the World Bank and development project document/IDDs. (See Chapters 2 and 4.) partners. The self-assessment was reviewed by a team led by the World Bank and subject to quality review by the PEFA Secretariat and by peer reviewers appointed by the World Bank, and discussed at a workshop with the princi- pal Vietnamese stakeholders in July 2013. These issues are discussed in the context of climate change, but many have 31.  more general applicability to development planning and fiscal policy as a whole. 32. See discussion of data collection and compilation in Chapter 3. 41 Strengthening National and Provincial Coordination: within the mandates of MPI and MOF to establish a more Data Sharing and Capacity Building complete and unified CC-response expenditure allocation, Different levels of the Government need to share spend- tracking and monitoring system. Based on the findings in ing information to effectively coordinate and implement the preceding paragraphs, Figure 1.2 illustrates the annual climate change policies. The present system of planning, planning and budgeting cycle33 and the areas that need to budgeting and reporting is decentralized and central line be addressed to provide a stronger basis for implementing ministries are not kept informed of the level of investment at climate change policies by line ministries and provinces. sub-national level in relevant sectors. This impedes coordi- Addressing these areas will provide a strong foundation for nation between central departments and provinces except in improving the management of climate change financing selected integrated projects. As a consequence, resources are and for longer-term strengthening of the PFM system that likely to be applied inefficiently by both levels of government. will benefit overall fiscal policy management as well as CC- Addressing the need for a clearer definition of responsibili- response policy. ties of line ministries and provinces with respect to climate change and development of regional strategies and proj- Country Management Systems and International ects involves both planning/budgeting reforms as indicated Climate Finance above and public administration reforms. Data sharing can A well-defined PFM system will help to channel available be expanded by improving project reporting on budget and climate change finance34 to Vietnam and encourage DPs spending by line ministries and provincial finance depart- and global climate finance to use the country system.35 ments. Improved data availability enhances policy discussions The TABMIS is an advanced government financial man- between line ministries and provinces in the annual plan- agement information system, which can incorporate all CC- ning and budget cycle. Timely and reliable information cov- relevant projects in the State Budget, and can use its account- ering all levels of the Government and sources of financing ing, reporting, and bank reconciliation facilities to track would also enhance coordination. (See Chapter 4.) There is spending and ensure full financial accountability of all a need to strengthen capacities of a range of actors across the transactions processed through the system. DPs will require national and provincial financial and CC-response systems assurance, however, that fiduciary risks are low and that the to deliver policy objectives and also to provide a progressive overall planning and budgeting system can establish both CC-­ response through feedback and review processes. Partic- financial and performance accountability with respect to cli- ular areas for strengthening include the application of climate mate change (and indeed for all development objectives). The change scenarios to budgeting and planning; increasing the WB did preliminary work on its general portfolio to inves- understanding of intervention potential in various sectors, tigate likely financial management risk at provincial level.36 including climate change mainstreaming; the identification While risks were seen as moderate to substantial, it was rec- and classification of different climate change related expen- ommended that the GoV, with DP assistance, undertake pilot ditures; and M&E of the CC-response. Such institutional work to establish that TABMIS is capable of tracking and strengthening needs to be tailored to selected targets. For accounting for ODA funds and this work is now underway. example, in an expenditure climate tracking system the iden- tification, classification and other codings of climate change Strengthening climate change related budgeting and related projects by technical project officers at the national planning will lead to a more effective and strategic and provincial level is a pre-requisite for effective collation of all governmental CC-responses across the nation. Specific The steps in the planning and budgeting cycle apply to the national and 33.  areas for institutional strengthening are outlined in Chap- provincial levels. Directives on the SEDP and State Budget are issued by the PM in May, and these directives are guided in detail by MPI and MOF, ter 5 and the associated action plan. respectively, throughout the process. With some specific local differences for provinces, the process is followed by both line ministries and provinces. For estimates of global cost and sources of finance see: World Bank (2009): 34.  Opportunities for Strengthening the Annual Planning World Development Report 2010 http://siteresources.worldbank.org/ and Budgeting Cycle INTWDR2010/Resources/5287678-1226014527953/WDR10. Global Forum Summary (2013). Using Country Systems to Manage Climate 35.  Strengthening planning and budgeting will be crit- Change Finance: A Global Forum Facilitated by the Partnership for Action on ical to establishing an effective climate change pol- Climate Change Finance and Effective Development Co-operation. Incheon, Republic of Korea. icy implementation framework. As described above, the World Bank (2013). Vietnam: Assessment of PFM Arrangements at Provincial 36.  planning and budgeting framework can be strengthened Level , June 2013. 42 Figure 1.2. Annual SEDP Process Areas for Potential SEDP Budget Improvement Process December January Year-end Review November February Limited basis for report on expenditure or performance PM advises on budget norms and priorities October of CC-relevant projects and May 1. Issues directives to Ministries by May 31 March programs September April August Limited definition of Capital & recurrent circulars & indicative May CC project design budgets June 10; Submissions July 20 July requirements for June appraisal and M&E June July Limited (or no) definition of project CC objectives, TIMELINE May expected outcomes, and milestones—and consequent Budget negotiations August limited options for effective M&E during August; April implementation Final submission September No set requirement to GoV September March for ministry / provincial to NA October 1; October Finance Departments NA approval to report project November 15 February November spending each quarter Budget Approval January December CC-response and, coupled with general improvements 226 million) and the Climate Investment Funds (CIFs: total to financial and performance accountability, will help pledges ~USD 7.6 billion). target and facilitate access to various climate financing mechanisms. Reports that cover all central and provincial The Green Climate Fund (GCF) is a new operating entity projects can ensure that overlaps between DP and GoV ini- of the financial mechanism under Article 11 of the UNF- tiatives are identified and minimized. Establishing clear evi- CCC, and is expected to provide country-led access. The dence of the low fiduciary and performance risks of using purpose of the GCF is to make a significant and ambitious TABMIS as the vehicle for managing climate change projects contribution to the global efforts towards attaining the objec- should be linked to actions to strengthen the planning and tive of the UNFCCC. The GCF has been established and is budgeting cycle.37 Moreover, successful reforms would help ready for capitalization. Vietnam will be able to access the to establish Vietnamese entities for accreditation to access GCF through multilateral implementing entities, relying on several channels for additional global climate finance. The their robust fiduciary standards and proven project oversight Global Environment Facility (GEF, an operating entity of functions. Alternatively, it can designate one or a number of the UNFCCC’s financing mechanism) has been the largest bodies as a national implementing entity (NIE) and apply funder of projects to improve the global environment under for accreditation with the GCF, which is an established pro- the mandate of the Rio Conventions. To date it has allocated cedure for the Adaptation Fund (AF). If Vietnam proceeds USD 11.5 billion grants, supplemented by USD 57 billion in with the designation and accreditation of a NIE to the GCF co-financing, part of this is on climate change. Other funds then it will need to upgrade certain institutional capacities include the Special Climate Change Fund (SCCF: USD regarding fiduciary processes, financial transparency, project 220 million), the Adaptation Fund (AF, under the Kyoto management and oversight, results-based management and Protocol: 34 approved projects for a grant volume of USD M&E capacity. Development of a financing architecture has started under the NCCC. A comprehensive country system for 37. This is taken up in Chapter 4 and 5. managing international climate finance needs to be 43 built, guided and monitored by the NCCC. A financial longer-term reform and improve coordination between plan- mechanism for the SPRCC has been developed (see above). ning and budgeting at all levels of government. An important Other international climate finance (grants or loans) comes PFM issue is to ensure that assets created through the invest- from bilateral donors and also multilateral funds, includ- ment budget should have sufficient operation and mainte- ing GEF and GCF, AF and the CIFs. Vietnam has estab- nance provisions in the recurrent budget once the investment lished national procedures for accessing the GEF, but access is completed. In addition, budgeting should be designed to other international funds is fragmented and much inter- around a medium-term fiscal framework to ensure that fiscal national climate finance is “off budget” and not (clearly) resources are prioritized in line with available fiscal space.39 linked to or integrated in domestic budgeting and invest- Steps toward establishing a program-based classification to ment processes. The NCCC has discussed international help address these issues could also be considered as part of finance from the GCF and for example channeling funds for the long-term PFM reform efforts. full implementation of REDD+ in Vietnam, and MPI and MARD have been allocated roles in these two aspects. MPI and MONRE have received support from UNDP and the 1.5 Progress in WB for development of a Vietnam version of the Climate Finance Options platform.38 MPI has established a Climate mainstreaming the climate Finance Task Force (Decision 505/QĐ-BKHDT, 2012) to change response develop mechanisms to mobilize financial sources. The CTF must provide regular updates on the status of climate finance The NCCS and VGGS are instrumental in the process of (including current climate finance flows and their impact); developing climate change policy in specific sectors. Good identify potential mechanisms and sources of financing for progress has been made in mainstreaming climate change the CC-response; explore innovative financing mechanisms; into areas such as water management, energy and DRRM. and identify options for combining climate finance with To ensure that CC-response policies are incorporated fully government-owned investment programs. The Department into sector development and social policies and programs is of Science, Education, Natural Resources and Environment not always straightforward. It involves a systematic effort to: (DSENRE) of MPI leads the CTF and acts as chair and secre- (i)  formally identify CC-response objectives within sector tariat. The goal is to fully reflect climate change policies into and provincial plans and change sector policies and plans the planning and budget mechanism, while also supporting accordingly; (ii) give clear agency responsibilities for plan- the development of a green fiscal and investment framework ning and implementing such policies; (iii) establish effective that will enable the country to maintain high growth while tracking of achievement against milestones and delivery of limiting the environmental impacts. These recent actions outputs and outcomes during implementation; and (iv) regu- amount to the beginnings of a coherent national architecture lar evaluation of accomplishments against policy objectives. to access and strategically use the available international cli- Links between socio-economic development and a CC-­ mate finance. This is needed as the current climate financing response are stated in policy and strategy documents landscape is extremely complex. The NCCC should guide the and opportunities exist to promulgate this through the design and functioning of a comprehensive and well-coordinated climate finance mechanism in Vietnam. Further international The concept of fiscal space has become a central concept in modern macro- 39.  support is needed, especially for building capacities in different economic management. Very simply it aims to describe the resources units and agencies that relate to climate finance management. available to government to apply to new state policies within the limits of fiscal prudence. In this broad sense it can be applied to all forms of fiscal management. In advanced economies and increasingly in emerging market Longer-Term PFM Issues: Policy-Based Budgeting economies it is estimated formally as an element of a medium-term fiscal framework (MTFF). Fiscal space is estimated from two elements of the fiscal Performance Accountability in Support and ­ environment: (i) the aggregate resource envelope, which can be estimated of Climate Action using economic models to project (a) overall expected tax and non-tax reve- nues available under existing tax and charging policies, and (b) prudent levels Addressing the basic areas of improvement will provide a of new net borrowing consistent with rigorous debt sustainability analysis; base for longer-term reforms of the PFM system needed and (ii) the continuing costs of government under its existing expenditure policies. The latter is estimated in advanced economies by establishing a sys- to scale up and sustain climate action. Initial steps taken tem of forward budget estimates that maintain data on costs of ongoing gov- to strengthen the PFM cycle will help to establish a basis for ernment activities under clearly defined price and policy assumptions (these are sometimes called existing policy estimates). The difference between these two elements constitutes fiscal space—or the resources available to finance 38. CFO: http://www.climatefinanceoptions.org/cfo/. new policy proposals under the existing tax and charging regime. 44 SEDP process. The SEDP translates at country, sector, and change chapter is included, and its provisions must now be local levels.40 Improved mainstreaming of climate change in reflected in a range of national, sector and provincial policies the SEDP (2016–2020) and the (annual) processes would and regulations. strengthen the CC-response and progress climate change related policy objectives. This can be combined with strength- Mainstreaming has progressed in several aspects, but ening the legislative framework in relation to climate change. many opportunities exist to extend climate change main- For example, in the new Law on Environmental Protection streaming more comprehensively across sectors. Progress approved by the National Assembly in June 2014, a climate and challenges for climate change mainstreaming in sectors and at provincial level are outlined in the table below. Key 40. T  he SEDP (2011–2015) identifies climate change mainly in terms of areas where climate change policy mainstreaming and imple- adaptation and links it to extreme weather events and environment. This is a mentation are encouraged are in policy, governance/adminis- narrower focus than the NCCS, which does not just focus on extremes. Clear CC objectives by sector are not spelled out. tration and scientific and technological development. Sector Key Points: Mainstreaming Progress Water Climate change has been addressed in recent legislative and strategy documents in the water sector, most notably resource the Law on Water Resources (2012) and the “National Action Plan on enhancing the efficiency of management, pro- management tection and use of water resources” (2013), which includes climate change in the objectives. Three regional irrigation master plans (north, south, and centre) all capture the climate change issues. The irrigation master plans provide evi- dence of the systematic use of the MONRE climate change scenario by MARD (as per Directive 809/CT-BNN-KHCN of 2011) to mainstream climate change. However, enforcement of policies and regulations is sometimes weak. For example, the 2006 “National Strategy for Water Resources towards 2020” (Decision No.81/2006/QĐ-TTg) proposes water management master plans at local levels but progress is limited. In addition, the institutional set-up in the water sector is complicated with a number of line ministries involved, including MONRE (overall water resources management and water in the environment), MARD (which manages reservoirs in connection with irrigation and water provision), and MOIT (which manages reservoirs in connection with hydro-power). PPCs also manage some reservoirs, as well as MOT (in connection with water transport). A coordinated CC-response across the water sector is critical and will provide major benefits. Agriculture MARD has led a progressive response to climate change in the agricultural and rural development sector. MARD’s and rural first action plan on climate change was in 2008, and in 2011 it issued Decision 543/QĐ-BNN-KHCN on the action development plan to respond to climate change in the agriculture and rural development (ARD) sector 2011–2015 with a vision to 2050; as well as Directive 809/CT-BNN-KHCN on plans, programs and projects in the ARD sector. MARD has also set a GHG reduction target of 20 percent by 2020 compared to 2010 (Decision 3119/QĐ-BNN- KHCN, 2010). Significant GHG emissions are from the agricultural sector (43 percent of total GHG emissions based on 2000 baseline figures41). There are significant opportunities for mitigation in the ARD sector, which is also demon- strated by a recent climate change technology needs assessment.42 Forestry The forestry sector is seen as high priority for mitigation through sequestration of CO2. Vietnam is proceeding to implement REDD+ and targets to increase forest cover from 40 percent to 45 percent (Resolution 24-NQ/TW). The (For a further National Action Program on REDD+ (2011–2020) aims to reduce emissions and increase GHG sequestration, thus discussion contributing to MARD’s 20 percent GHG reduction by 2020. on main- streaming The challenge for the forestry sector is to integrate policy instruments for development of the sector (e.g. the Law on the CC- Forest Protection and Development (2004) and the National Strategy on Forestry Development 2006–2020) with the response in CC-response through REDD+, but also through adaptation benefits from afforestation, sustainable forest management this sector, and plantation management. The forestry sector includes small-scale, natural resource-dependent, rural dwellers, as well see Annex I) as large commercial entities (SOEs or private). The mainstreaming of climate change through the development of the forestry sector must consider these diverse interests, but M&E and feedback to strengthen policy and planning should be unified and consistent across the sector. Strengthening the linkages between the NFDS, NPFPD and climate change related policies will help to deliver both forest development and climate change benefits. 41. MONRE (2010). Vietnam’s Second National Communication to UNFCCC. Hanoi, 2010. Quang, Q.T., Van Anh, N., & Hai, N.T. (2012). Vietnam Technology Needs Assessment for Climate Change. Department of Meteorology, Hydrology & CC, GoV; 42.  UNEP, GEF, AIT. 45 Sector Key Points: Mainstreaming Progress Energy Although GHG emissions from the energy sector are rapidly increasing, the sector has the potential to make signif- icant mitigation gains. MOIT developed an Action Plan to Respond to Climate Change (Decision 4103/QĐ-BCT), which is focused on pre-existing programs (e.g. the NTP-Energy Efficiency, Decision 1427/QĐ-TTg, 2012) and mod- ernization of technology. The action plan has generated some successes. However, it does not address the challenges of indirect fossil fuel subsidies and a carbon price. UNDP, the WB, as well as other DPs have analyzed low-carbon energy options. The analysis shows that there is a range of low-cost, affordable options across a variety of sectors in Vietnam to reduce GHG emissions. However, these options are strongly determined by energy price levels, which are very low in Vietnam by international comparison as a result of price controls and indirect subsidies. In addition, there is a need for improved GHG data collection, compilation and publication, improved institutional capacities and enhanced ministerial coordination in the energy/green growth/GHG emissions area. The updated NTP-Energy Efficiency outlines a range of projects to be supported over the period to 2015. The tar- gets in key sectors demonstrate an increase in the aspiration and penetration of energy efficiency when compared to the Decision of 2006 (79/2006/QĐ-TTg), which only sets overall energy consumption targets. Renewable energy has been supported in a range of laws and in later versions of the electricity master plan. For instance, the Power Development Plan for 2011–2020 and vision to 2030 (Decision 1208/QĐ-TTg, 21/07/2011) targets the total power from renewable sources to rise from 3.5 percent in 2010 to 4.5 percent in 2020 and six percent in 2030. Non-hydro renewable energy development is behind this schedule, largely because investors’ interest is low given the prevailing power prices. However, the potential for wind power and solar power is substantial, especially in the southern central and coastal regions of Vietnam. Construction National construction standards for buildings, transport infrastructure and rural infrastructure such as dykes must increasingly be modified as climate change effects become more pronounced. This will require technical capacity building in MOC, MARD, MOT and other ministries and agencies. In some cases (e.g. dykes and irrigation) there is a discrepancy between construction standards for domestic-funded projects and ODA-funded projects, suggesting that uptake of global best practice is not yet happening. Discussion with officials indicated awareness of the problem and the need for undertaking a comprehensive review of standards in relation to climate change risks.43 There is a need for construction standards, linked to the MONRE climate change scenario, to be used in governmental, public and commercial works. This may require strengthening of the legal framework. MOC has developed a climate change action plan (March 2014) which includes improving the incorporation of climate effects into construction activities, increasing the capacity to respond to climate change and promoting energy efficiency and green construction. MOC is also working towards a green building strategy, is mainstreaming climate change and sea level rise in urban development planning (especially urban areas in the central coast region and in the Mekong Delta), and is enhancing solid waste planning and management. This is likely to help align MOC’s CC-response with the VGGS. Roads and Existing roads and transport policies, standards and guidelines at the national level are not comprehensively address- transport ing climate change resilience of rural infrastructure, especially roads. Most damage estimates for Vietnam’s roads fall between USD 4 billion and USD 9 billion, mostly from the effects of flooding.44 The predicted changes in temperature, precipitation and flooding present additional threats to Vietnam’s roads. Road standards, determined by meteoro- logical information as well as location, include the Technical Standard for Roads (issued in 2005), standards for urban roads (TCXDVN104-2007), standards for the delta region (e.g. TCVN4054-2005) and bridge standards (22TCN-05). A review of a number of MOT projects in road construction demonstrated that planning and design of road projects do not explicitly mention climate change or the use of climate change scenarios in their planning. However, road design standards were set using the latest meteorological data (last 10–30 years). Building climate change effects into road standards and building practices will require use of the MONRE climate change scenarios to assess the future climate within the lifetime of the road project and then assess the require- ments for a durable design. Development of appropriate regulations and establishment of a climate assessment tool will help increase road resilience to projected climate change. There are similar requirements for including future climate scenarios in the planning of all transport investments and mainstreaming climate change across the various elements of transport planning, infrastructure and management, both in rural and urban areas.  his point, which relates to both MOT and MOC, accounts for the relatively low level of CC-projects submitted by either ministry for the CPEIR. See further 43. T discussion in Chapter 3. Chinowsky, P.S. et al. (2012). Road Infrastructure and Climate Change in Vietnam. UN University—World Institute for Development Economics Research; Working 44.  Paper No. 2012/80. 46 Sector Key Points: Mainstreaming Progress Disaster risk Mainstreaming climate change in the disaster sector has been significant and extensive. The National Strategy management on Disaster Prevention, Response and Mitigation to 2020 (Decision 172/2007/QĐ-TTg) promulgated mainstream- (DRRM) ing of disaster risk reduction in national, sector and provincial socio-economic development planning frameworks. The majority of current SEDPs at the national and provincial levels, as well as sector master plans for the period 2011–2020, have included DRRM. All ministries represented in the Central Steering Committee for Flood and Storm Control have developed action plans for the integration of DRRM within their sectors. All 63 provinces in the coun- try have now also developed DRRM action plans. Some elements of progress status are provided in the first DRRM strategy implementation report issued in April 2013. In June 2013 the Law on Natural Disaster Prevention and Control (Order 07/2013/L-CTN) was adopted. This law identifies natural disaster prevention and control activities, and the rights and obligations of agencies, organizations, households and individuals engaged in natural disaster prevention and control activities. However, financing for disaster risk reduction does not seem to be prioritized. The use of the MONRE climate change scenarios is not men- tioned, even in Article 17 on assessment and zoning of risks, suggesting that the link between climate change and DRRM is yet to be fully achieved. Coordination between the joint technical lead of DRRM in MARD with the climate change structures in MONRE, and how the NCCC Standing Office ensures and monitors coordination, are critical factors to ensure further strengthening of a coordinated DRRM and CC-response. Mainstreaming at the provincial level has progressed but scope for more integrated consideration of provincial issues it is not systematic across all provinces and is constrained by sector and across provincial boundaries is limited both by by capacity limitations. About 45 provinces have been sup- local capacity and lack of access to provincial data. Limited ported by the NTP-RCC to develop action plans in response guidance and understanding of climate change has reduced to the NCCS. A survey of these plans shows a substantial the impact of CC-relevant activities at provincial level. There list of proposed interventions but with minimal appraisal or needs to be a consolidated capacity upgrade, closer integra- prioritization. For each of their 36 proposed projects, the An tion with national level bodies and financial mechanisms and Giang climate change action plans usefully included a bud- harmonization of policies to provide a clearer road map for get and possible source of funds which helps link the climate provincial authorities. change projects with the available financial mechanisms. The proposed projects were mainly projects in which adapta- Climate change mainstreaming can be further strength- tion and mitigation were mainstreamed as opposed to com- ened as an integral part of the policy, planning, budget- pletely climate change focused projects, and covered a num- ing and implementation cycle. One important aim of this ber of sectors (natural resources, agriculture, construction CPEIR is to provide an overview of how resources have been and transportation). This suggests that An Giang province directed towards achievement of stated government climate already perceives the main CC-response as a mainstreamed change goals and identified tasks in the last four years. The activity rather than a standalone activity. In contrast, the cli- expenditure review shows features that can be strengthened mate change action plan for Quang Nam province identifies in future planning cycles. These areas include: (i) wider cov- a range of specific objectives, which are mainly precursors to erage of priority climate change policy dimensions; (ii) fur- CC-response (and precursors to the type of projects proposed ther developed processes to ensure clear formulation and in An Giang), including assessing impacts of a sea-level rise, implementation of sector and provincial climate change pol- assessing vulnerability and developing a list of plans and proj- icies; (iii) harmonization and formalization of CC-relevance, ects. This suggests that Quang Nam has not yet fully formu- objectives, expected outputs and outcomes through policy lated the CC-response and mainstreamed it across activities, and program reform, and planning; and (iv)  stronger ana- but is still at the stage of creating the evidence base and for- lytical M&E and refining of weak, year-end feedback and mulating the policy/strategy response framework. Extending review processes. Methodological measures to help address the action plans across all provinces, assuring consistent qual- these issues and support climate change delivery (CCD) are ity of Action Plans and establishing funding mechanisms for elaborated on in Chapter 2. proposed interventions remain a priority. CC-response capac- ity and data sets at the local level are weak. At present, the 47 2. CPEIR METHODOLOGY AND CLIMATE CHANGE TYPOLOGY DEVELOPMENT 48 Key Findings from Chapter 2 2.1 The scope of the CPEIR 1. The decentralized nature of project recordkeeping and reporting causes substantial delays in obtaining data and and the wider application applying the TCCRE and CC-relevance methodology. of its methodology 2. The lack of consistent reporting on project expenditure The CPEIR is limited to selected ministries and prov- outturns has made it difficult to give reliable comparisons inces. The climate change expenditure analysis, which is between CC-response allocations (or ODA commitments) summarized in Chapter  3, provides a comprehensive over- and actual expenditures. view of climate change investment spending and relevant 3. IDDs do not, most of the time, clarify the nature of project recurrent spending in five key ministries and three provinces. objectives and expected outputs sufficiently for M&E of cli- Since an estimated 70 percent of total investment spending mate change project and program effectiveness. is done at provincial level, this analysis does not represent the totality of Vietnam’s CC-response efforts. However, the anal- The methodology used for the CPEIR is applied across a ysis provides a substantive insight into CC-response spending range of countries but is adapted to meet specific country in the five ministries, which represent the main governmental requirements.45 In line with the climate change policy and CC-response bodies at the central level. It also provides sig- institutional analysis in Chapter 1, this chapter outlines the nificant insight into provincial level spending in three target approach and methodology for collecting, processing, and provinces. However, the provincial level analysis does not interpreting the climate change expenditure data currently represent an adequate sample from which to extrapolate gen- available in Vietnam. To ensure an accurate representation of eralities to the 60 other provinces and municipalities. climate change expenditure/investment, it was necessary to review the climate change expenditure data available, assess The frame of the CPEIR expenditure data was as follows: their limitations, and develop processes to compile and analyze it. As indicated in Chapter 1, this review incorporated elements • Five line ministries: MONRE, MARD, MOIT, MOC of institutional analysis that points to ways of strengthening and MOT the GoV’s CC-response. In the work to develop and apply the • Three provinces: An Giang, Quang Nam and Bac Ninh typology to Vietnam’s climate change expenditures there are • Data type: Recurrent (including three sources for eco- two key elements to be aware of. First, the CPEIR clusters the nomic, environment, and science and technology activi- classification of expenditures judged to be relevant to climate ties) and investment expenditures change into groups. This supports the analysis of the direc- tion and effectiveness of CC-response resource allocation rela- • Data coverage: All potential CC-relevant investments by tive to the GoV’s policies. Second, the review has developed a selected general government entities (see Box 2.1) methodology for assessing the quantitative relevance of climate • Data granularity: At the individual investment project change expenditures in each group to either or both adaptation level and mitigation objectives. Section 2.1 looks at the scope of the • Time period: 2010–2013 CPEIR methodology applied in Vietnam; Section 2.2 reviews the classification approach to linking expenditures to cur- The CPEIR methodology addresses several data and rent CC-response policy; Section 2.3 discusses issues relating procedural limitations in Vietnam. The CPEIR aimed to to assessing CC-relevance; and section 2.4 discusses the link validate the methodology and to obtain procedural insights between the expenditure classification and policy objectives. to support CPEIR findings and recommendations. As indi- cated in Chapter  3, ex-post project data is currently held by individual line ministries and provincial departments, 45. See Background Note II. and records are in many cases incomplete, particularly with 49 Box 2.1. Coverage and Tracking of CC-Response by these entities should be included for fiscal control pur- Expenditure Data: Treatment of SOEs poses as part of general government. The entities, corre- and the Role of MOF spondingly, should have a clear arrangement to report to government on performance of assigned tasks. In Viet- Two features of the CC-response expenditure data that nam, different types of enterprises may be included in this have been compiled for this CPEIR are of critical importance category. The forestry sector, for instance, implements to understanding the scope of the CPEIR and how these CC-response policies by transferring funds to forest sec- data can be applied government-wide: tor enterprises or financing through payments from forest- using enterprises to execute government policy. These a. The data relates to general government operations only, forms of support are not clearly indicated in the budget or not to the operations of either SOEs or private sector accounts, nor is there any clear agreement on enterprise enterprises; and performance. The effectiveness of the CPEIR methodology and monitoring of CC-response implementation would be b. A CC-response is most often associated with projects greatly enhanced if transfers to enterprises could be iden- that serve many purposes, including economic develop- tified in the expenditure data and if agreements with the ment, poverty reduction, or other sector objectives. They enterprises related to the CC-response are put in place. generally cannot be associated with specific transactions. CC-relevance is thus in most cases an assessed value, not Budgeting and tracking assessed expenditures a transaction-based accounting value. Because the data is based on CC-relevance assessments General government and SOEs in the CPEIR of investment projects and recurrent spending, actual CC-response budget and payment transactions can be The scope of the CPEIR is restricted to general govern- recorded in the accounting system only for those ele- ment (as defined in the IMF Government Finance Statistics ments that are assessed as being wholly dedicated to cli- Manual (GFSM 2001)). While both state-owned and private mate change. The TABMIS of MOF will therefore not be enterprises undertake investments in energy use or produc- expected to generate budget execution reports show- tion and distribution, their primary purpose is to do so in an ing actual CC-response spending relative to the original economically viable way within the existing price and cost or revised budget. MPI and MONRE, however, who will regime. Investment in clean or efficient energy by enter- be guiding the application of the TCCRE and the CC- prises is therefore highly dependent on the price/costs of relevance assessments, will be able to supply MOF with fossil fuels relative to other sources. The main way that gov- a complete list of all CC-relevant projects admitted to the ernment policy can impact these decisions is through its annual investment budget each year. On the basis of this policies and regulatory mechanisms as well as subsidy or list, MOF should be able to: (i) enter a memorandum -level taxation policies. budget allocation against each project (which will be the Enterprises themselves will implement CC-response pol- basis for the annual memorandum-level climate investment icies if the additional costs of doing so are covered by budget); and (ii) supply MPI and MONRE with biannual the Government or emission costs are embodied in their reports on actual total spending by these projects. These cost and profit structure. Sometimes, however, SOEs are data can then be used to generate reports on the level of required to finance these activities from their own bal- actual spending on CC-response from the annual climate ance sheets, including borrowing or providing fuels or budget. electricity below cost. This type of activity is described in Similar principles will apply to budgeting and monitoring the the IMF Manual of Fiscal Transparency (2007) as quasi-fis- climate recurrent budget. Since it is directly responsible for cal. Essentially, government is requiring its enterprises to the recurrent budget, MOF could be more directly involved use its resources for fiscal policy purposes (in this case in assessing the CC-relevance of elements of the recurrent CC-response policy). budget submitted by line ministries and provinces. MOF It is also sometimes the case that SOEs have not been could possibly engage directly in the assessment process set up as true enterprises, but are more akin to statutory and participate in MPI/MONRE/MOF specialist teams to bodies, largely supported by government subvention and assess and direct overall CC-response efforts by line minis- expected to implement some aspects of government pol- tries and provinces. Although MOF would not be required icy. Expenditure recorded in the budget and in treasury to track CC-relevance at a transactions level, it could in this accounts for the State Budget in these instances does not way act jointly with MPI and MONRE to coordinate recur- necessarily represent actual spending, but rather a transfer rent and investment budget efforts to assess and direct to the entities. In principle, all such governmental activities overall CC-response efforts of the GoV. 50 regard to their CC-relevance. Data available in most line sub-categories. Breaking down all CC-related investment into ministries (other than MARD and MONRE) is difficult to specific categories allows a detailed analysis of the investments. access. This difficulty in access was mainly due to follow- Each category must, in turn, be linked to the GoV’s CC poli- ing appropriate administrative processes and the dispersed cies. The advantages of developing a typology include: and diverse storage of project information across line minis- tries requiring many connections and communications to be • Systematic coverage of all CC-responses and easy colla- made. The information obtained was largely limited to proj- tion of all activities under each classification type. ect titles and budget allocation for the period 2010–2013. • Longitudinal analysis of budgetary changes in certain However, project titles are not always sufficient to identify response areas through tracking CC-response spending project objectives and CC-relevance clearly. In addition, over time. not all actual spending data were available for line minis- • Linkage of CC-response to policy objectives provides tries (other than MARD) or provinces and project codes improved appraisal of policy implementation and feed- and location codes were sometime difficult to determine. back to reform processes. As discussed in Box 2.1, CC-response data coverage should not include SOEs that operate on commercial principles. The existing CC-response policy frameworks, in particular Clear performance-related arrangements should be made the NCCS and VGGS as described in Chapter 1, were seen as with non-commercial SOEs, and MOF should report only the critical starting point for establishing the typology. Indi- total transactions of CC-relevant projects, not assessed CC- vidual categories and tasks, however, were also drawn from response spending. groups/categories that are used internationally in climate change work. Most notable in this respect was the typology The CPEIR methodology can be further refined and of activities with climate co-­benefits compiled by the WB.47 applied by the GoV to establish a comprehensive CC- Case studies on South Korea’s approach to CC-response response expenditure analysis. The present data limita- management and the tracking and evaluation of expenditures tions can be addressed by the GoV by reforming its project contributing to France’s climate change policy are contained appraisal process. Reforms are already underway, but others in Annex II. are needed (further elaborated in Chapters 4 and 5). Further refinement of the typology used in this study will be critical The CPEIR typology was refined through several consul- input to these reforms. This will be a continuing process to tations with relevant government agencies. A workshop be taken up by the GoV and there will also be a need for was held in which the evolving typology was discussed with capacity-building to carry out this task. The development of representatives from relevant government bodies and inter- the typology is discussed in more detail below and in Back- national agencies. In addition, after trialing investment data ground Note II.46 classification in the typology and pilot data interpretation, the typology was further refined following consultations with relevant line ministries. The process of development is 2.2 Development of a typology illustrated in Figure 2.1. linked to Vietnam’s climate The typology aims to provide a unifying framework for the full range of activities involved in CC-response deliv- change response policy ery. The TCCRE has been developed in a hierarchy, allowing Developing a typology of CC-related investments is data analysis at various levels of detail. The three hierarchical essential to allow categorization of the various CC- Pillars —the cornerstones of the CC-response; levels are (i)  ­ related activities undertaken by the target line ministries (ii) Categories —the main themes involved in CC-response and provinces. The typology identifies the full range of within each pillar; and (iii)  Tasks—the sectors or identifiable activities, which could be considered as CC-response in Viet- groups of CC-response activities within each category. The nam and allows investments to be placed into a number of task level represents the full range of recognizable activities of the CC-response at the line ministry and provincial level. The Background notes are available on the website of the Ministry of Planning 46.  and Investment established to track Climate Finance Options for Vietnam (http://cfovn.mpi.gov.vn), as well as on the websites of the World Bank World Bank (2011). Typology of Activities with Climate Co-Benefits by WB 47.  (www.worldbank.org/en/country/vietnam) and UNDP (www.vn.undp.org). Sector. 51 Figure 2.1. Mapping Policies to Climate Change Expenditures and Organizational Responsibilities Stage 1: Policy Elements Final CC hierarchical typology: 10 elements from NCCS • Three pillars 17 elements from VGGS • 11 categories Stage 2: Policy and Implementation Structure • Multiple sector tasks linked to Three policy pillars: adaptation and mapped to Policy and Governance 27 climate change elements of Scientific, Technological and the NCCS and VGGS Societal Capacity Climate Change Delivery Stage 3: Link Policy to CC Categories and Tasks Five policy and governance categories: Priority tasks: Adaptation and mitigation management frameworks Three scientific, technological and societal capacity categories Three climate change delivery categories All tasks below PGI and PG2 defined in sector terms and administrative responsibilities and linked to adaptation or mitigation objectives as defined in the PG1 and PG2 frameworks. Stage 4: Cross Check with International CC Typologies Stage 5: Cross Check Mapping of CC Elements of NCCS and VGGS final CPEIR typology has three pillars: Policy & Governance track onto the typology, but not all tasks track onto the (PG), Scientific, Technological and Societal Capacity (ST), VGGS, demonstrating that while the VGGS is closely associ- and Climate Change Delivery (CCD). Each pillar has between ated with a CC-response it does not cover the entire range of three and five categories. An important distinction within the CC-response tasks. Most of the NDS policy elements tracks pillars is that between PG and ST on the one hand and CCD onto tasks of the typology (except for the disaster response on the other. The former can be designated as enabling activ- element), but the NDS does not cover many of the typol- ities. They are not directly creating a CC-response, but they ogy tasks. This illustrates the systematic linkage between the provide essential administrative and technical infrastructure NCCS and the typology tasks, and also the policy conver- for line ministries and provinces to deliver responses. The full gence of a CC-response with green growth and disaster strat- TCCRE is presented in Background Note III.48 egies. To assist line ministries and provinces assign groups of projects (and linked organizational responsibility) under each The final climate change typology can be linked to the of the proposed tasks and sector activities within these tasks, main climate change policies of Vietnam. There is a clear a more extensive list of possible sub-sector tasks drawn from link between the NCCS, VGGS and NDS (National Strategy a combination of the detailed analysis of climate expenditure for Natural Disaster Prevention, Response and Mitigation to in Vietnam is provided (see Annex III.3). 2020; adopted 2007) and the TCCRE, with the task level of the TCCRE tracking policy elements of the NCCS, VGGS The TCCRE provides a classification that can be applied and NDS (see Annex III.2). All typology tasks track onto to all CC-relevant expenditures in Vietnam. The TCCRE policy elements of the NCCS. All VGGS policy elements represents the main policy dimensions as set out in the NCCS, VGGS and NDS, international groupings of CC- 48.  Background notes are available on the website of the Ministry of Planning response which are relevant to Vietnam, as well as key areas and Investment established to track Climate Finance Options for Vietnam (http://cfovn.mpi.gov.vn), as well as on the websites of the World Bank in which activities are presently undertaken or there is per- (www.worldbank.org/en/country/vietnam) and UNDP (www.vn.undp.org). ceived to be a need for activity. It constitutes a climate change 52 program classification that allows elements of GoV and DP its practicability. The methodology should be applied by the spending on climate change objectives to be clearly identi- relevant government bodies to institutionalize a national CC- fied, tracked, and climate change outputs and outcomes response tracking system. Further refinement will be needed evaluated relative to cost. Its implementation is necessary to (see Chapters 4 and 5), but this depends on a clear decision to show the distribution of effort, strengths and weaknesses, apply the TCCRE, and to apply clear rules for determining the and the potential impact of spending by the CPEIR minis- extent of CC-relevance in each project selected. tries and provinces surveyed. Broader implementation of the TCCRE should provide multiple benefits to management of Four Steps to Assess the CC-relevance of Projects the overall CC-response program. It will: (i) provide a com- A four-step process has been designed for treatment of prehensive overview of the distribution of total spending on any investment or financial entity which on initial con- CC-response, including alignment with country climate sideration could be related to climate change. The pro- change and green growth strategies; (ii) facilitate closer coop- cess was designed to use pre-­determined criteria to help make eration between levels of government and between the GoV decisions; applying discipline to decisions that involve judg- and DPs (particularly as DPs’ use of country systems for plan, ment of multiple factors and helping to ensure consistency budget, accounts, and reporting is established); (iii) establish in outcomes. As discussed in Chapter 1, mainstreaming of accountability for use of funds and achievement of results climate change activities should be strengthened in key line relative to objectives; and, as a result, iv) strengthen chan- ministries to ensure that all CC-relevant projects are consid- nels for financing the program and guide resource mobili- ered in this process. The four steps are shown in Figure 3.1 in zation.49 The typology, moreover, is not a closed system. As the Background Note III containing the Typology Guide.50 new CC-relevant projects and categories emerge, these can be added. The CPEIR recommends that the TCCRE be applied The first step should ensure: (i) that all projects with (and progressively refined) by MPI and MONRE to all CC- potential CC-relevance are considered; and (ii) that relevant expenditures in the State Budget to estimate the level of all expenditures considered for inclusion are climate climate-relevant spending by all line ministries and provinces. change related. The first part of this step requires that a MOF should ensure that all climate change related projects are workable but robust definition of a climate change related tracked by the relevant finance departments. expenditure is used. The definition used assumes that all CC-relevant expenditures have aspects of adaptation or mitigation. Thus, CC-relevant expenditures aim either 2.3 Applying the TCCRE to: (i)  improve resistance or resilience to present and fore- and assessing climate cast climate change by protecting against negative effects on people, resources and infrastructure or taking action change relevance against projected future adverse effects, or (ii) reduce resource inputs and GHG emissions per unit output though Assessment of CC-relevance is an important part of the technological change, substitution and carbon sequestra- CPEIR methodology. The TCCRE allows all CC-relevant tion. This could involve reducing GHG emissions directly expenditures to be classified against different elements of (such as reduced use of fossil fuels in transport, renewable climate change policy. The extent to which each project energy generation, energy conservation and efficiency) or addresses CC-response must also be assessed. A process for through capturing of carbon (e.g. carbon sequestration). classifying and assessing relevance was developed as part of the Some investment may aim to provide both adaptation and CPEIR. This process has been tested and has demonstrated mitigation benefits and these are also included as CC- relevant expenditures. Ensuring that all expenditures in Reviewers have observed that CC-response is not the only type of spending 49.  that would be amenable to application of a program classification and the annual budget and planning process are CC-relevant results-oriented budgeting (such as Program-Based Budgeting). That is requires establishment, as far as possible, during the for- certainly the case, but this CPEIR is concerned only with the application of mulation of the five-year SEDP and in preliminary policy this methodology to CC-response management. CC-response policies are recognized as being of critical importance by the GoV, and the application of discussions during the annual planning and budget cycle; the methodology to the CPEIR entities included in the study demonstrates its practicability. It should also be noted that, while TABMIS is an advanced Fiscal Management Information System, no other work on program-based Background notes are available on the website of the Ministry of Planning 50.  budgeting is underway at present. Application of the TCCRE may point the and Investment established to track Climate Finance Options for Vietnam way to similar applications in other sectors, but such applications are beyond (http://cfovn.mpi.gov.vn), as well as on the websites of the World Bank the scope of this CPEIR. (www.worldbank.org/en/country/vietnam) and UNDP (www.vn.undp.org). 53 the strategic foundation to encourage mainstreaming of CC- inadequate. In the latter case an addition should be made to response into BAU sector and provincial policies. the TCCRE. A thorough policy discussion will help ensure that all The third step is to identify whether the activity’s cli- high-priority CC-relevant projects are included in the mate change objectives are primarily related to adap- annual plan and budget appraisal process. This pol- tation or mitigation. All related investments that pass icy discussion needs to take place between MONRE, MPI through step one should either improve resistance or resil- and MOF and the proposing line ministries or provincial ience to present and forecast climate effects (i.e. adapta- administrations to ensure the CC-relevance of the proposed tion) or reduce GHG emissions by lowering emissions or expenditure. Some projects may, however, not be sufficiently increasing sequestration (i.e. mitigation). Some invest- well prepared or justified in terms of CC-relevance. Their ments, however, may have elements of both adaptation links with national CC-response policy should be exam- and mitigation, in which case several options are possible: ined, either in terms of correspondence to the NCCS and (i)  such projects can be grouped as a separate adaptation/ climate change elements of the VGGS and NDS, or other mitigation (A/M) category; (ii) projects can be assigned to climate-related sectors covered by the TCCRE though not either A or M depending on the objective assessed as being specified in NCCS, VGGS or NDS. All climate change most important; or (iii) the relevance category can be divided related investments should be shown to contribute either to between the two objectives according to relative importance. resistance or resilience to the present and forecast climate, to For the CPEIR study, the first of these options has been reduce resource inputs and GHG emissions per unit output, taken because option ii detracts from the hybrid nature of or both. Activities include preparatory work, such as capac- some projects and also establishes the possibility of double ity development, policy strengthening or piloting techni- accounting, and option iii would be difficult to do robustly cal advancements, as well as more direct response actions. when information on climate change is so scant. A signif- Formal discussion of these issues during the appraisal/ icant number of projects fall into this A/M category. In negotiation stage of the annual planning and budget cycle will applying the methodology to all State Budget projects, the ensure that the CC-relevance of projects and related recurrent third option would be preferred and should be the long- spending is progressively well defined in the planning and term objective to get the best idea of the relative amount budgeting process—and climate change mainstreaming is of effort being made toward each objective through bud- thereby made more effective. get allocations. Finally, it is important to assess how much of the overall activity expenditure is climate change related. The second step is to classify expenditures in the appro- As indicated at the outset, it is rarely possible to link spe- priate pillar, category and task of the TCCRE. Each cific elements of project spending to specific CC-response investment is positioned at the pillar, category and then outputs and outcomes and thereby identify the climate rel- task level of the TCCRE. If activities in the investments evance in percent of the activity. Where this can be done, cover more than one task, then the investment is placed in it should be part of the process, but for the most part, CC- the task to which the more significant budget is allocated, relevance can only be determined by relatively broad crite- but CC-relevance would be assessed in terms of total CC- ria. Investments are divided into five categories based on the response contribution. If the investment cannot be placed estimated percentage of the overall investment budget which in a task category then either the investment is not actually is linked to a climate change response. Project management climate change related51 and the answer in step one should be and administrative costs related to project delivery of climate reviewed, or the investment is CC related but the TCCRE is change related activities should be included as they are neces- sary for delivery of the climate change components. If a proj- 51. T  his result should not occur if the first step is properly applied. During ect seems to fit into multiple categories then it is the highest the actual review of the CPEIR line ministries and provinces a number of projects submitted for review were subsequently judged to not be CC-related. percent category of climate change-related expenditure into This result, however, was a consequence of the lack of initial clear defini- which it fits in which it is recorded. Table 2.1 shows the cri- tion of CC-relevant projects. These issues may well recur in early general application, but should not generally be seen as part of the process. A high teria for the five categories of proportional climate change emphasis should be given therefore to clear policy directions on what is or is spending. not CC-relevant in step one. 54 Table 2.1. Criteria for the Five Categories of CC-Response Spending Climate Change Related Category Expenditure Criteria Complete 100% Projects which either (i) explicitly state a predominant climate change objective, or (ii) are relevance expenditure fully dedicated to exclusively delivering climate change related benefits, or (iii) sit within a governmental program dedicated to climate change (e.g. NTP-RCC). Projects may satisfy one or more criteria to qualify. High 75%–99% Projects which have (i) one or more of the primary objectives to improve climate resilience or relevance expenditure mitigation, or (ii) deliver significant and specific results/outcomes that improve climate resilience or contribute to mitigation. Projects may satisfy one or both criteria to qualify. Medium 50%–74% Projects which either (i) have secondary objectives related to building climate resilience or relevance expenditure contributing to mitigation, or (ii) some results/outcomes of the project are related to building climate resilience or contributing to mitigation, or (iii) mixed programs with a range of activities that are not easily separated but include at least some that promote climate resilience or mitigation. Projects may satisfy one or more criteria to qualify. Low 25%–49% Projects that include activities that display attributes where indirect adaptation and mitigation relevance expenditure benefits may arise but climate change benefits are not explicitly listed in project objectives or the stated results/outcomes. Marginal 1%–24% Projects that include activities that have indirect and theoretical links to climate resilience, relevance expenditure although climate change benefits are not explicitly listed in project objectives or the stated results/outcomes. Assessment of CC-relevance at a detailed level plays a crit- c. The list of project names, planned and actual figures ical role in reviewing implementation of CC-response pol- for each individual project in the NTP-RCC for cal- icy. The process described above has been implemented endar years 2010, 2011 and 2012, and planned figures as an integral part of the CPEIR assessment of trends for calendar year 2013. in CC-response spending and reflected in the CPEIR d. IDDs for selected projects to help clarify the nature of guide mentioned above. The CPEIR recommends that project objectives and expected outputs. MPI and MONRE add this method of assessing the CC- relevance of all CC-response projects by strengthening the annual e. For recurrent data, the list of key activities named in planning and budgeting cycle through the inclusion of the the CC-relevant sectors such as science and technology, CC-relevance of all investments. environmental protection, the economic sector, and corresponding planned and actual figures for individ- Data coverage and quality have been challenging in a ual activities funded by all kind of resources (from the number of cases. The data sought corresponded to the State Budget, ODA and NTP) for calendar years 2010, CPEIR frame as follows: 2011 and 2012, and the planned figures for calendar year 2013. a. The list of project names and corresponding planned and actual figures for each individual project funded The decentralized nature of record keeping and report- by development investment from the State Budget ing makes it difficult to identify climate change related and by government bonds for calendar years 2010, spending. Data are available at each line ministry and prov- 2011 and 2012, and the planned figures for Calendar ince but scattered at various levels. The most detailed data year 2013. is at the spending unit at the budget’s lowest level. The offi- b. The list of project names and corresponding key activ- cial requirement in the financing system in Vietnam is that ities, planned and actual figures of each individual the financing department (upper level) only needs aggregate project and key activity funded by ODA for calendar data, not detailed data. The CPEIR requires detailed data for years 2010, 2011 and 2012, and planned figures for each activity, and it thus takes time to collect this from the calendar year 2013. spending unit. Including climate change related information in 55 project documents would increase the ease and efficiency of con- but the CC-response assessment applied to each project will firming and tracking climate expenditure. During the CPEIR give the best available estimate of CC-response expenditure. analysis the CC-relevance was determined in a post-hoc It was not possible to apply such calculations to ex-post data manner—after the project has been designed and sometimes available to the CPEIR team, in part because TABMIS was after the project had been completed. This means that the not fully rolled out, but more importantly because finance inclusion of climate change components in the project and/or departments in many cases did not provide outturn data for the proportion of CC-relevance was difficult to determine in all CC-relevant projects. When measures are taken to estab- some cases. This situation was alleviated by discussion with lish both project level reporting by finance departments and technical officers about the project(s) and/or reading of the general application of a CC-relevance assessment by MPI IDD and thus inferring the climate change components. and MONRE, these issues should be well addressed. For the CPEIR, all data and CC-relevance assessments have been It would be critical to improve this situation in a regu- thoroughly discussed with the relevant line ministry and pro- lar climate tracking process. It was recognized during vincial officials and are as reliable as possible in the present these discussions that the project management and technical circumstances. officers in the ministries were the individuals with the best knowledge and awareness of the project design and climate change related objectives. Thus, the most tractable solution 2.4 Linking expenditures would be to add a climate change related section in the proj- ect documents and IDDs which identify the climate change in the TCCRE typology related objectives, categorize the project into the task level of the typology, note the nature of the CC-response (A, M or to policy objectives A/M) and identify the proportional climate change related The TCCRE is based on identifying expenditure at task expenditure. This information could then easily be collated level, but data can be reformulated to show spending for all projects in a climate tracking database, which in related to higher-level policy objectives. The TCCRE combination with MOF budget outputs, would permit the methodology links an expenditure to one particular task. climate tracking data to be collated in an efficient manner. These expenditures can then be collated by task and pre- Embedding this structural addition into the project docu- sented to show climate change related expenditure in relation ments and IDDs requires a systematic revision of all relevant to tasks (see Chapter 3). The TCCRE task level represents document types across ministries and across budget types the domain of activity types that are undertaken and thus (e.g. investment, recurrent, ODA) to allow this informa- tracks onto the type of climate change related activities in tion to be detailed at source and during project design. This the various governmental bodies. This makes it easier for the project-based climate change related information is the raw project-to-task linkage to be made at the ministry and pro- data which enters a climate tracking process so its importance vincial bodies. However, Chapter 1 has identified the need cannot be over emphasized. for linking expenditures to higher-level policy objectives such as those stipulated in the NCCS, VGGS and NDS. Because Reporting on expenditure outturns is not always con- the typology was developed partly from a policy basis, the sistent, which makes it difficult to give fully reliable task-level expenditure information can be re-formulated in comparisons between CC-response allocations (or ODA relation to policy objectives. This permits the direct linkage commitments) and actual expenditures. In any budget- between climate change related expenditure and higher-level ing system, original allocations invariably differ from out- policy objectives to be determined. turns. Sometimes original allocations are exceeded because of virements or supplementary appropriations and very often Task level codes can be recoded to policy objectives in a plans are not executed fully. Details of these processes for semi-automated way so that expenditure for each policy Vietnam are given in the 2013 PEFA. However, there needs objective can be determined. The link between the tasks of to be a year-end explanation for variation between alloca- the TCCRE typology and policy objectives is illustrated in tion and outturn to be able to track climate change spend- Annex III-2. Recoding of the data at task level can be carried ing and its impacts. As highlighted in Chapter 1, it would out so that task codes are modified into policy objective codes. be essential that all CC-relevant project data be reported by For example, using the NCCS, task PG1.1 becomes CC6. relevant finance departments at line ministry and provincial As each task is re-coded to the related climate change policy level. This will not record CC-­relevant transactions as such, objective, previous differently coded tasks collate together (for 56 example, PG1.1, PG1.2 and PG1.3 are all recoded to CC6). and which therefore cannot be entered in the TCCRE. A sim- For most policy objectives this can be done in mass through ilar approach can be used to link expenditure to the action simple spread-sheet manipulation. Some tasks are related to plans of these policies, or even climate change action plans more than one policy objective. In this case, recoding needs at a provincial level. Being able to directly link expenditure to be done on an individual expenditure basis, based on the with policy objectives has significant benefits for oversight of project-specific nature of the task. However, in some cases the distribution of climate change related resources across the bulk coding could be done for all expenditures for particular array of policy objectives. In addition, data from a number ministries if all specific project activities are linked to one of years can track changes in the distribution of expenditure particular policy objective, rather than mixed between the across policy objectives over annual cycles. Such insight could two. Once all tasks are recoded to policy objectives, then the show, for example, the effect of changing planning and bud- expenditure in relation to each policy objective can be deter- geting procedures or of modifying project selection criteria. mined (see examples in Chapter 3). Linking climate change related expenditures to the NCCS, VGGS and NDS, or their respective action plans, Box 2.2. Recommendations from Chapter 2 can be a powerful tool. Connecting spending to the respec- 1. The TCCRE needs to be progressively refined by tive plans can help manage the progression in CC-response MPI and MONRE and applied by line ministries budgeting or aid in an M&E system. The link between and provinces to all CC-relevant expenditures in NCCS and climate change related expenditure can be deter- the State Budget to estimate the level of climate- mined in this fashion to show the portfolio of expenditure relevant spending by all line ministries and provinces. in relation to the NCCS policy objectives. The expenditure The MOF should ensure that all climate change related projects are tracked by the relevant finance data can also be reformulated to link to the VGGS as there departments. is policy convergence in relation to the tasks (see Table 2.1). However, for the VGGS the outcome of the recoding will 2. MPI and MONRE should develop and apply the show the climate change related expenditure that is relevant CPEIR method of assessing CC-relevance of all to these policy objectives. There may be other expenditure CC-response projects included in the annual plan- ning and budgeting cycle. related to these strategies which is not climate change related, 57 3. CLIMATE CHANGE EXPENDITURE: Trends Relative to Policy Objectives, Categories, and Tasks 58 Key Findings from Chapter 3 8. The NTP-RCC serves as an example of the influence on CC-­ response by a program catalyzed with DP fund- 1. The budgeted CC-response amount accounts for a substan- ing through the State Budget as it has given considerable tial share of the total budgets of the studied line ministries emphasis to enabling activities to support the mainstreaming (18  percent), reflecting an existing large platform to take of climate action and capacity development. action to address the climate challenge in Vietnam. 9. While the examination of provincial spending data does not 2. Central government CC-response financing is mainly allow quantitative inferences to be drawn about the totality directed towards climate resilience activities (88 percent) of provincial allocations, the CC-response spending from the through large-scale infrastructure projects from MARD and three studied provinces has given primary emphasis to CCD MOT, with an emphasis on improving resilience of irriga- adaptation activities and have climate budgets growing at a tion systems and building transport systems that offer cli- faster pace than their total budgets. mate co-benefits. Limited finance from the five ministries was provided towards some tasks that are essential for fur- By applying the methodology (the TCCRE) developed ther developing Vietnam into a climate-resilient low-carbon in Chapter 2, the CPEIR provides a comprehensive and economy. detailed analysis of climate change expenditure52 in five 3. The majority of surveyed CC-response projects (58 percent) key line ministries (which represent the bulk of the central can be characterized as having “ low” or “marginal” rele- government’s CC-response spending) and three provinces. vance to CC-response, with, at most, activities that display Allocation among projects and recurrent spending data with attributes where indirect adaptation and mitigation ben- relevance to climate change were analyzed by applying the efits may arise but where these are not explicitly listed in TCCRE discussed in Chapter 2. While the CPEIR does not project objectives or stated results or outcomes. contain the majority of CC-response spending from provincial governments, this chapter illustrates how the CPEIR meth- 4. The bulk of CC-response spending from the central gov- odology can aid analysis and management of CC-response ernment studied has targeted direct climate change deliv- policies at entity, provincial and central levels. Its principal ery (CCD) activities (88 percent), while a relatively small benefit is providing multiple views of the way that resources proportion has been directed towards science and technology (both investment and recurrent spending) are being allocated. development (ST—9 percent) and policy and governance Specifically, this chapter attempts to answer a number of stra- (PG—3 percent). tegic and analytical questions pertaining to the CC-response 5. CC-response spending is dominated by investment (account- expenditures covered in this review. These include: ing for 92 percent of the CPEIR national government expen- ditures), but climate change recurrent spending, while much 1. What is the magnitude of the GoV’s CC-response lower, is important to map and track because of its key role spending and share from the total budgets of CC- in enabling activities and providing administrative, insti- response spending for the five line ministries (including tutional and technical support in managing climate change NTP-RCC and NTP-EE financing) and three selected investments. provinces? 6. The majority of expenditures on climate change are targeted 2. What are the levels of CC-response spending directed towards the NCCS and VGGS policy objectives of food and towards programs, activities, and projects that address water security (63 percent) and sustainable infrastructure adaptation and/or mitigation? (74 percent), indicating there may be a need for robust plan- 3. What type of tasks is CC-response financing directed to ning and budgeting guidelines for CC-response expenditures and what gaps exist (using the TCCRE)? to maximize value for money in investments. 7. The Government has already significantly mobilized its  he climate change-response expenditure included in this analysis do not 52. T own resources for climate action, accounting for more than constitute financing directed towards the additional cost of development as a result of climate change, and should not be seen as a measure or indicator of half (69 percent) of the CC-response financing studied in outcomes directly related to climate resilience or mitigation. The costs of the the CPEIR. ODA towards the CC-response is significant CC-relevant projects are accounted for as CC-response expenditure based on and has mainly been in the form of loans for investment the criteria developed for the TCCRE in Chapter 2 (e.g. 100 percent of the project is attributed if projects explicitly state a predominant CC objective or projects, with an initial focus on CCD and an increasing are fully dedicated to exclusively delivering CC-related benefits, or sit within emphasis on PG activities. a GoV program dedicated to CC). 59 4. How is the GoV’s CC-response financing (from the b. The total share of CC-response spending out of the line five line ministries, NTP-RCC, NTP-EE, and SP-RCC ministries’ total budgets; Financial Mechanism) aligned with the strategic objec- c. The rate of growth (or decline) of this CC-response tives and solutions of the NCCS and VGGS? spending; 5. What are the shares of domestic and ODA sources of d. The main drivers behind the spending; CC-­response financing and what types of projects and programs do each address? e. The spending level for each of the line ministries towards climate change and what this says about their 6. What types of activities are financed through the roles in Vietnam’s climate change dialogue; NTP-RCC and do these activities correspond with the spirit of the program? f. The share of CC-response spending directed towards providing adaptation and/or mitigation co-benefits; 7. What types of projects (and in what locations) has and CC-­ response spending from the Financial Mechanism of the SP-RCC been directed to? g. The CC-relevance level of the projects. (Do the projects articulate climate change adaptation or mitiga- 8. How does the representative sample of provinces cur- tion in their objectives or results and desired outcomes? rently finance CC-response activities? Is there some indication that climate change is being Tagging and tracking spending from the State Bud- mainstreamed in the studied line ministries’ programs, get gives an indication of the relative distribution and and to what level? Are the majority of projects only importance of the spending, identifies responsibilities indirectly providing climate change co-benefits?) for performance and uncovers potential planning and The share of CC-response spending from the total financing gaps between Vietnam’s strategic climate pri- budgets of the five line ministries is significant orities and spending. The following sections of this chap- (18 percent) and has remained fairly constant from 2010 ter analyze trends in central and provincial climate change to 2013, while the total amount of the studied alloca- spending as well as ODA support for CC-response spending tions has decreased by 11 percent in real terms. As indi- (some of which occurs outside the frame of the State Budget). cated in Figure 3.1, climate appropriations from the bud- A broader view of CC-response policy management is given gets of the five line ministries have decreased during this in Chapters 1 and 4, particularly with reference to organi- time period from around VND 4,300 billion in 2010 zational aspects and use of other fiscal instruments. Devel- to around VND 3,800 billion in 2013 (in constant 2010 oping a more comprehensive set of these data would provide VND). This decline can be largely attributed to a gov- a strong foundation for the GoV’s overview of CC-response ernment policy (Decree 1792/CT-TTg, 5/10/2011) that policy. required tightening of public investments and an enhanced focus on priority projects to raise the effectiveness of pub- 3.1 Central government lic investment. The share of ministerial budget financing (of the five studied line ministries) that has been directed climate change response towards activities that explicitly address climate change or those with climate change co-benefits has decreased slightly expenditure analysis from 19.9 percent in 2010 to 19.6 percent in 2013.53 How- ever, both the total size and share of the budgeted amount Central Government Climate Change Response Spending by Five Line Ministries, NTP-RCC, towards CC-response spending have oscillated during the and NTP-EE four year period, experiencing a decrease from 2010 to 2012 and an increase in 2013 almost back to 2010 levels. This section assesses the total level of investment and In total, climate budgets for the five line ministries have recurrent CC-response spending by the five line minis- decreased at around the same pace as the ministries’ total tries (including through the NTP-RCC and NTP-EE). In budgets from 2010–2013 (at a compounded average annual particular, the section attempts to address: a. The amount of central government CC-response The national CC-response budget in the scope of the CPEIR accounts for 53.  spending in the scope of the CPEIR; 0.5 percent of the total government budget. 60 Figure 3.1. Total Climate Change Appropriations (investment Figure 3.2. Growth Rates of CC-Response Appropriations and and recurrent) for Five Line Ministries, NTP-RCC, and NTP-EE, Total Budget Appropriations (investment and recurrent) of Five 2010–2013 (left Y axis: constant price 2010 VND billion; right Y Line Ministries (including NTP-RCC) from 2010–2013 (constant axis: percent) price 2010 VND billion) 5000 25 60% 4500 4000 20 50% 3500 40% 3000 15 2500 30% 2000 10 1500 20% 1000 5 10% 500 0 0 0% 2010 2011 2012 2013 Mitigation 111 20 41 149 –10% Adapt. & Miti. 435 385 366 267 –20% Adaptation 3770 3025 2922 3413 MOT MARD MONRE MOC MOIT Total % of LM budgets 20 18 15 20 studied LMs Total Budget Annual Growth Rate rate54 of between 3 to 4 percent) (see Figure 3.2). These Climate Budget Annual Growth Rate results indicate a continuing GoV commitment to a firm CC-response policy despite a tightening fiscal environment. Figure 3.3. Number of CC-Response Projects under Imple- However, CC-response spending budgeted during this time mentation (investment and recurrent) for Five Studied Line period from the five line ministries is equal to around 0.1 Ministries, NTP-RCC, and NTP-EE by CC-Relevance Category (not including road transport projects) percent of Vietnam’s GDP.55 As a reference, the WB’s Chart- ing a Low Carbon Development Path for Vietnam Study has 1200 found that the incremental investment cost for Vietnam to 1000 move from a BAU scenario to a low-carbon development path is 1 percent of annual GDP during 2010–2030 (which 800 Marginal does not account for the additional cost of adaptation). 600 Low Medium The GoV’s CC-response for the five line ministries pri- 400 High marily consists of investment projects that only have indi- 200 Complete rect climate change adaptation or mitigation co-benefits. The majority of projects under implementation (on average 0 2010 2011 2012 2013 58 percent of CC-response projects under implementation and 42 percent of annual CC-response allocations of the five line ministries56 including through the NTP-RCC and projects studied in this CPEIR (on average 34 percent of NTP-EE), can be characterized as having “low” or “marginal” CC-response projects under implementation and 20 percent relevance to the CC-response, as classified by the TCCRE of CC-response allocations) were classified as having “high (See Figure 3.3). These projects are classified as such because CC-relevance” or “complete CC-relevance.” Despite this, the they consist of activities that display attributes where indirect total allocations directed towards these types of projects have adaptation and mitigation benefits may arise, but where these increased in 2013 (from 2011–2012 levels) to 22 percent of are not explicitly listed in project objectives or stated results/ total allocations, indicating a concerted effort made by the outcomes. In total, only a minority of the central government Government to develop a tailored CC-response program. The majority of the identified central government CC-­ 54.  Calculated using the compound annual growth rate formula, which is response allocations have been in the form of MARD appropriate when assessing the gross change over time (as opposed to typical irrigation and MOT road transport projects. Figure 3.4 year-to-year change over a period). 55. Source: General Statistics Office of Vietnam. displays the distribution of CC-response expenditures by 56.  Given the different methodology used to calculate expenditures towards line ministry and by year. As shown, MARD attains the road, bridge, and highway transport infrastructure, these projects and expen- ditures were omitted from the analysis of the share of projects contributing largest share of spending, with 79 percent of implemented to climate change activities. CC-response spending, followed by MOT, which accounts 61 Figure 3.4. Total CC Expenditures (investment and recurrent) Figure 3.5. Distribution of Annual Allocations of CC-Response by Line Ministries from 2010–2013 (2010–2012 implemented, Investment Projects by Project Size for Line Ministries from 2013 budgeted, by constant price 2010 VND billion) 2010–2013 (2010–2012 implemented, 2013 budgeted, by con- stant price 2010 VND billion) 6000 100% 5000 90% 4000 80% 70% 3000 60% 2000 50% >10 VND Bill 5–10 VND Bill 40% 1000 1–5 VND Bill 30% 0.5–1 VND Bill 0 20% <0.5 VND Bill 2010 2011 2012 2013 10% MOT MONRE MOIT MOC MARD 0% MARD MOC MOIT MONRE MOT for 13 percent of CC-response spending. Both of these min- istries primarily finance infrastructure projects that have in their respective sectors (see Chapter 1 for a further discus- climate resilience co-benefits. A total of around VND sion of the roles of the line ministries). 12,800 billion has been directed towards MARD’s CC- The rate of change of each line ministry’s allocation for a response spending, which has been allocated towards large CC-response varies considerably across ministries. From CC-response projects (as shown in Figure 3.5, which dis- 2010–2013, the CC-response budgets of MONRE and MOIT plays the distribution of annual commitments towards CC- increased (by 9 and 5 percent respectively) despite their total response projects). This emphasizes the importance of sus- budget decreasing during this same time period (see Figure 3.2). tained climate leadership within MARD and the need to MOT is the only ministry where the climate budget decreased review the current distribution of expenditures against the at a substantially higher rate relative to its total budget. MARD’s priorities of the MARD climate change action plan to ensure climate budget is nearly at the same level in 2013 as it was in that the Government is getting value for money in its CC- 2010, with a slight negative annual average growth rate (–2.5 response spending. In light of the need to improve project percent) compared to its total budget (–0.9 percent). The aggre- appraisals and strengthen the mainstreaming of the CC- gate climate budget for the five line ministries decreased at response, as identified in Chapters 1 and 2, it is essential to nearly the same rate as the total budget. ensure that financing is directed towards interventions that are based on strategic priorities rooted in sound vulnerabil- As noted, CC-response spending is primarily focused on ity and low-carbon options assessments, complemented by adaptation, but a growing amount of financing is being clear design standards. Almost half of MARD’s CC-relevant directed towards mitigation (as shown in Figure 3.15). From investment projects and the vast majority of MOT’s proj- 2010–2013, the GoV allocated financing for projects that ects have been classified as having “marginal CC-relevance,” provided a significant amount of climate change adaptation illustrating the need for further mainstreaming of the CC- co-benefits (88  percent of CC-response financing). As noted response into project planning and appraisal and the need to previously, MARD accounts for the majority of this total adap- ensure that infrastructure projects are undergoing proper cli- tation financing (corresponding to 81 percent of total adaptation mate screening. MONRE, MOIT, and MOC account for financing covered in the CPEIR, as shown in Figure 3.6). This 8 percent of the CC-response expenditure. While MONRE’s is aligned with the strategic viewpoint of the NCCS. The share CC-response budget is relatively small, it is still the lead of tasks directed towards mitigation increased slightly from 2.6 agency for the NCCS and action plan, as well as for the percent in 2010 to 3.9 percent in 2013.57 Recurrent spending NTP-RCC, enabling it to facilitate the close coordination on mitigation (through the NTP-EE) is the main driver for the of climate change policymaking and capacity building increase in this CC-­response spending. required across ministries. MOC and MOIT play an impor- tant role in mainstreaming, in particular in promulgating  t should be noted that CC-response spending towards mitigation-only tasks 57. I policies, regulations and standards that facilitate a CC-response within studied line ministries decreased significantly during 2011–2012. 62 Figure 3.6. Adaptation CC-Response Spending (investment Recurrent CC-response spending has also prominently and recurrent) by Line Ministry (not including NTP-RCC and financed projects that contribute to both adaptation and mit- NTP-EE) (2010–2012 expenditures, 2013 budgeted, by constant price 2010 VND billion) igation. These expenditures primarily cover forestry projects, with an additional amount directed towards city and provin- 5000 cial-level action plans to respond to climate change. MARD 4500 accounts for the largest share of this spending (55 percent), 4000 with the remaining spending split mainly between MONRE 3500 (30 percent) and MOT (9 percent), as shown in Figure 3.8. 3000 As a whole, while 57 percent of MONRE’s total CC-response 2500 expenditures are directed towards adaptation, a large addi- 2000 1500 tional portion (39 percent) targeted projects that have both 1000 adaptation and mitigation benefits. 500 0 Central Government Climate Change Response 2010 2011 2012 2013 Spending: By CPEIR Typology MOT MONRE MOIT MOC MARD This section characterizes the type of CC-response spend- ing for the five line ministries, NTP-RCC, and NTP-EE. In particular, this section addresses: CC-response financing for mitigation is generally cou- a. The distribution of CC-response tasks, as classified by pled with adaptation (accounting for about 10 percent the TCCRE; of CC-­ response allocations from the five line ministries, NTP-RCC and NTP-EE), though a number of projects b. The types of GoV-financed projects that can be clas- and programs exist that focus exclusively on mitigation. sified as explicitly addressing climate change or hav- Mitigation projects that are financed include a diverse range, ing climate change adaptation and/or mitigation such as projects that implement solar and wind hybrid energy co-benefits; generation in a railway station and the development and c. The CC-response tasks that are financed by the five implementation of pilot models for mitigating GHG emis- line ministries; and sions in cement production. MOIT and MARD account for d. The main types of tasks that have not been addressed the vast majority of mitigation CC-response spending (45 per- by CC-response financing from the five line ministries. cent each), emphasizing the ministries’ importance in the GoV CC-response spending (as shown in Figure 3.7 below). Figure 3.7. Mitigation CC-Response Spending (investment Figure 3.8. Adaptation and Mitigation (projects that contribute and recurrent) by Line Ministry (not including NTP-RCC and to both) CC-Response Spending (investment and recurrent) by NTP-EE) (2010–2012 expenditures, 2013 budgeted, by constant Line Ministry (not including NTP-RCC and NTP-EE), (2010–2012 price 2010 VND billion) expenditures, 2013 budgeted, by constant price 2010 VND billion). 200 180 450 160 400 140 350 120 300 100 250 80 200 60 150 40 100 20 50 0 0 2010 2011 2012 2013 2010 2011 2012 2013 MOT MONRE MOIT MOC MARD MOT MONRE MOIT MOC MARD 63 Classifying Vietnam’s CC-response projects and pro- tasks, particularly those related to water resources, highlights grams using the TCCRE provides an overview of the the earlier noted need for robust appraisal, monitoring and balance of tasks between sector delivery (CCD) and evaluation methodologies and for strong institutional condi- enabling activities (PG and ST) and indicates that the tions to ensure value for money spent. vast majority of financing has been directed towards the former. Figure  3.9 shows the distribution of central gov- A relatively small proportion of CC-response expendi- ernment spending on CC-response from the five line min- tures have been directed towards Scientific, Technolog- istries (including through the NTP-RCC and NTP-EE) in ical, and Societal Capacity (ST—9 percent) and Policy terms of the TCCRE hierarchy: the categories within each and Governance (PG—2 percent) for essential enabling pillar [Policy and Governance (PG), Scientific, Techno- activities to improve the capacity for CCD. 94  percent logical and Societal Capacity (ST), and Climate Change of financed ST activities are projects and programs that Delivery (CCD)] are shown in aggregate in the inner develop science and technology as a foundation for policy ring, and the outer ring shows the tasks within each cate- formulation, impact assessments, and the subsequent iden- gory. As mentioned, the GoV’s CC-response financing is tification of appropriate climate change adaptation and mit- largely directed towards CCD activities (89 percent of CC- igation measures. This spending has generally been directed response financing), with a specific focus on natural resources, towards information and database development and hydro- which includes the major task of irrigation (57 percent of meteorological and climate/risk projection enhancements, total CC-response expenditures), and developing a resilient which provide Vietnam with the technical capacity and ana- society, which includes tasks such as developing disaster- lytical basis to select high impact CCD tasks for financing. specific infrastructure and transport (the latter accounting A small portion of CC-response expenditures are directed for 11 percent of total CC-response expenditures). Financ- towards PG activities, which predominantly finance the ing for rural development and food security (mainly towards development of action and sector plans. MARD rural infrastructure development projects) and forest The GoV’s CC-response spending has provided limited development (mainly towards forest livelihood improvement finance towards some tasks that are essential for further and DP-financed forest sector projects) is also included as part developing Vietnam into a climate-resilient low-carbon of this pillar of investments. This heavy emphasis on CCD economy. The GoV, through the five line ministries cov- ered in the CPEIR, has provided just a small percentage of its CC-response financing towards concrete CCD activities Figure 3.9. Total Climate Change Expenditures (investment and whose main objectives or desired results are addressing saline recurrent) (VND 16,683 billion) for Five Line Ministries, NTP- intrusion (CCD1.2) (1.8  percent of CC-response spend- RCC, and NTP-EE by TCCRE (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion). Note: From ing), water quality and supply (CCD1.5) (0.02 percent) and inner wheel to outer wheel (TCCRE category and task). See improving the resilience of fisheries and aquaculture to cli- Annex III.2 for detailed typology mate change impacts (CCD1.8) (0.5 percent). In particular, the GoV has mobilized a limited amount of its own resources for mitigation tasks (in the studied line ministries and NTPs) that are necessary for stimulating a low-carbon CC-­ response development path, including low-carbon energy generation (0.02 percent or VND 4  billion) or energy efficiency mea- CCD2.3 - sures (0.45 percent or VND 76 billion). A significant amount Transport (11%) CCD2 - of ODA financing is being directed towards energy SOEs Res. Society (16%) for energy efficiency and low-carbon energy generation (dis- cussed later in Chapter 3). CCD1 - Natural Resources (72%) CCD1.7 - Forest MARD’s CC-response expenditures have mainly tar- Dev. (4%) geted investments in climate-resilient irrigation, which CCD1.6 - Rural CCD1.3 - Irrigation account for 73  percent of its total CC-response spend- Dev/Food Sec. (5%) (57%) ing (see Figure 3.10). Other tasks that have received CC- response financing include those for rural development and food security (6 percent) and forest development 64 Figure 3.10. Total MARD CC-Response Spending (investment Figure 3.11. Total MOT CC-Response Investment (VND 2,248 and recurrent) (VND 12,811 billion) by Category and Task of billion) by Category and Task of TCCRE (implemented, by con- TCCRE (implemented, by constant price 2010 VND billion) stant price 2010 VND billion) CCD2.5 - Disaster- CCD1.1 - Coastal specific protection and coastal Infrastructure (3%) dykes (7%) CCD1.7 - Forest Development (5%) CCD2.2 - Residential and CCD1.6 - Rural Dev. city area and Food Security resilience (3%) (6%) CCD1.4 - Riverdyke and embankments (3%) CCD1 - Natural Resources CCD2 - Resilient (91%) Society (90%) CCD1.3 - Irrigation (73%) CCD2.3 - Transport (85%) (5 percent). While 2 percent of MARD’s CC-response invest- ments are directed towards ST tasks, the majority of recur- rent spending (67 percent) targets this pillar of tasks. This Figure 3.12. Total MONRE CC-Response Spending (investment and recurrent) (VND 1,044 billion) by Category and Task of includes a variety of research projects, including those that TCCRE (implemented, by constant price 2010 VND billion) study the effect of climate change on rice production and of CCD2.4 - salinization on crop yields. In addition, there has been a small ST1.4 - Waste mgmt. and amount of CC-response spending on PG activities through Survey & treatment (3%) PG3.3 - Assessments CC Capacity recurrent spending, where it is mostly spent on action and on CC Building (5%) Impacts (27%) sectoral plans. Available data58 indicates that financing from MOT has primarily been directed towards road transport infra- ST1.1 - structure development (accounting for 85 percent of the Information and database CC-response investment budget) that facilitates the con- dev. (14%) struction of more climate resilient roads, highways, and ST1 - Develop Sci./Tech. bridges. MOT also contributes 7 percent to coastal protec- (81%) tion, with the remaining 9 percent directed towards irriga- ST1.2 - Hydromet/ tion, residential and city resilience, disaster specific infra- early warning structure, and infrastructure and construction activities (see systems (12%) Figure 3.11). MONRE’s CC-response spending has been paramount as it has financed the majority of the GoV’s spending towards developing climate-relevant Scientific, Tech- CC-response financing and is responsible for implementing nological and Societal Capacity (ST) (61 percent) (see a large portion of projects financed through the NTP-RCC, Figure 3.12). This spending is mostly funded through its where projects are generally designed with CC-response as recurrent budget, which consists of about half of MONRE’s the main objective. The recurrent expenses mainly include surveys and assessments on climate change impacts (69 per- 58.  This notes the difficulty in post-hoc classification of MOT’s CC-response cent) and information and database development (17  per- spending (see Background Note II) and that MOT has provided only the cent). Almost all of the remaining recurrent spending has total aggregate figure for recurrent spending. been directed towards PG tasks. This includes financing 65 towards capacity building, developing policy and planning coast provinces that are able to withstand the effects of CC mechanisms for a CC-response, and adaptation and miti- (CCD2.3) (from 2012 NTP-RCC financing), and a 2013 gation policy instruments. MONRE’s investment budget capacity building project for appraising construction project has also been active in financing ST tasks, with 80 per- quality (ST1.4) (see Figure 3.14). As noted earlier, MOC has cent of investments directed towards specifically enhancing not provided any recurrent budget data, which has led to a hydro-meteorological and climate risk projections. MONRE potential underestimation of their total CC-response expen- also contributes to financing CCD tasks that include waste ditures. Mainstreaming of CC-response activities, particu- management and treatment (such as urban wastewater treat- larly with respect to urbanization and regional development is ment projects) and that address saline intrusion. under active consideration by MOC. Discussions with MOC indicated a high degree of interest and potential involvement While MOIT’s CC-response appropriations are not large, in a wide range of CC-relevant activities, including revised there has been increasing emphasis on energy efficiency design standards in construction and use of materials, and (mostly through the NTP-EE) (see Figure 3.13). This has urbanization and regional development. Up to now, the main been mostly funded through its recurrent budget, which issue has been the limited focus on mainstreaming climate accounts for the majority of MOIT’s CC-response expendi- change into BAU policies. The recent emphasis on main- tures. MOIT spending towards CC-response has financed streaming, in part through the CPEIR dialogue, can lead to energy efficiency activities, including spending directed a higher proportion of investments meeting CC-relevance towards improving the energy efficiency of public facili- criteria. ties such as schools. The NTP-EE, which is coordinated by MOIT, has led to financing of over VND 137 billion, mostly Central Government Climate Change Response dedicated to energy efficiency tasks and developing commu- Spending: Investment vs. Recurrent nity capacity in CC-response. This section addresses the level and type of CC-response Without counting the recurrent budget (not made avail- spending that is allocated from the GoV’s investment and able), MOC has the smallest amount of CC-response recurrent budgets. In particular, this section focuses on: spending among the five ministries included in the CPEIR. A total of VND 22 billion has been budgeted for a. The allocation of studied CC-response spending from CC-response in MOC’s investment budget over a four-year investment and recurrent budgets; period, when including NTP-RCC financing. This includes b. The types of activities being financed by investment an energy efficiency program in 2010 (CCD3.2), a plan and recurrent budgets; and to renovate and build rural residential areas in the central c. The line ministries that play a larger role in CC- response recurrent spending. Figure 3.13. Total MOIT CC-Response Spending (investment Figure 3.14. Total MOC CC-Response Investment Spending and recurrent) (VND 228 billion) by Category and Task of (VND 2 billion) by Pillar, Category, and Task of CPEIR Typology TCCRE (implemented, by constant price 2010 VND billion) (implemented, by constant price 2010 VND billion) ST3.2 - Cap. across CCD2.3 - Transport whole community (23%) in CC-response (17%) ST3 - Dev. CCD3.2 - Comm. Cap Energy (18%) Eff. (32%) ST1 - PG3 - Action Develop CCD3 - Sci./Tech Plans/Impact Ent. & Prod. (54%) Ass. (17%) (49%) PG3.3 - CC Cap Building (5%) ST1.4 - Survey/ CCD3.4 - assessment on CC PG3.1 - Action CCD3.2 - Energy Industry & impacts (54%) and Sector Efficiency (23%) Trade (12%) Plans (11%) 66 The majority of CC-response spending is through a. Is CC-response spending aligned with the strategic investment (92 percent of the CPEIR central govern- objectives and solutions of the NCCS or VGGS? ment expenditures), but climate change recurrent spend- b. Which objectives or solutions of these two strategies is ing has a key role in financing enabling activities and CC-response spending mostly directed to? administrative and technical support in managing cli- mate change investments. Vietnam’s investment bud- c. Are the majority of projects directly or indirectly pro- get has a number of projects that provide climate change viding climate change co-benefits? co-benefits, demonstrating that the country has already d. Which strategic objectives or solutions are currently aimed to implement CC-response at scale. The impor- not being financed or have only received a limited tance of recurrent spending is illustrated by the data from amount of finance? the NTP-RCC. As discussed further below, the NTP pro- Tracking CC-response spending against the strategic gram has provided strong technical inputs to Vietnam’s CC- objectives of the NCCS indicates a significant empha- response by supporting mostly recurrent spending (of which sis on spending towards the strategy’s food and water it accounts for about 40 percent of the total) that proactively security goal, accounting for 63 percent of central targets activities to improve the country’s enabling envi- CC-response expenditures. 60 Over VND 10,500 billion ronment and capacity to deliver CC-response investments. (constant 2010) of the CC-­ response central government MONRE and MARD contribute the bulk of the recurrent 2010–2012 expenditures and 2013 budgeted amount ana- spending out of the ministries that have provided recurrent lyzed in this CPEIR have been directed towards food and budget data (with 26 and 20 percent of 2010–2012 expen- water security (see Figure 3.16). These projects primarily ditures and the 2013 budget59 respectively), confirming the key role of these two ministries in shaping the CC-response consist of MARD projects that improve the climate resil- and supporting its implementation using State Budget funds. ience of irrigation systems. A large volume of CC-­ response Recurrent spending for CC-response by year is displayed in spending towards only one of the NCCS’ ten strategic Figure 3.15 below. objectives indicates potential inefficiencies in CC-response allocations and highlights the added value of agreeing on planning and budget allocation guidelines for CC- Central Government Climate Change Response response.61 The second largest financed strategic objec- Spending: Tracking against NCCS Strategic tive is the protection of sustainable development of forests, Objectives and VGGS Solutions attaining 11 percent of CC-response expenditures. Fourteen This section tracks CPEIR CC-response spending with percent of CC-response expenditures have been divided the key climate strategies of the GoV. In particular, this between the following four NCCS objectives: proactive section asks: disaster preparedness and climate monitoring, scientific and technology development for CC-response, GHG emission reduction, and increasing the role of government for CC- Figure 3.15. Recurrent CC-Response Spending for Five Line Ministries, NTP-RCC, and NTP-EE by Adaptation and Mitiga- response. The portion of CC-response spending dedicated tion (planned, by constant price 2010 VND billion) to investing in the development of climate resilient road 400 transport infrastructure does not fit under any of the stated 350 CC-response strategic objectives, indicating a potential gap 300 250 in the NCCS’s priorities. A number of NCCS strategic objec- 200 150 tives received little to no financing. These include actions to 100 address sea-level rise in vulnerable areas, community capac- 50 0 2010 2011 2012 2013 ity development to respond to climate change, international Mitigation 21 20 26 50 cooperation and integration to enhance the country’s sta- Adapt. & Miti. 230 207 200 120 tus in climate change issues and diversification of financial Adaptation 57 111 88 54 resources and more effective investments. See Annex III.2 for a detailed chart tracking the policy elements of NCCS 60.  and VGGS onto the TCCRE.  oting that the review team was not provided with recurrent spending 59. N This is the only such NCCS objective that has received more financing from 61.  figures from MOT or MOC. DPs than from domestic sources. 67 Figure 3.16. Total Climate Change Expenditures (investment and recurrent) by NCCS Strategic Objectives (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion) Not captured CC8 - Sci./Tec. 11% Dev 4% CC1 - Proactive CC7 - Comm. disaster prep./climate Cap. Dev - 1% monitoring 5% CC6 - Increase role in Gov't in CC response 2% CC5 - GHG emission reduction 3% CC4 - Suitable proactive response to SLR 0% CC3 - Protection and sustainable dev. of forests CC2- Food and Water 11% Security (63%) Tracking CC-response expenditures studied in the Figure 3.17. Total Climate Change Expenditures (investment CPEIR against the VGGS solutions highlights that 74 and recurrent) by VGGS Solutions (2010–2012 implemented, 2013 budgeted by constant price 2010 VND billion) percent of these expenditures address the development of sustainable infrastructure in transportation, energy, irrigation, or urban works, and confirms that financing directed towards some resilience activities is not captured Not captured within the VGGS policy framework (see Figure 3.17). The (19%) GG13 expenditures directed towards the development of sustainable 1% Other GG16 infrastructure mostly correspond to MARD investments in 4% 1% climate resilient irrigation systems and MOT road transport GG9 - Dev. of investments. Many VGGS policy elements have had limited Sustainable Infra GG6 (74%) 1% financial support from the GoV through the 5 line minis- tries, NTP-RCC, and NTP-EE. These activities include those that correspond to improving energy productivity and energy use efficiency; economic and efficient use of natural resources; promoting technological innovation and stimulat- ing cleaner production; communication; raising awareness; Legend: GG6: Review and adjust master plans for the production support for implementation; development of a new rural sectors and gradually limit the development of “degrading” model with lifestyles in harmony with the environment; economic sectors while creating favorable conditions for new resource mobilization for the VGGS; and reduction of GHG green production sectors GG13: Promote sustainable consumption and build green emissions through the development of sustainable organic lifestyles agriculture. The GoV’s main objective under the VGGS is to GG16: Study to develop science and technology, issuing a promote low-carbon growth and, as such, approximately 19 system of economic and technical standards, and establish an percent (around VND 3,200 billion in constant 2010 VND) information/data centre on green growth of CC-response 2010–2012 expenditures and the 2013 budgeted amount that are mainly directed towards adapta- tion activities were not tagged with a corresponding VGGS 68 solution. It should be stressed, however, that sustainable eco- Central Government Climate Change Response nomic growth that enables a high quality of life depends on Spending: Sources of Climate Change Response the ability to increase climate resilience across the economy Funding and all levels of society. Tasks that are not covered include This section tracks the sources of CC-response spending policy and governance activities that support climate change for the five line ministries, NTP-RCC, and NTP-EE. It adaptation and risk reduction, adaptation and mitigation pol- asks: icy instruments, the adaptation related elements of science and technology development for a CC-response, and a num- a. What share of the CC-response is being financed by ber of adaptation CCD tasks (such as the development of ODA? coastal and river protection, dykes and embankments, saline b. What are the respective sources of CC-response financ- intrusion mitigation measures, improved resilience of water ing for each studied line ministry? What types of proj- quality and supply, forest development, and disaster specific ects are financed by domestic sources and what types infrastructure). by ODA? The CPEIR analysis shows that a large amount of expendi- c. What form of financial assistance is provided by ODA tures on climate change in Vietnam (in the studied minis- through these line ministries and to what types of tasks? tries and NTPs) are targeted towards the policy objectives d. Is the level of ODA financing towards CC-response of food and water security (CC2 in the NCCS) and sus- changing? Is the mix of projects addressing adaptation tainable infrastructure (GG9 in the VGGS). These policy and/or mitigation changing with it? objectives (which in this context relate mainly to irrigation) e. What types of projects is the NTP-RCC financing? are of national importance and should be a component in How are activities financed by the NTP-RCC aligned public climate expenditures, given that the agricultural sector with the strategic objectives of the NCCS? contributes about 20 percent of the country’s GDP.62 With irrigation and water resources management serving as key f. What types of activities are being financed as part of areas of expenditures, clear and direct gains would be appar- the SP-RCC Financial Mechanism and where are these ent from further linking of the MONRE climate scenarios projects located? into the enhanced design and planning of irrigation systems. The analysis of ODA financing towards CC-response Although uniform expenditures across all policy objectives exemplifies the difficulty in tracking and monitoring would not be an a priori expectation, with the predominance CC-relevant expenditure and the need for a comprehen- of irrigation related tasks in the CC-response, most of the sive climate budgeting system. ODA data provided to the CC-­ response budget does not flow to other target areas iden- CPEIR was compiled using two methodologies. The first tified in the NCCS or VGGS. methodology, which was used to identify the disaggregation The link between expenditures and NCCS and VGGS of financing sources for the line ministries and NTPs (see Fig- policy objectives has the potential to provide key longitu- ure 3.18), corresponds to data provided by the line ministries dinal information in CC-response oversight. A high-level on their CC-response projects. The second, which provides picture of expenditure against relevant policies is a useful a view of the past 10 years of CC-response financing in cen- tool in the refinement and strengthening of Vietnam’s CC- tral government (see Figure 3.19), was provided by MPI. The response. The value in the tagging and tracking approach will present budgeting and reporting system does not reconcile become increasingly significant as climate change policies the sources of ODA data. Unfortunately, this limits the scope become increasingly embedded in planning, budgeting and of the analysis given that ODA financing is also disbursed delivery processes of the line ministries and provinces over through channels other than line ministries. ODA can be the next few years. Consequently, resource allocation across channeled to sectors directly to SOEs or through MOF to the climate change related policy elements will be modified provinces and cities. In addition, SP-RCC budget support is and will increasingly reflect the characteristics and priorities disbursed to the general State Budget. of the CC-response in Vietnam. 62. World Bank, World Development Indicators 2012. 69 CC-response spending has been mostly financed by the CPEIR survey period, however, both loan and grant domestic sources, though DPs have financed 31 percent assistance has given more emphasis to PG activities. Science of CC-response financing implemented directly by the and Technology (ST) has been supported mainly by way of five line ministries (including through the NTP-RCC and grants, with highly variable allocations. NTP-EE) (as shown in Figure 3.18 below).63 Figures 3.18 and 3.19 illustrate that ODA for climate change activities has risen While GoV SOE CC-response expenditures are out- a large degree over the past decade and has given substantial, side the scope of this CPEIR, a review of ODA financ- although variable, support to mitigation as well as adapta- ing towards SOEs has found that a significant amount tion—broadly reflecting a measure of responsibility of DPs to of DP resources are being directed towards SOEs for provide financial support for both climate change concerns. CCD tasks, particularly for energy efficiency and renewable energy (about VND 10,000 billion for 2010– The largest portion of ODA has been in the form of loans 2013). Coupled with the fact that the GoV has thus far for investment projects with an initial focus on CCD and provided limited financing towards these activities, this an increasing emphasis on PG activities. Figure 3.20 below highlights the notion that low-carbon energy generation/ shows ODA support for CC-response spending through loans efficiency activities, which have a number of develop- and grants from 2004–2013. The major part has been in the ment co-benefits, are largely financed by DPs. While this form of loans (approximately 97 percent). The main empha- is common in developing countries, it will be essential sis overall has been to support CCD-oriented activities. In for Vietnam to scale up this financing in order to enter a low-carbon development path that supports green growth.64 Figure 3.18. Total CC-Response Expenditures by Source The NTP-RCC is an example of the influence on of Funding (implemented, constant price 2010 VND billion) CC-response by a program catalyzed with DP funding 100% through the State Budget. As described in Chapter  1, 90% 80% the NTP-RCC, which was DP-financed and channeled 70% 60% through the State Budget, focused first on scientific analysis 50% and initial planning. The second phase (2011–2015), which 40% 30% corresponds most closely to the CPEIR period of review, 20% 10% emphasizes detailed planning, capacity building and imple- 0% MARD MOC MOIT MONRE MOT NTPEE NTPRCC mentation of (sectoral and provincial) action plans. Its NTP ODA 4292 0 29 156 640 32 84 status signifies that it is formulated to respond to areas where Domestic 8489 2 81 588 1608 104 578 development is perceived to be lagging behind. The pattern Figure 3.19. ODA Commitments Towards CC-Response (in USD million). Note: 2013 data does not include all donor projects deliv- ered in 2013. ODA data is not deflated because data of projects under implementation by year is not available. 2000 1500 1000 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Adaptation Adap. & miti. Mitigation See World Bank (2014) Vietnam 2030: Charting a Low Carbon Development 64.   t should be noted that NTP-RCC financing is partially funded through 63. I Path for Vietnam for an economic analysis of the various low-carbon devel- the SP-RCC ODA budget support mechanism and is thus integrated in opment options available to Vietnam and the cost savings and development Figure 3.18 as domestic financing. co-benefits that are associated with these options. 70 Figure 3.20. ODA Commitment by Pillar of CPEIR Typology (investment lending (loans) on left; technical assistance (grants) on right) 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ST PG CCD ST PG CCD of spending in terms of its focus on different TCCRE pillars particular during the planned third phase of the NTP. The and categories and of actual spending relative to allocation information also helps improve coordination among the is illustrated in Figure 3.21. This type of analysis, in the line ministries taking leading roles in other climate change context of a broader coverage of total GoV and ODA spend- related national programs. As mentioned in Chapter 1, the ing and better linkage with the planning and budgeting next phase of the NTP-RCC may benefit from a focus on cycle, helps identify whether the perceived focus matches more prioritized implementation of sector and provincial national priorities. In the longer term, this analysis helps action plans and mainstreaming of MONRE’s climate sce- to indicate needed changes in such programs over time, in narios into adaptation planning. Figure 3.21. NTP-RCC CC-Response Spending (VND 663 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion) CCD1.2 - Saline ST3.2 - Capacity across Intrusion (5%) community in CC-response (5%) PG1.2 - Develop/adjust ST1.4 - policy planning Survey/Assessment on CC mechanisms (9%) Impacts (31%) ST1 - Develop Sci./Tech. (51%) PG3.1- Action and sector plans (12%) ST1.2 - Hydromet/ early warning system (8%) ST1.1 - Info and database development (13%) 71 The NTP-RCC has given considerable emphasis to were unable to report on actual spending because the finance enabling activities to support the mainstreaming of cli- departments did not provide regular reports on outturns. mate action and the development of capacities, with MARD and MONRE were able to provide both allocation 51 percent of its expenditures directed towards developing and outturn data. The pattern of allocation and realization for ST as a foundation for the GoV’s CC-response agenda. As the NTP-RCC is illustrated in Figure 3.23. illustrated in Figure 3.21, much of this spending has focused on climate change impact assessments, coordinating adapta- As noted in Chapter 1, a dedicated GoV CC-Response tion and risk reduction implementation across government, Financial Mechanism was created in 2010 to finance enterprises, and communities, and investments in information CC-response projects under a set of criteria decided by and database development and hydro-meteorological and cli- MONRE, in coordination with MOF and MPI. A review mate risk projection enhancement. The NTP-RCC program of the selected projects thus far has shown that financing has has also financed policy and governance activities, including been mostly directed towards activities with an emphasis on the development of sector and action plans. The largest CCD improving the resilience of coastal areas and riverbanks. The tasks financed through NTP-RCC are interventions to halt SP-RCC FM has selected 61 projects for a planned allocation saline intrusion. The NTP-RCC has also placed an emphasis of around VND 17,900 billion (over the lifetime of the activ- on moving forward on mitigation-oriented activities—often as ities), of which the SP-RCC FM has planned to finance 80 part of joint mitigation and adaptation objectives (as illustrated percent and provinces the remaining 20 percent. Thus far, 16 in Figure 3.22 below), including the design of sector pilot proj- projects (of around VND 4,400 billion) are being financed, ects that reduce GHG emissions. with approximately VND 815 billion committed for 2013 and 2014. As indicated in Figure 3.24, about 40 percent of Tracking NTP-RCC financing with NCCS policy ele- the allocated financing for the 16 projects is directed towards ments indicates an emphasis on expenditures for activ- coastal protection through the construction and upgrading ities that increase the role of the GoV in CC-response of sea dykes or embankments. This includes investments (30  percent) and promote scientific and technological in building culvert systems in Bac Lieu city and upgrading development (28 percent). This confirms the NTP-RCC’s dykes or embankments along the coast in the Ha Tinh and plan to focus on enabling activities that underpin CCD tasks. Ca Mau provinces and Duyen Hai district. An additional A significant additional amount of NTP-RCC financing is amount is allocated towards the construction of river dykes directed towards the NCCS strategic objective of providing and embankments (accounting for 36 percent) and towards suitable proactive response actions to sea-level rise in vulner- addressing saline intrusion (accounting for 12 percent). The able areas (19 percent). Of the NTP-RCC expenditures that remaining allocated financing has focused on projects that are captured within the VGGS (noting that most are not cap- improve irrigation systems in low-lying areas and improve tured as they are not mitigation related), the majority (77 water quality and supply. Forest development and disaster- percent) are directed towards economic and efficient use of specific infrastructure projects have been selected for natural resources and the review and adjustment of master financing but are not included among the 16 projects that plans for production sectors. have financing allocated. As shown in Figure  3.25, about Reporting actual outturn against budget allocation is an important element of the accountability of the NTP-RCC. Figure 3.23. NTP-RCC: Planned vs. Outturn As noted in Chapter 2, however, a number of departments 300 Figure 3.22. NTP-RCC by Adaptation and Mitigation (imple- 250 mented, by constant price 2010 VND billion) 250 200 200 150 Planned 150 Outturn 100 100 50 50 0 2010 2011 2012 2013 0 Adaptation Adap & miti. Mitigation 2010 2011 2012 2013 72 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 0 2000 4000 6000 8000 10000 12000 CCD1.1 - Coastal Protection and CCD1.1 - Coastal Dykes Protection and Dykes CCD1.2 - Saline Intrusion CCD1.2 - Saline Intrusion Coastal CCD1.3 - Irrigation CCD1.3 - Irrigation Mekong CCD1.4 - River Allocated Dyke and CCD1.4 - River Embankments Dyke and Embankments Mountain Selected CCD1.5 -Water Quality and CCD1.5 -Water Supply Quality and Supply Others CCD1.7 - Forest Figure 3.25. Total Financing for SP-RCC Projects by Geographic Region (allocated, VND billion) Development CCD1.7 - Forest Development CCD2.5 - Disaster-Specific CCD2.5 - Infrastructure Disaster-Specific Infrastructure Figure 3.24. Financing by CPEIR Typology Task of SP-RCC Allocated and Selected Projects (constant price 2010 VND billion) 73 37 percent of total financing for the 61 selected projects has of each province,65 though some findings may have broader been directed towards activities in provinces in the Mekong regional implications. An aggregate compilation would not pro- region, 33 percent to the coastal region and 22 percent to the vide a basis for estimating overall provincial trends. As spend- mountainous region. 8 percent of the financing is directed ing from sub-national governments account for the majority to other regions, though these projects are not among the of total capital spending by the GoV, this further highlights 16 financed in 2013 or 2014. the need for planning, budgeting, tracking, and monitoring CC-response expenditure at the local level and building capac- Tracking SP-RCC FM projects with national strategic ity in sub-national governments to apply the TCCRE to these climate change and green growth objectives indicates expenditures is therefore necessary. The analysis demonstrates that allocations are largely covered under a select few that the TCCRE is adaptable to the provincial level and there- NCCS strategic objectives but are generally not captured fore constitutes a unifying framework for linking objectives, under the VGGS as they consist of adaptation activities. activities, and CC-response dialogue, planning, budgeting, The vast majority of total financing (88 percent) has been and spending across sectors and levels of the GoV. The analysis directed towards the NCCS strategic objective “suitable also serves as a baseline for the three provinces moving forward proactive response actions to sea-level rise in vulnerable in efforts to begin articulating the “climate budget” for each areas,” while the remaining financing is split between “pro- level of GoV. active disaster preparedness and climate monitoring—early warning, DRR” and “food and water security.” As noted All three provinces have given primary emphasis to CCD earlier, only about 6 percent of financing from allocated activities and have climate budgets growing at a faster projects is captured under the VGGS (all directed to the pace than their total budgets. Figure 3.26 shows the rela- “development of sustainable infrastructure for transporta- tive size of spending in each of the selected provinces in a per tion, energy, irrigation and urban works”). Given the nar- capita basis. In all three, the primary emphasis of financing row scope of financing across the NCCS strategic objectives has been CCD activities, with relatively few resources allo- and that the SP-RCC has been identified as a financing cated to provincial ST or PG activities. This is consistent source for the implementation of the newly launched Green with the relatively limited capacity at provincial level and the Growth Action Plan, this highlights the need to review the need for central and sector inputs on policy and scientific planning and review processes for project selection under support. As indicated in Figure 3.27, the climate budgets for the SP-RCC FM. the three provinces increased at a faster average annual rate Figure 3.26. Provincial Climate Change Expenditure per Capita 3.2 Provincial government by CPEIR Pillar (aggregate of 2010–2012 implemented and 2013 planned by constant price 2010 VND million per person) climate change response 0.60 expenditure analysis 0.50 0.40 This section assesses a sample of sub-national CC-response spending in Vietnam. The section addresses: 0.30 0.20 a. The types of CC-response projects that this group of 0.10 provinces finances, and 0.00 b. The share of CC-response financing for each of the AN GIANG BAC NINH QUANG NAM provinces in relation to their total budgets. CCD PG ST Provincial spending data are examined separately from the central climate change allocations and outturns, primarily A s discussed in Chapters 1 and 4, in establishing a national CC-review 65.  because of the limited size of the provincial data set (three process, a broader national perspective on provincial level spending should of 63 provinces). This coverage does not allow quantitative include regional initiatives including on urbanization, and the Mekong Delta and HCMC projects, all of which will give insight to major spending in inferences to be drawn about the totality of provincial spend- urban and delta areas. These aspects are not within the scope of the CPEIR ing, so these data are analyzed primarily from the perspective data analysis. 74 Figure 3.27. Growth Rates of CC-Response Appropriations Figure 3.29. A Comparison of CC-Response Allocations for and Total Budget Appropriations (investment and recurrent) of 2010–2013 from MARD and the Three Provinces (Note: If Studied Provinces from 2010–2013 (constant price 2010 VND MARD projects cover more than one province, the financing billion) was pro-rated based on the number of provinces covered in the project) 60% 1200 50% 40% 1000 30% 800 20% 600 10% 400 0% –10% 200 An Giang Bac Ninh Quang Nam 0 Climate Budget Average Annual Growth Rate AN GIANG BAC NINH QUANG NAM Total Budget Average Annual Growth Rate Local Financing MARD than the total budgets, with the increase in An Giang being total budget, with the vast majority directed towards river the most pronounced. dykes and embankments and irrigation systems (see Fig- The three provinces have likewise given considerably ure 3.30). Quang Nam, whose climate budget also accounts more emphasis to adaptation activities. Quang Nam for 4 percent of its total budget, has primarily financed has financed some mitigation activities, which correspond irrigation systems, forest development activities, and waste to its provincial action plan to respond to climate change management and treatment (see Figure 3.31). An Giang has that places some priority on energy conservation measures appropriated about 1 percent of its budget from 2010–2013 in the transport, industrial, and energy sectors. In all three for climate change programs, which are mostly directed provinces, however, adaptation remains by far the highest towards the development of river dykes and embankments, priority—consistent with national policy (Figure 3.28). resilient irrigation and transport systems, waste management and treatment, and improved water quality and supply (see The three studied provinces have spent a sizable share of Figure 3.32). In addition, a comparison of MARD’s CC- their total budgets on a CC-response, given the many com- response financing with local financing in the three provinces peting priorities that must be financed. The share of total confirms that the provinces are financing a large portion of budget directed towards CC-response spending is around or CC-response activities directly (as indicated in Figure 3.29). below 5 percent for the three provinces. Bac Ninh’s budget for CC-response activities accounts for about 4 percent of its 3.3 Institutional strengthening Figure 3.28. Total Climate Change Expenditure per Capita in Provinces by Adaptation and Mitigation (implemented, and data compilation constant price 2010, in VND million) The distribution of CC-response spending points to 0.600 a need for a vigorous mainstreaming of CC-response 0.500 policies in many of the line ministry and provincial 0.400 discussions. Comparatively few projects are wholly CC- relevant and designed specifically to meet CC-response 0.300 objectives. Discussions at both line ministry and provincial 0.200 level made it clear that direct action through the SEDP pro- 0.100 cess would be necessary to encourage the more traditional 0.000 oriented officials to initiate action aimed specifically at a BAC NINH AN GIANG QUANG NAM CC-response. Adaptation Mitigation Adap. & Miti. 75 Figure 3.30. Total Bac Ninh CC-Response Spending (investment and recurrent) (VND 481 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion) CCD2.4 - Waste Mgmt. CCD1.3 - Irrigation (25%) and Treatment (9%) CCD1.5 - Water Quality/Supply (4%) ST1.4 CCD1 - Nat. Resources (83%) CCD1.4 - Riverdyke and Embankments (54%) Figure 3.31. Total Quang Nam CC-Response Spending (investment and recurrent) (VND 850 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion) CCD3.2 - Energy Efficiency (5%) CCD1.1 - Coastal Protection/Coastal Dykes (6%) CCD2.4 - Waste Mgmt./Treatment (17%) CCD2 - Resilient Society (23%) CCD1.3 - Irrigation (26%) CCD1 - Nat. Resources (69%) CCD1.4 - Riverdyke and Embankments (7%) CCD1.7 - Forest Development (18%) CCD1.6 - Rural Development/ Food Security (8%) 76 The findings outlined in the preceding sections provide budgeting process. The main findings from the CPEIR considerable evidence of the need to improve data col- are summarized in the list at the very beginning of this lection and compilation to strengthen the planning and chapter. Figure 3.32. Total An Giang CC-Response Investment Spending (VND 179 billion) by Category and Task of TCCRE (implemented, by constant price 2010 VND billion) CCD2.4 - Waste Mgmt./Treatment (14%) CCD1.3 - Irrigation (20%) CCD2 - Resilient Society (33%) CCD1 - Nat. Resources (61%) CCD2.3 - Transport (17%) CCD1.4 - River Dyke and Embankments (28%) CCD1.5 - Water Qual./Supply (9%) Box 3.1. Recommendations from Chapter 3 3. Increase resource mobilization and value for money in the climate response: 1. Undertake a systematic tagging of CC-response a. Identify funding gaps where public or private, and spending as part of the government planning, bud- domestic or international, financing needs to be mobi- geting and reporting systems (confirmation of Chap- lized, and define a comprehensive resource mobiliza- ter  2 recommendations underpinned by the findings of tion framework to allow higher and more effective Chapter 3): CC-response spending to meet Vietnam’s objectives a. Develop a comprehensive mapping and monitoring of in climate resilient, low-carbon development and the level and nature of the CC-response effort from all growth. sources as part of the SEDP (State Budget investment b. Build stronger complementarity and convergence and recurrent, ODA and others); and across sector budgets, ODA sources, and between b. Conduct regular analysis of CC-response spending central and sub-national CC-response spending to support reporting and guide next (five-year and (investment and recurrent) to reduce fragmentation of annual) planning and budgeting cycles. climate change efforts and maximize poverty reduc- 2. Review alignment between CC-response spending tion and shared growth co-benefits. and climate change policy priorities: c. Develop a more strategic use of the NTP-RCC and a. Provide special attention to planning, designing, of the FM of the SP-RCC to support capacity devel- appraisal, monitoring, and reporting of irrigation and opment, increase prioritization and targeting, diver- transport projects since these represent the core of sify the CC-response and promote global and local the GoV’s current CC-response spending; and knowledge uptake from ODA and other supported activities. b. Review gaps and weaknesses of CC-response spend- ing coverage highlighted in the CPEIR, and define implications in the mainstreaming, planning, appraisal and monitoring processes. 77 4. MOVING FORWARD: Incorporating Climate Change Policy in the Planning and Budgeting Cycle and Establishing a Climate Policy Review 78 A systematic process to plan, budget, and track CC- established as an integral part of sector and provincial plans response spending is key to effectively execute, control and should: and assess the GoV’s climate change policies. Chapters 1 and 2 identified major elements that need stronger emphasis a. Guide annual allocations by setting directions for the within the current policy context and planning and budget- CC-response at central and provincial levels in the five- ing cycle for climate change and green growth. Elements of year SEDP. such procedures have been applied to the CPEIR selection of b. Develop broad guidelines on resource allocation avail- ministries and provinces covered in Chapter 3. An important able for a sector and province CC-response within the conclusion, however, is that these techniques could be more overall fiscal framework. fully integrated with strategic and annual planning and bud- c. Establish clear CC-response planning and project geting. Chapter 3 illustrated some of the analytical benefits guidelines for each sector, city, and province/region. that could be gained from regular and more comprehensive d. Strengthen M&E processes for CC-relevant programs reviews. This chapter highlights the importance of apply- at line ministry, province and city level. ing the TCCRE in the forthcoming five-year plan and the preparation of the 2015 annual SEDP and recurrent budget. e. Initiate an annual national Climate Budget and Cli- Measures to strengthen project preparation and management mate Report and corresponding review that leads to: are broadly similar for expenditure allocations aimed at either f. Review of policies and budget envelopes for the follow- adaptation or mitigation. But, as outlined in Chapter 1, the ing year’s CC-response policy implementation. differing requirements for policies with respect to adaptation and mitigation must be recognized. Therefore, this chapter Guiding the Priority Setting Process in the SEDP highlights areas where policy analysis and review processes The GoV should conduct an extended pilot to establish differ. Producing an annual Climate Budget that covers both broad strategic priorities for CC-response spending as adaptation and mitigation spending, and a regular Climate part of the 2016–2020 SEDP. The current CPEIR’s infor- Report that gives some assessment of the budget’s impact is mation and findings should help determine CC-response strongly recommended. Together, they will provide needed spending in terms of allocation to adaptation and mitiga- analytical information and a public focus on climate change tion efforts and distribution among sectors and provinces. and green growth. To make this a reality, the GoV must make Tagging of all CC-responses associated with sector and pro- a sustained effort to develop a strong planning and financing vincial programs, alongside CC-response sector policy and framework, which should aim to strengthen coordination of institutional development, will help to define these initia- GoV and DP inputs. It is proposed that this be implemented tives over the long term. This, in turn, will help establish from 2014 onward, initially on a pilot basis, building on the broad priorities between adaptation and mitigation, as well as experience of those line ministries and provinces that have between needs for enabling different CC-delivery activities been involved in the CPEIR. The ministerial coordinating for both objectives. A major effort to review sector policies architecture will need to be strengthened significantly to in this respect will provide stronger guidance for the annual reflect these considerations and to manage reporting and planning and budgeting cycle. Once more complete data on analysis and long-term policy implementation effectively. all CC-response spending is made available, MPI and MOF can begin to pilot evidence-based ceilings for expenditure on 4.1 Climate change all elements of the CC-response; though it will take several annual planning and budgeting cycles to establish provincial expenditures in the planning and sector shares of available fiscal space, given the separation and budgeting cycle of political mandates. As this process becomes established at sector and provincial levels, MONRE should play an import- Climate change spending should be clearly linked to stra- ant technical role in assessing the subsequent impact of the tegic CC-responses, identified, and appraised during the CC-response across programs and projects, which then feeds annual planning and budgeting cycle. The planning pro- back into future revision of the agreed expenditure envelopes. cess for both adaptation and mitigation activities should be 79 Over time, annual climate budget ceilings should be Such practices are relatively well established for sector plan- established to guide sector ministerial and provincial ning,67 but sector targets have not yet emphasized the need CC-response project preparation. Once more complete to define CC-response objectives and resource needs because data on all CC-­ response spending is made available, the MPI of the issue discussed in the preceding paragraph. It will take and MOF should begin to pilot evidence-based ceilings for some time for the GoV to establish a full overview of how cli- expenditure on all elements of the CC-response. Indicative mate change is addressed across sectors and sub-national gov- ceilings linked to objectives and performance history provide ernments or the level of resources needed, but the basis should essential guidance to sector ministerial and provincial project be initiated now. The CPEIR exercise helps in this regard by preparation; though it will take several annual planning and giving an initial (albeit partial) idea of how much is actually budgeting cycles to establish provincial and sector shares of being spent at the central level—and, as described, indicates available fiscal space, given the separation of political man- the need to encourage CC-­ responses from line ministries and dates. As this process becomes established at sector and pro- provinces through dialogue and guidance in the SEDP pro- vincial levels, MONRE should play an important technical cess. As indicated in Chapter 2, application of the TCCRE as role in assessing the subsequent impact of CC-response across part of the budget preparation process will explicitly require programs and projects, which then feeds back into future line ministries and provinces to identify projects aligned with revision of the agreed annual expenditure envelopes.66 CC-response guidelines and thus help foster mainstreaming of sector and provincial projects with CC-response policies. Programs with potential CC-relevance should be part of SEDP planning, and priority projects should be con- Planning and budgeting envelopes should eventu- sidered in the annual cycle. In strategic SEDP discus- ally aim to progressively encompass all relevant CC- sions, pilot ministries and provinces should be encouraged response spending at all levels of government and to examine BAU policies and programs for a potential from all sources of funds. Current data relating to cli- CC-response—particularly MOT, MOC, and MOIT. The mate change efforts is highly fragmented in separate target ministries and provinces should be clearly advised that a programs and different levels of government. Full applica- CC-response applies to many projects with development or tion of the TCCRE to all domestic and foreign-financed social policy objectives, not only those dedicated exclusively CC-response spending will enable these efforts to be better to a CC-response. For example, integrating climate change coordinated and, as noted earlier, help identify potential gaps resilience or low-carbon technology in many projects can in addressing adaption and mitigation needs. More work by be a small, but highly significant, part of the overall bud- the GoV and DPs is needed, however, to capture foreign- get. In the annual SEDP appraisal process, line ministries financed elements of climate change spending that are cur- and provinces should present clearer evidence of CC-response rently outside the State Budget process. Progress toward this elements competing for budgetary allocation within the over- goal will be helped by encouraging greater use of Vietnam’s all fiscal envelope. TABMIS system for accounting68 and reporting on ODA as well as GoV spending, and by better and timely recon- Agreeing on Planning and Budget Allocation ciliation of all ODA in annual financial reports. As noted Guidelines for Climate Change Response below, however, mitigation efforts involve a range of fiscal Expenditures instruments, so a review of mitigation planning and budget- Develop agreed guidelines on the broad level of resources ing needs to look beyond the expenditure budget. available for a CC-response during each planning period.  ccording to PEFA 2013, indicative ceilings are given for recurrent spending 67. A  deally these guidelines would be developed as part of an MTEF rolling 66. I and for sector plans, but these ceilings are not well observed by spending minis- budget framework incorporating forward estimates of continuing costs of all tries. Moreover, revenue is generally underestimated at all levels of government programs and allocating new policy spending each year within an MTFF. and additional funds are allocated during the year. In general, these processes CC-response expenditure management is well suited to and needs such an take time to be fully established, but implementation can only be successful by approach. Development of this approach for CC-­ response programs could fostering discussion and agreement amongst all stakeholders. help develop a more general approach to fiscal management. Significant 68. See Box 2.1 for discussion of the nature of data on CC-response and the role changes to present budget law may prove necessary however. of TABMIS. 80 Strengthening Planning and Project Guidelines the project outcomes in the M&E process are assessed, as dis- Priority-setting should support and highlight the climate cussed further below. change relevance of projects within the national/sub- The real cost of GHG emissions should increasingly be national climate change policy objectives. As noted above, considered in appraising projects with mitigation objec- few projects are wholly aimed at climate change. Priority set- tives. As discussed in Chapter 1, the viability (and therefore ting needs to operate with a broad-ranging focus, including the ability to mobilize increasing public and private spend- development considerations and poverty objectives in relation ing) of many emissions-reducing initiatives is highly depen- to climate change. For instance, CC-response can be embed- dent on the relative price of fossil fuels and clean energy ded as co-benefits of expenditures for poverty reduction sources. Taxes and subsidies also need to be used as policy through careful appraisal and selection. As noted in Chap- tools along with expenditure. Introducing a shadow price for ter 2, guidelines for defining project objectives within each carbon would help ensure consistency in policies, whether sector need to give more emphasis to design of projects, pro- implemented through the expenditure or the tax side of the grams and policies with CC-response potential, and accom- budget. It would permit a more incisive consideration of cli- panying poverty reduction co-benefits that will be competing mate change investments at all levels of government and all for inclusion in the development plan and annual budget. The sources of funds. These points are discussed in more detail in adaptation prioritization framework (APRF) manual69 has section 4.3 on page 87. been developed to help with this adaptation appraisal process and to help set priorities among adaptation projects and pro- Monitoring and Evaluation grams in the SEDP. Appraisal of GHG mitigation-oriented projects, as discussed below, also needs strengthening. Effective and strategic M&E is essential to CC-response policy credibility. M&E processes should operate at the The TCCRE will strengthen project design and appraisal. level of project and program implementation within each The CPEIR methodology has been concerned with iden- sector and at the high policy level of assessing the impact tifying whether or not projects are CC-related. Use of the of total adaptation and mitigation policy efforts. As yet, lit- TCCRE methodology will help to improve both project tle evidence of effective climate change linked M&E at the information and detailed discussion of CC-relevant project project or program level is available. Elements of M&E are objectives.70 These aspects of the TCCRE will help improve undertaken as a matter of course in most donor-funded proj- APRF effectiveness for adaptation projects and will allow for ects, but even these data are not systematically compiled or an opportunity of consistent classification between climate reported. Designing an M&E system for climate change is a change project information and the APRF by checking the complex process due to the cross-cutting and mainstreamed coding of tasks, based on GoV’s climate change strategic nature of CC-response. However, a cohesive M&E system priorities. The experience of compiling data on CC-­ related can be initiated with an early emphasis on capacity enhance- expenditure for the CPEIR indicates that the APRF will be ments and a focus on strategically important indicators at all difficult to implement until projects are required to identify levels of implementation. For sector projects and programs, clear and strategic CC-response objectives and their respec- M&E processes should link clearly to the planning, bud- tive performance indicators.71 The performance of the APRF geting, and CC-response classification elements described is expected to improve over time, and establishing objectives above, by defining a limited range of key outputs and out- and indicators will be a primary focus of APRF implemen- comes expected at that level, starting with the programs that tation over the next several years. Ensuring that all projects currently represent the bulk of CC-spending in Vietnam. include clearly specified objectives and indicators is essential in order to classify spending appropriately, and to ensure that Policy-level M&E should consolidate project and pro- gram level data. Emphasis should be placed on linking out- puts to achieving the policy objectives embodied in NCCS and VGGS and identifying key performance indicators to  daptation Prioritization Framework (APRF) Manual for Socio-Economic 69. A Development Planning, (Final Draft) issued by MPI under Decision No. assess the degree to which expenditures are aligned to these 1485/QD-BKHDT dated October 17, 2013. policy objectives. Relying on a macro-level analysis of activ- 70. See the TCCRE Guide in Background Note III. ities associated with reducing vulnerability, managing risk 71. See Chapter 2 for more detail. 81 and reducing GHG emissions, M&E should ultimately CC-response outcomes in a way that can be compared to assess the extent to which the expenditures meet adaptation vulnerability baseline data and expenditure data to enable a and mitigation policy objectives across the range of sectors. thorough assessment of the effectiveness of the national cli- Again, it should be possible to establish a limited range of mate budget. KPIs for these objectives for each sector. Mitigation objec- tives related to the rollout of clean technology, renewable Current regulatory instruments and monitoring systems energy and GHG emission reductions are relatively easy to can support development of a practical and systematic define, although measurement can be more challenging. M&E process. Strategic environmental assessments (SEAs) Higher-level adaptation outcomes are more complicated that are required for all strategies and plans of five years or and sector specific. For example, an intermediate out- more, including sector and provincial SEDPs, provide useful come could be the proportion of construction projects in and relevant information. These reviews provide a rich source which climate change scenario predictions are included of data on environmental effects that can be combined with in the design and construction. These are relevant mainly other data to illustrate changes that have occurred, in part for MOT and MOC but also for disaster prevention- as a result of government programs. Environmental impact related infrastructure and fisheries. Robust definition of such assessments (EIAs) of projects can similarly contribute use- intermediate outcomes, however, would provide an oppor- ful information on environmental changes, and could be tunity for convergence of climate change ­ outcomes across used more systematically. Both SEA and EIA mechanisms sectors and high-level harmonization across the spectrum will be strengthened in the revised Law on Environmental of CC-response. Including the outcome/impact strata of Protection. the M&E can provide objective and verifiable “state of the CC-­ response” information, including the effect of the CC- Climate Change Reporting and Review response, and provide feedback to the planning, budgeting A regular report should be presented showing how CC-­ and expenditure level as well as the policy objective level. response money has been spent, giving a broad assessment This M&E information can thus drive policy refinement and of achievement against the stated objectives. Such a report enhance expenditure prioritization, as well as make a peri- should be considered as an essential component of climate odic assessment of what benefits are being achieved relative to change policy implementation. It should be comprehensive, the money being spent. The CPEIR recommends that the GoV published regularly (likely biennially, once established, but engages in a process in the near future to review current capac- as discussed below prepared in pilot form by mid-2016), dis- ity and initiate the development of a CC-­ response linked M&E seminated to the public, and be subject to independent tech- system and development of strategic KPIs to assess CC-response nical review. Institutionally, such a report would be under impact building on international good practices. the aegis of the National Committee on Climate Change (NCCC). MONRE would continue to lead in preparing In the short term appropriate strategic, multi-level key technical updates of risk and vulnerability assessments and indicators should be developed. In the long term an effec- the impact that CC-response programs are having in increas- tive M&E system will require sustained effort, supported ing resilience to climate change risks, as well as MRV of the by MPI and MONRE. The effective delivery of the out- GHG emission status. Implementation of adaptation and comes/impacts that are intended to be achieved should be mitigation policy relative to targets set would be reported as sequenced in the M&E roll-out, but it is important to focus separate components of a proposed Climate Report. Chap- on key indicators and avoid excessive detail. Practical M&E ter 3 of this CPEIR illustrates partly the type of analysis, but systems should be put in place, in the first instance as part of coverage and performance analysis would be progressively ministry and provincial work-plans. This will involve setting enhanced with strengthened technical and skills capacity. a limited number of strategic and readily measurable output and outcome targets for all actions and regularly reporting The TCCRE will be central to the Climate Report compi- to ministry management. In turn, these reports should be lation. The availability of regular and timely data on CC-re- conveyed to the relevant coordinating ministries (MPI and/ sponse expenditures through application of the TCCRE or MONRE) for review, and enforcement of reporting should methodology would greatly enhance the relevance and signif- be strengthened. Significant capacity building is required at icance of the report and would buttress political and admin- all levels to establish a comprehensive, but practical, M&E istrative executive control and direction of the overall climate system that generates and compiles information on key change program. The planning and finance department of 82 MPI, MOF and MONRE, as well as other key technical 2. Tag all CC-relevant projects in the context of the SEDP ministries, would coordinate closely to establish an effective process and establish clear assessments of the magnitude structure for compiling the data, and analyzing and reporting of CC-relevance for each project included in the annual on developments (see section 4.4). The introduction of the plan and budget. TCCRE methodology to the government reporting system 3. Require all CC-relevant finance departments to report is thus critical for early implementation of a systematic and on climate change project spending as part of regular sustainable review process. budget execution reports. MPI should develop reports The Climate Budget and Report should be subject to some on spending on CC-­ relevant elements based on these form of external review. The GoV would provide the first reports. level of review, but such reports should also be open to inde- 4. Prepare regular expenditure reports on climate adapta- pendent review as a matter of general international practice, tion and mitigation investment and expenditure by MPI and both the report and review made widely available to the and MONRE. public. It will take some time for the capacity to undertake such a review to be put in place. For example, the State Audit The CPEIR therefore recommends immediate measures of Vietnam has limited capacity currently to conduct such be taken to establish a CC-response planning and budget- reviews. For the immediate future, external review could be ing platform, initially on a pilot basis. The pilot would be provided by DPs for quality assurance, and priority could be based on the line ministries and provinces already included given to this area in the near future. in the CPEIR (likely with an extended sample of provinces) and should be closely linked to the development of the 2016– TABMIS reports at project level will play a critical role. 2020 SEDP and the annual planning and budgeting cycle. TABMIS provides the basis for accounting of all State Budget Implementation would involve eight key steps, as outlined transactions (and in principle can cover all ODA spending). below. As discussed in Box 2.1, the TABMIS accounting role, how- ever, would be limited to reporting actual spending by all 1. Refinement of the TCCRE guide and capacity building CC-relevant projects. An estimation of CC-response spend- in line ministries and provinces to apply the TCCRE. ing would be made using the agreed apportionment of rele- 2. MPI begins establishing strategic guidelines for CC- vance to adaptation and mitigation in applying the TCCRE, response spending and mainstreaming climate change as discussed below. policies in the 2016–2020 SEDP. The TCCRE’s CC-relevance component would be assessed 3. MPI issues the revised TCCRE guide, which requires cli- as part of project appraisal and reported to MPI and mate change tags, objectives, indicators, and milestones MONRE and incorporated within the SEDP process. The relevant projects. for all CC-­ SEDP process and climate change objective level accountabil- 4. MPI progressively generates CC-response expenditure ity are thus best handled separately by MPI and MONRE. estimates for all CC-relevant projects in pilot entities. MPI tagging and analysis can easily be linked to the TAB- 5. Preparation of a pilot draft memorandum Climate MIS accounting reports at project level. A clear and transpar- Budget for the ASBR. ent system for estimating relevance could thus be set up under MPI, MONRE and MOF direction to give the most reliable 6. MOF directs all pilot line ministries and provincial overview possible of the GoV’s efforts to implement its CC- finance departments to report on total spending on all response policies through public investment and spending. CC-relevant projects. This procedure will correspond quite closely to best interna- 7. MPI and MONRE strengthen M&E processes on tional practice (see Annex II for the French experience). relevant projects during project implementation. CC-­ Key prerequisites to establish a CC-response expenditure 8. Preparation of a pilot Climate Budget Report. budgeting, reporting, and accountability system include These steps will be critical to launch a systematic, trans- the following: parent and evidence-based climate change planning and 1. Improve forward planning of the national frameworks budgeting cycle. They will be a good start to strengthen- and establish more effective coordination of sector and ing key procedures, but will need to be supported by more provincial CC-response programs. effective coordination of activities both within the GoV 83 and between the GoV and DPs. Specific policies related to decentralization. MPI and MONRE could lead planning adaptation and mitigation need to be addressed alongside efforts to address adaptation efforts on a more coordinated the planning and budgeting process. The remainder of this regional basis. Vulnerability factors cross provincial bound- section will discuss aspects of planning and budgeting that aries, so regional solutions are likely to be more efficient and need further development. Issues relating more specifically effective than separate sectoral and provincial efforts. The to strengthening adaptation and mitigation policy implemen- Mekong Delta area, for instance, is a highly populated area tation and the ministerial coordinating architecture are dis- that is highly vulnerable to climate change, but addressing cussed in the following sections. these issues requires coordinated efforts by multiple central government sectors across provincial boundaries as well as The Climate Report will provide a basis to reassess prior- action by several provinces. An Giang province, for exam- ities and identify financing gaps. It will provide an oppor- ple, has established a Provincial Action Plan to implement tunity to increase alignment between spending and NCCS/ national strategies on climate disaster preparedness and VGGS priorities and review the effectiveness of CC-response community-based DRRM. However, ideally these should spending. Together with the strategic emphasis on M&E out- be coordinated with sector policies and policies in other lined above, it will help ensure that the GoV receives value Mekong Delta provinces.72 The CPEIR recommends that MPI for money spent on its CC-response actions. Financing and and MOF explore ways of establishing multi-sector regional proj- coverage gaps, as illustrated in Chapter 3, can be reviewed ects that address known vulnerability issues but are financed by regularly in association with the Climate Budget and Climate both city/provincial and central budgets. The NTP-RCC may Report. As coverage is extended to the provinces, complemen- provide an appropriate vehicle to catalyze the piloting of such an tarity between national and provincial action can be strength- approach. ened (see next column). Coverage of recurrent spending and all ODA spending will also allow more effective coordination Capacity building, including stronger uptake of global of linked (and possibly overlapping) activities. The Climate knowledge and best practices from ODA-supported proj- Report will also help to identify the roles of the NTP-RCC ects, are needed to further support coordination, espe- and SP-RCC more clearly in relation to other CC-response cially at the provincial level. Better coordination will require activities; and opportunities for the FM of the SP-RCC to enhanced capacity, in particular at the provincial level. The increase and diversify its portfolio should be more easily iden- need to align planning and budgeting with climate change pol- tified. The Climate Report will also provide a basis for an icy objectives requires a good understanding of the planning annual CC-response Financing Report (CCR-FR) to iden- process in relation to climate change policy objectives. This tify financing gaps and appropriate sources of finance. The becomes even more important if more regional approaches patterns of spending shown in the Climate Report will give are undertaken to try to enhance the CC-­ response effective- a preliminary indication of how money is being allocated rel- ness. Capacity enhancement leads directly to improved M&E, ative to NCCS/VGGS/DRRM and the fundamental objec- which will be a key tool for ensuring an effective CC-response. tives of adaptation/DRRM and mitigation (see Chapter 3). Structuring the capacity program for improved coordination These findings can then be related to available sources of CC- within the M&E framework may well provide the best out- response finance and current FMs. Both the Climate Report comes. Activities financed by ODA should also be better inte- and CCR-FR can enable a substantial improvement in man- grated in regular country systems to increase uptake of good aging CC-response financing as well as improving the effec- practices and global knowledge. tiveness of resource allocation. Both sets of tasks, however, will require significant capacity building, as discussed in sec- Planning and budgeting should be more effectively tion 4.4 on page 89. linked—particularly by balancing new investment with stronger operation and management capacity in the con- text of the available fiscal space. The TCCRE highlights Strengthening Coordination of Planning the need to support enabling activities as well as CCD to and Budgeting Sector, provincial, and regional coordination needs  deally, such programs should also be informed by broader regional efforts, 72. I strengthening. Timely and reliable information for all such as the USAID funded program for the Lower Mekong Delta Basin, (see parties involved in climate change allocation decisions can USAID, 2013 Mekong Adaptation and Resilience to Climate Change (Mekong ARCC) http://www.mekongarcc.net/sites/default/files/mekongarcc_draft_ help resolve some tensions in the still-developing process of synthesis_report.pdf. 84 address climate change. Generally, current planning focuses The GoV’s policies and programs to manage these risks, on creation of assets through investment in development strengthen climate resilience, and adapt to climate change projects. Very often, however, the recurrent budget is unable have been reviewed and analyzed in Chapter  1. Many of to meet ongoing operating and maintenance costs associated these policies and programs guide ministries toward focusing with that asset. More generally, it is essential that priority CC-response efforts, others help strengthen the information setting for a CC-response is put firmly in the context of avail- base for assessing climate vulnerabilities, and a number have able fiscal space in a clear medium-term time frame. These advised on strengthening the methodology for identification, issues can be tackled through ongoing PFM reforms, in par- appraisal and prioritization of projects and activities. The ticular the development of rolling medium-term fiscal and considerable amount of recent work on adaptation responses expenditure frameworks (MTFF and MTEF). The MOF has has established a solid foundation on which to develop such successfully piloted the use of an MTFF and MTEFs in four a framework. line ministries and three provinces. Reviews of these pilots by MOF and an independent consultant have shown that National Vulnerability Assessment adoption of these processes improve cost of baseline spending Climate risk and vulnerability assessment is the critical and new policies, and link capital and recurrent budgets more starting point for an operational adaptation policy frame- effectively. Many of the advantages of MTFFs and MTEFs work. A considerable amount of work has already been done to can only be fully realized in the context of a reliable and com- establish basic scenarios of climate change and assessment of prehensive information system, like TABMIS. The CPEIR vulnerabilities and risks that Vietnam’s different regions and recommends the GoV initiate a climate finance budget (and sec- sectors face (see Chapter 1). These assessments identify areas tor budgets) for the 2016–2020 SEDP in a form consistent with most vulnerable to climate change impacts and, in turn, some a general government MTFF, as part of the SEDP preparation. of the current programs that are primarily addressing policy DPs should increasingly use TABMIS for budget, implementation. However, the vulnerability study needs to accounting, and reporting on resources provided to be extended to all relevant sectors and provinces in order to Vietnam for CC-response expenditures. The desire to identify and secure assets against climate change related vul- process ODA through country systems is recognized in nerability. This process should be formalized and institution- Vietnam. However, efforts to reconcile ODA expenditure alized to ensure that progressive resilience building is aligned not yet on budget and account in TABMIS with the debt to the revised versions of the climate change scenarios as they management system have been less timely. While improve- are generated. This may be done through, for example, a ments in timeliness will help, a major effort should be made sector-specific under-law which provides guidelines on inclu- to process ODA transactions as much as possible through sion of climate change resilience in the interventions. The TABMIS. DPs, of course, wish to be reassured regarding response to climate-derived vulnerability covers adaptation reporting format and timeliness, as well as with regard to responses in a number of line ministries, as well as disaster fiduciary risk. As noted in Chapter 1, some work is being risk reduction and management activities, mainly in MARD. done on a pilot basis with regard to provincial ODA- However, disaster response (related to disaster risk) and cli- financed projects. The CPEIR recommends that the GoV mate change adaptation (related to climate change related and DPs agree on principles and a timeline for processing all vulnerability) are perceived in policy terms and institution- CC-relevant ODA through TABMIS—initially by pilot- ally as separate entities and objectives, rather than a com- ing selected ODA projects to use the GoV plan, budget, and mon agenda responding to vulnerability which is derived, or payment and reporting process for financial management exacerbated, by climate change. A more effective response to and reporting to all stakeholders. vulnerability should be instigated, with increased alignment of adaptation and DRRM approaches both in higher-level policy objectives as well as in institutional coordination. The 4.2 Planning and financing recent high-level DRRM/CCA coordination forum in Octo- ber 2013 is a move toward this goal. However, there is a need adaptation policy for increased institutionalization of this approach with the Climate adaptation planning, financing, and pol- main government entities involved in DRRM and adaptation icy implementation processes need improvement to response. effectively respond to growing climate change risks. 85 National climate change scenarios and vulnerability but whenever SOEs are used it adds to the difficulty of assessments are vital to ensure evidence-based CC- interpreting expenditure data, as discussed in Box 2.1 and response policy implementation. Maintaining a national Annex I on the forestry sector (the latter suggests the ben- scenario is critical for national and provincial administrators efits of more detailed sector/provincial studies where SOEs to set priorities on adaptation responses to climate change have major responsibilities for policy implementation). On through the planning and budgeting process. Such predic- the Treasury accounts, these expenditures are recorded tions, however, have a high degree of uncertainty and depend as transfers to the SOE rather than as direct delivery of on global efforts to improve scientific knowledge on likely services; the actual expenditure by the SOE will be recorded future climate developments and adaptation technology. on the enterprise account. Depending on the balance of these Regular updating and strengthening of the national adapta- transactions, Treasury may overstate or understate the actual tion scenario, including by employing stress tests across sev- amount involved. In effect, the actual expense is carried out eral possible climate and socio-economic future scenarios, is off-budget, and assessing its impact will require establishing important. In addition, regional and local scaling of national clear agreements with the SOEs and effective monitoring of scenarios is needed. More efforts are also needed to support the their actual CC-spending and outcome delivery. The CPEIR practical use of the scenarios by sectors and provinces to fur- recommends that SOEs’ role in adaptation program execution ther encourage mainstreaming. The interpretation of climate should be clearly stated and any major impact on fiscal risk scenarios and related key climate change variables in relation should be clarified. to vulnerability of the sectors needs to be made more apparent and directly applicable to users. The inevitable uncertainty in Design Standards and Regulations climate projections needs to be dealt with in a practical way, Better design standards are an important part of the cli- with the onus on no-regret adaptation actions or adaptation mate change response, and regulators can play a critical interventions which have other positive benefits. In addition, role. Raising design standards to meet both adaptation and guidance on frameworks to embed climate change in project mitigation objectives should be emphasized in SEDP dis- design and implementation need to be developed to promote cussions with agencies involved in construction activities, the CC-response. For example, with substantial financial such as MOC and MOT. Implementing new standards for resources going towards road building and with no pro- construction (or for materials or fuel) will often require sup- active approach to future-proofing roads there is a need for porting regulations to ensure compliance by enterprises. For systematically building climate change projections into road example, construction activities are regulated under the 2003 design standards. MONRE, and particularly the Institute of Law on Construction (No. 16-2003-QH11) administered by Meteorology, Hydrology, and Climate Change, will be the the MOC. Discussions with the ministry indicated that these national anchor for such efforts. The CPEIR recommends issues are under active consideration and that many aspects continued efforts to update and scale the scenarios to regional are being examined, particularly in the context of urbaniza- and local levels and across a variety of climate and socio- tion, though they are not yet part of the mainstreaming dia- economic futures to enhance their use, improve accessibility logue in the context of the SEDP. Setting appropriate CC- and practicality across sectors and provinces, and to ensure that related considerations in design and construction standards projects and programs are appraised under a variety of projec- can help build resilience. This can be supported by extend- tions of future climate impacts. ing the accessibility and practical use of the MONRE CC scenarios to key sectors, as well as production of appropriate The Role of SOEs in Adaptation Policy assessment frameworks for site-based risk.73 The CPEIR rec- The role of SOEs needs to be recognized explicitly. Some ommends that mainstreaming of CC-relevant design and regu- CC-response programs deliver services through state or pro- latory standards should be addressed and possible CC-response vincial SOEs in place of, or in combination with, direct gov- projects should be formulated in the SEDP process from 2014 ernment spending. This is more common in activities that onward. are aimed at mitigation but also applies to some adaptation activities (such as irrigation and drainage management com- 73.  For example, the Climate Impact Assessment Guidelines for Roads (World panies for irrigation services). The issue is more complex in Bank) which uses a three-phase assessment approach: climate considerations, strategic project consideration and risk assessment / summary project assess- the case of mitigation, as discussed on the following page, ment to support planning and design considerations of road construction. 86 4.3 Planning and financing development of a national MRV system would benefit from both a top-down and bottom-up approach for compiling and mitigation policy elaborating emissions data. In the near term, it is possible that existing bottom-up approaches could be adapted (such Mitigation policy implementation should be evidence- as those used for CDM projects) in sub-sectors that are can- based and linked to global efforts. For reasons already didates for crediting mechanisms, developing lessons learned outlined, however, the operational concerns for the mitiga- and serving as a model for other sub-sectors. In the medium tion component of CC/GG policies differ substantially from term, a top-down approach will be required that will account those of adaptation. Mitigation operations are concerned with for national/sector emissions to be translated into a semi- progress on global mitigation initiatives, taxes and incentives, regular national inventory of GHG emissions. Both and policies of SOEs in energy sector much more than with approaches will require verification guidelines to be devel- direct investment expenditure. Many of these issues involve oped from international standards. The CPEIR recommends complex policy issues that will be resolved progressively, and that a roadmap be developed to set priorities for establishing their implementation involves a much higher degree of uncer- MRV capacity. tainty and risk than implementing adaptation policy. More- over, many are addressed outside the standard planning and Mitigation policies should link with global and national budgeting cycle. These factors do not make mitigation policy action on GHG emissions abatement and green growth any less important, but they do mean that its implementation targets. Mitigation is complex and involves many stakehold- will be subject to more complex policy discussion, longer ges- ers. The following parts of this section recommend further tation, and a higher degree of uncertainty than that of adap- steps to consolidate the GoV’s policies on mitigation, as well tation. This will affect the type and amount of direct public as major barriers and risks to moving forward rapidly in order expenditures that will actually be needed to develop effective to identify the role of public spending and of fiscal policies in GHG mitigation policies. their implementation. One starting point for a national mitigation policy (beside Climate Fiscal Policy, Mobilization of Public and co-benefits) is for a country to identify, recognize and Private Low-Carbon Investment and Development track its GHG emissions. Details of the development of an of the Concept of a Carbon Price Anchor MRV system to track and report emissions levels are given in The principle that fossil fuels impose a global cost is Chapter 1, which notes that, while the GoV has given highest important to mitigation policy. As described in Chapter 1, priority to adaptation, it has demonstrated its commitment to establishing the costs of carbon emission involves a range low-­carbon growth through its Green Growth Strategy and of fiscal measures that go beyond expenditure. It is evident has set an ambitious mitigation target for 2030. Details on that mitigation policy based on establishing either taxes or the business case for low-carbon development are provided in market-based prices has faced a great deal of resistance from the World Bank’s 2014 Charting a Low Carbon Development vested interests in all countries where it has been proposed or Path for Vietnam study. As noted, these processes require a attempted. But these political economy barriers must be tack- range of data, need to be implemented at different levels, and led if mitigation is to be successful over the long run—either require considerable capacity development to be implemented nationally or globally. Efforts in Vietnam provide direct ben- successfully. Establishing regular reporting on emissions efits in terms of reducing energy vulnerability, and, while by sector and by region is a starting point for an effective small in the global context, could be globally influential if national mitigation policy implementation framework. How- they are based on clear principles and applied consistently. ever, since tracking emissions is also critical for global emis- As described in Chapter 1, current fiscal policies are moving sions policy, it is very appropriate that much of the effort in in the right direction, but are not yet fully consistent overall. this area be strongly supported by global knowledge and sup- Measures to establish a consistent mitigation policy regime port from DPs—and that all expenditures financed by ODA should address the following aspects: in this area should be tracked as an element of Vietnam’s mitigation policy implementation framework. Internation- a. A cost recovery approach to energy pricing and ally compatible MRV systems need to be developed to enable reduction of any remaining subsidies (including Vietnam to plan and pursue low-carbon green growth. The implicit subsidies). In Vietnam’s case, while direct 87 subsidies have been reduced, implicit subsidies remain. on extension of the market. Issuance of too many permits in Cheap domestic fuel sources are viewed as an easy way the EU’s Emission Trading Scheme led to the EU market’s to provide benefits to people. However, the economic collapse and consequently a world-wide drop in the price of arguments against such a course are strong: the real carbon to a level that would have only marginal impact on cost of cheap domestic fuel is the price that it could fossil fuel-based energy costs. As a consequence, some coun- command on the world market, not just its domestic tries consider establishing a carbon tax as a possible first production cost. step toward global agreement on setting effective prices on b. Support to lower income groups. Lower fuel costs GHG emissions. A middle way, focusing mainly on con- may benefit the better-off. Low prices also increase sistency, could be a progressive move toward establishing a demand for fossil fuels, resulting in a spiral of increas- shadow price for carbon, derived in part from international ing demand that puts pressure on the government estimations, marginal abatement costs, and by review of the budget and energy policies. Lower income sectors dis- prices implicit in current investment options and tax deci- advantaged by market and carbon pricing can be com- sions. Such a shadow price is then meant to be applied to pensated in a variety of ways, including cash transfers, all mitigation investment appraisals and fossil fuel tax rate strengthened social protection, and better infrastruc- considerations. Studies, in particular the LCOA (WB, 2014), ture, while allowing market (and emissions-linked) to develop a low-carbon development roadmap have exam- prices to determine production and consumption costs. ined options in relation to Vietnam’s most likely technolog- ical options for future energy needs. These studies do not c. Use a consistent estimate to set both renewable at this stage formally apply a shadow price, but the work is and energy efficiency taxes and incentives. While consistent with efforts to formulate such a price to apply con- carbon-trading markets have yet to establish a carbon sistently to future investment decisions. The CPEIR therefore price that reflects climate change’s global impact, it is recommends that the GoV review its mitigation policies with a important for each country to use clear and consis- view to establishing a consistent policy delivery framework that tent price74 mechanisms as a central tool of its climate aligns all fiscal instruments to the common goal of cost-effective change policy and response spending. Individual coun- abatement of emissions. try assessment of the most appropriate price will dif- fer across countries. Nonetheless, a consistent applica- The Role of SOEs in Mitigation Policy tion of pricing principles will help harmonize national policies. It will also be a very significant advantage in The GoV’s policy and management of SOEs is crucial to terms of market preparedness (see discussion of current understanding mitigation policy in the energy sector and efforts in Chapter 1) when global carbon trading mar- the accompanied CC-response spending. Pricing energy to kets are in place. reflect market realities as well as to encompass GHG emis- sions impact is a critical part of energy sector reform. The Policies aimed at market readiness and carbon abatement bulk of energy investment and sale of energy to the public should be consolidated and consistent. The general view is executed through energy SOEs, notably Electricity Viet- on setting prices has tended to favor market-based emissions nam (EVN). A cost recovery approach to electricity pricing trading schemes as the most efficient way of establishing is recommended as a minimum policy for EVN, with any prices. However, experience in Europe and elsewhere has subsidies to vulnerable areas or lower income groups being also demonstrated the need for a phased approach in setting handled directly by the GoV rather than from EVN’s balance up such schemes, in terms both of how many carbon emis- sheet.75 SOEs contribute a significant share of total GHG sion permits to issue and of establishing global agreement emissions, which as a result creates challenges for operation- alizing emission reduction targets within a decentralized  ee OECD (2013) Effective Carbon Prices, OECD Publishing. The inter- 74. S setting where line ministries play a crucial role due to their national consensus on mitigation policy is that setting a price on carbon direct links to SOEs. This further illustrates the importance emissions is the most effective instrument to change enterprise and consumer behavior and reduce emissions. This study covered climate change policies in of energy pricing reform that would create the proper market 15 countries and their impact on such areas as electricity generation, house- incentives for implementing emission reduction activities. hold energy use, road transport, and manufacturing, and concluded that carbon prices were cheaper and more effective than any other instruments. In the European electricity sector, for instance, abating a tonne of CO2 cost an average of €10, compared with €176 for capital subsidies and €169 for feed-in tariffs. 75. See discussion of the role of SOEs in Box 2.1. 88 The critical role that energy SOEs play in passing through structure for implementation is a pre-requisite.77 Implemen- prices to reflect both market realities and the impact tation of these principles, as indicated in Annex I, however, of GHG emissions should be strengthened. The GoV is does indicate a need for deeper examination of the relative addressing the above issues to allow market forces to oper- roles of SFCs, provinces, and MARD in NPFPD implemen- ate effectively76 and for the public and private sectors (both tation than has been possible in this broad CPEIR review. domestic and international) to invest in low-carbon energy. It would be essential that MARD carry out a more detailed While these matters are under consideration in the broader review of forest management practices to integrate REDD+ arena of general SOE reform, which lies outside the mandate and the NPFPD. The CPEIR recommends that REDD+ prin- of the CPEIR, these energy-related issues are central to an ciples should be established as an integral part of the overall effective mitigation spending and policy response to address mitigation portfolio of Vietnam, integrated with the NPFPD GHG emissions and need to be given critical attention. The rather than seen as a separate and isolated undertaking, and CPEIR recommends therefore that the GoV reviews its policies that planning for a systematic increase in adaptation co-benefits with regard to energy SOEs to help define pricing arrangements, be strengthened. investment plans and stakeholder representation that is most conducive to boost country CC-mitigation response. 4.4 Strengthening the Performance-Based Payments: REDD+ and Forest ­ Management Related Activities ministerial architecture REDD+ principles could have wider application as an and intergovernmental integral part of the National Plan on Forest Protection and Development (NPFPD). As discussed in Annex  I, coordination which examines the relatively complex arrangements for The NCCC needs high-quality information in order to mainstreaming CC-­ response policy in the forestry sector, drive more effective CC-response spending. The role of the principles underlying REDD+ are aimed primarily at the NCCC SO is vital for channeling high-quality, verified establishing environmental performance related payments and succinct information to the NCCC. The SO needs to as the basis for CC-response in the forestry sector. These strongly encourage M&E of the CC-response to support principles could be applied more widely during and after the effective oversight by the NCCC. Buy-in needs to occur REDD+ Phase II, to support delivery of the NPFPD. If fur- across all ministries through the CC focal points. The SO ther aligned, the REDD+ instruments and policies have great will have primary responsibility for rolling out M&E and potential to help realize NPFPD objectives, as well as poverty collating the information as it flows back from CC under- co-benefits, and could be managed as a strategic asset of the takings. Full development of M&E is challenging and a long- mitigation portfolio. Their implementation through inter- term task that must cover central government sectors as well national/national/private sector financing of incentive-based as provinces and cities; it is the key tool to link the delivery benefits confers further advantages when REDD+ becomes of planned budget and the climate change response impact. operational. While carbon sequestration is limited and Considerable further capacity development will be needed in finite it is an important part of the wider mitigation effort. the SO as the NCCC matures during 2015 to ensure the best REDD+ also has potential for multiple adaptation benefits possible development of information and analysis is available (such as flood control and reduction of soil erosion). Both the to the NCCC, in combination with a demand for strong inter-­ potential carbon sequestration and the nature and extent of ministerial coordination. The SO should also use this infor- adaptation benefits are site-based. As such, a highly devolved mation and analysis to guide the development of the Climate Report. The CPEIR recommends significantly strengthening the SO to guide development of the M&E system and the Climate  hile a portion of subsidies to consumers is still borne by EVN, cross subsi- 76. W dies among electricity consumers have reduced over the years and electricity tariffs have increased both in nominal and real terms in the past few years,  ARD has established a National REDD+ Network and a REDD+ Work- 77. M improving the financial viability of the sector. Current average electric- ing Group, which are divided into REDD+ Sub-technical Working Groups ity tariffs of US cents 7.6/kWh roughly cover EVN’s opex and financing on (i) REDD+ Governance; (ii) Measurement, Reporting and Verification; costs (average tariffs cover legacy debt and tariff adjustments have to cover (iii) REDD+ Financing and Benefit Distribution; (iv) Local Implementation investment requirements). However, to also cover the power sector’s large of REDD+; and (v) Private Sector Engagement. The working group is a investment requirements the sector needs further tariff increases up to US subsidiary body to the Steering Committee for Climate Change Mitigation cents 16/kWh by 2020 to make the power sector financially viable. and Adaptation. 89 Report to enable the NCCC realize its oversight, prioritization of programs and strategies competing for available funds, it and coordination role. should be possible to review the budget result and the Climate Report to narrow the scope of FMs to more specific targets The financial architecture should be strengthened and and sources of funds. The existence of a more comprehensive unified as a result of stronger planning and budgeting, mechanism will, in itself, help to attract funding sources and strategic M&E development, and more effective inter- provide a basis for designing FMs to suit Vietnam’s needs. The ministerial coordination. The development of a climate CPEIR recommends that the financing framework be harmo- budget, tracking of actual spending, basic M&E, and effective nized to focus clearly on adaptation and mitigation policy imple- coordination of all these activities will provide a basis for iden- mentation goals and establish appropriate Financing Mechanisms tifying financial gaps and overlaps. Rather than a multitude linked to these goals. Box 4.1. Recommendations from Chapter 4 7. Develop a framework to coordinate and mobilize financ- ing of CC-response activities and establish appropriate Key short- to medium-term recommendations that will sup- financing mechanisms in line with adaptation and mitiga- port the key steps to strengthen CC-response planning and tion policy implementation frameworks. budgeting in the process of developing the 2016–2020 SEDP and in the 2015 annual planning and budgeting Longer-term initiatives that should be initiated in the near cycle78 and help address the findings and recommenda- term but employed progressively in line with developing tions of earlier chapters are as follows: capacity and successful implementation of the measures to integrate CC-response policy in the SEDP cycle are as 1. Address issues of mainstreaming CC-relevant design follows: and regulatory standards in SEDP discussions to encour- age CC-relevant construction projects and appropriate 1. Develop and implement a roadmap to set priorities for regulations to be formulated in support of the SEDP establishing MRV capacity. process from 2015 onward. These activities will often 2. Review the mitigation fiscal framework to help align all require detailed sector/provincial reviews. fiscal instruments and develop a consistent policy and 2. Strengthen sub-national/sector coordination to make instruments to achieve cost-effective abatement of GHG better use of data available through the planning and emissions. budgeting improvements. Emphasize integration of CC-response strategies with sector and provincial 3. Further review policies regarding energy SOEs to define strategies. pricing arrangements, investment plans, improve pub- lic financial disclosures, and enhance stakeholder 3. Instigate a more effective response to vulnerability representation in support of national climate policy with increased alignment of CC adaptation and DRRM implementation. approaches, both in higher-level policy objectives as well as in institutional coordination. 4. Embed the basic principles of performance payments underlying REDD+ as an integral part of the National 4. Mandate instructions to increase usage and update vul- Forestry Strategy, rather than a separate and isolated nerability and risk assessments for all areas to take into undertaking under the CC-response umbrella. account climate scenarios at regional and local levels. 5. Initiate a climate finance budget (and sector budget) for 5. Clarify the role of SOEs in implementing CC-response the 2016–2020 SEDP in a form consistent with a general objectives and ensure that SOE performance targets are government Medium Term Fiscal Framework (MTFF) as set and monitored. part of the SEDP preparation. 6. Take initial steps to strengthen the SO of the NCCC to enable it to guide the development of the M&E system and the Climate Report and assist the NCCC to realize its CC-response oversight, prioritization and coordina- tion role. DO NOT DELETE ME!!!!!!! blind footnote in above box 78 78. These steps are described above and developed in detail in Chapter 5. 90 5. A NATIONAL ACTION PLAN TO ESTABLISH A CLIMATE CHANGE BUDGET AND ANNUAL REVIEW: Implementing the CPEIR Recommendations 91 Plans for a Climate Budget and associated review and the expected outputs and outcomes of these activities, their financing process should begin as early as possible. This linkages with other activities (to help identify priorities and chapter further develops the recommendations presented ear- sequencing), and identifies risks that need to be taken into lier, particularly those in Box 4.1 and Annex I, by specifying account for effective implementation. Table 5.2 includes all of activities needed to implement the key recommendations. these activities in an action plan template, together with other The precise form of these activities and their management is ongoing CC-response activities, which can form the basis for to be determined by the GoV. Particular emphasis is placed on more detailed work plans for each of the responsible agencies immediate actions aimed at establishing a basic CC-­ response and units. These units will specify milestones and a timeline platform for the next SEDP—an opportunity that should for completion of each activity. All activities are tagged with not be missed. Section 5.1 outlines the broad structure of the the CC-response typology (TCCRE) element that they will suggested program and focuses on the need to coordinate the contribute to, since implementation of the CPEIR will itself many dimensions of that program effectively. The following be a component of Vietnam’s CC-response strategy. sections then review the two main components and activi- ties that must be put in place to implement the CPEIR rec- ommendations over the short, medium, and long term. Sec- 5.1 An overview of the results tion 5.2 outlines specific activities required in the immediate future to strengthen the SEDP and the planning and budget- framework and action plan ing cycle. Section 5.3 specifies the activities required for pol- Strengthening coordination among the key CC-response icy development and institutional strengthening to support policy agencies, as well as linking policies to the CC-­ adaptation and mitigation policy development and financing response activities of line ministries and provinces, is mechanisms for priority CC-response activities. Section 5.4 critical. Figure  5.1 below illustrates the main components presents a framework that can be used by the GoV to review and activities included in the proposed results framework and develop these activities into an action plan that is aligned and action plan template. The two components of the pro- with Vietnamese institutional norms and procedures. First, posed program are interdependent. The first pillar focuses Table 5.1, located at the end of this chapter, summarizes all on the immediate need to establish CC-response activities elements of the proposed program in a results framework for- as a clear and accountable part of the strategic and annual mat that further details the activities and major sub-activities SEDP, planning, budgeting, and financing cycle. The second needed to implement each recommendation. It highlights pillar relates to policy and institutional processes combined Figure 5.1. CPEIR Recommendations and Action Plan Framework Pillar A: Climate Planning Pillar B: Climate Policy and Institutional and Budgeting Reform Coordination and Strengthening Change Committee National Climate A1 Establishing CC-response as part B1 Strengthening CC institutional of 5-year SEDP coordination A2 Reviewing, assessing, and recording B2 Consolidation and harmonization CC-relevant expenditure of adaptation and mitigation policies A3 Monitoring and reporting CC-response B3 Improving climate finance architecture program Central Government Agencies and Provinces 92 with a proposed financial architecture. It is concerned with impact of CC-response spending. Stronger coordination, initiating activities to strengthen the adaptation and mit- through implementation of the CPEIR recommendations, igation arms of the CC-response policy and the financial will help forge the development of information collection and architecture that can use the planning and budgeting data reporting routes to ensure that CC-response investment port- to inform decision-making about mobilizing and coordi- folios and operations are robust and compatible with inter- nating available sources of finance. The central pillar high- national best practices. Successful implementation, however, lights the need for a stable technical body with capacity will depend very much on GoV steps to develop the existing to review and coordinate all of the functions involved in inter-ministerial structure to harmonize planning and bud- the planning and budgeting cycle and development of the geting with the ongoing development of its CC-response financial architecture and appropriate financing mech- strategies and policies. anisms. As identified in Chapter  1, the existing inter- ministerial architecture and workflow under the NCCC need strengthening to direct and prioritize implementation efforts. 5.2 Climate planning The activities proposed under pillar 2 will help to develop aspects of coordination, but these issues need to be taken up and budgeting reform by the key agencies involved in CC-response, as well as by the Core requirements for strengthening planning and bud- NCCC. International support for all of these activities would geting for CC-responses have been identified and jus- likely be forthcoming. tified in earlier chapters. Chapter 1 identified key areas for improvement in Vietnam’s climate change policies and Effective coordination is central to the whole effort. response, which included further mainstreaming of climate Enhanced information flow and coordinating mechanisms change responses into sector policies; harmonization of will help to ensure that all relevant information is provided adaptation and disaster risk management actions, combined to the key agencies, including the SO. The NCCC’s role will with further institutional coordination; consolidation of thereby be significantly strengthened. Setting up appropriate evidence-based national GHG reduction targets; further har- technical capacity, combined with strengthened high-level monization of M&E of different (climate-related) policies coordination, helps set priorities at a technical and evidence- and programs; and, improved information flow to promote based level in each of the program activities, as well as coordination and enhanced prioritization by the NCCC. allow better high-level assessment of the overall balance of Chapter 1 also highlighted the need for the SEDP process the CC-response program, combined with identification to support the CC-response more directly through strength- of financial gaps. These changes, in turn, will allow better, ening the current planning and budgeting cycle to improve more harmonized design of FMs to align financial resources project selection processes and promote further mainstream- with identified gaps. Overall, the NCCC will be better pre- ing. Building on this approach, Chapter 2 emphasized the pared to adjust the operational strategy in response to emerg- necessity of, first, establishing a policy-based classification of ing needs, budget limitations, or other factors, such as new all CC-response expenditures (the TCCRE), and second, of technological options for mitigation or increased disaster risk strengthening procedures to assess the quantitative relevance from updated scenarios. of each expenditure to either or both climate change adapta- Evidence-based analysis of CC-related budgets and tion and mitigation objectives. Chapter 4 identified the steps spending will result in better financial coordination. needed to incorporate the TCCRE and the assessments of Currently this task is meant to be handled by the Climate CC-relevance in the planning cycle (listed on pages 80–82 Finance Task Force under MPI, but a strengthening of the of Chapter 4). Primary importance is given to activities aimed system will provide a more comprehensive overview, includ- at establishing strategic priorities during the preparation of the ing on-going and planned investment operations, trends in 2016–2020 SEDP, and they will guide priority setting for the climate-friendly investment, current climate finance flows subsequent annual cycles. The recommendations in Box  4.1 and, most importantly, the impact of investments. Increas- are closely linked to the TCCRE steps, and should be carried ingly, as policy implementation targeting and M&E are out to consolidate CC-response initiatives within a strength- improved, more information will become available on the ened planning and budgeting cycle over the medium to long 93 term. The activities associated with each of the TCCRE steps expenditures. The main risks that need to be mitigated relate and the corresponding recommendations are outlined below. to weakness in capacity and political commitment. A fully operational climate change budget will take sev- Preparation of the 2016–2020 SEDP eral budget cycles. All the activities included in this report would serve as a basis to finalize a detailed action plan in A major effort is needed to establish CC-response as a cen- consultation with the relevant GoV authorities. Though the tral element of the forthcoming five-year SEDP. Prepara- immediate target is to establish the first draft Climate Report tion of the SEDP 2016–2020 begins in 2014. To introduce by mid-2016, this would be a pilot exercise rather than a final CC-response most effectively to this process, however, it product. It will take two to three years to establish a sys- is critical that MPI and MONRE build on the findings of tem that operates effectively on all aspects of planning and this CPEIR, particularly with regard to mainstreaming CC- budgeting. Capacity building will be needed to ensure that response into sector and provincial programs that can have a the system can be operated sustainably over the long term, major effect on climate change response. and likely technical assistance will be required to implement An important task will be to establish a strategic direc- the needed changes. Possible areas for technical assistance are tion for CC-response plans and expenditure in the 2016– noted in section 5.4 (Tables 5.1 and 5.2). 2020 SEDP. MPI, in coordination with MONRE, would lead a review of all major ministries to identify ways their Adoption and Issuance of the TCCRE Guide current programs can be enhanced to incorporate a CC- TCCRE refinement and training are critical to strength- response. The CPEIR analysis in Chapter 1 provides a start- ening the planning and budgeting cycle. The CPEIR ing point for such a review, but further technical assessments developed a TCCRE and prepared a basic guide on its use, to deepen the analysis would be desirable. The outputs of including a methodology for assessing CC-relevance. The this work would consist primarily of sector and provincial TCCRE and Guide was circulated and general principles reviews of the CC-response potential in each of the major were broadly agreed upon in the context of the CPEIR. Two sectors (which would be incorporated in the five-year SEDP) activities are recommended to help ensure that the tool is and detailed guidelines to each ministry on the approach to applied effectively: be taken for preparation of action plans and CC-relevant projects and programs for the annual plan and budget sub- • Finalization of the Guide: Both the TCCRE and the missions. This should include a focus on specific sub-sectors Guide will need further refinement to enable their use or regions that have been identified as highly strategic for by all line ministries and provinces in the government an effective CC-­response, including the Mekong Delta. The SEDP planning and budgeting process. Revised docu- main risks to fulfilling these targets will be some capacity ments will need to be produced prior to budget submis- weakness in the ministries and uneven political commitment sions and provisions should be made to regularly update to ensure that the tasks are pursued. A proactive, strategic both the TCCRE and the Guide over time. The Guide dialogue on climate change with involvement of DPs may will need to be formally adopted and then issued for line help mitigate these risks. ministry uptake. • Training in Use of the Guide: TCCRE training courses The SEDP process should also help consolidate a more should be conducted prior to the preparation of projects strategic approach to area-based planning. Recommen- and negotiations commencing in 2015. dations 2 and 3 (Box 4.1) in Chapter 4 highlights the need to develop multi-sector, area-based projects to address high- Early technical assistance support for these activities is priority, vulnerable regions and issues. The SEDP discussions advisable. This would start with support for both finaliza- provide an opportunity to initiate a review and establish tion of the Guide and design of training courses on use of joint activities to develop such approaches and initiatives the Guide, covering all central line ministries and provincial with a high degree of national climate policy anchoring, and representatives, with a sustained program covering all prov- initiate steps toward institutionalizing such an approach as inces to be conducted during 2015. Outcomes that can be part of the SEDP and annual budget. Initiatives to augment expected to be achieved over time will be the establishment bottom-up M&E and reporting on the provincial climate of clearly defined climate change objectives, indicators and response, project design, implementation and delivery should milestones for all CC-relevant projects and other CC-related be included as supportive activities to the SEDP. The results 94 of these discussions and broad intentions to adopt a multi- government for that year, which would begin the process of sector, area-based approach can be incorporated in the five- establishing guidelines for future years as well as for tracking year SEDP. Activities to implement this policy element could actual spending performance against budget during 2015 and then follow. In this context, outputs from the activities would over time. consist of (i) reviews of existing regional initiatives of this nature (including analysis of benefits and costs of such arrangements Close cooperation between MPI, MONRE, and MOF is and of institutional set-up); (ii) proposals for mechanisms for essential to incorporate CC-response spending estimates joint financing by both city/provincial and central budgets; in the State Budget and ASBR. This is a critical part of and (iii)  proposals establishing pilot multi-sector regional strengthening the planning and budgeting cycle. A close projects with possible distinct budgetary tracking and infor- link between MOF, MPI as well as MONRE is particularly mation flow. These outputs need not be geared specifically to important, and it will also be important to bring other coun- the annual planning and budgeting cycle, as most will require try experience to bear on the way that CC-response is handled a longer time frame to complete. Eventually, however, the in the budget environment. Outputs would be the inclusion regional approach would be integrated and coordinated with of the CC-response (memorandum) estimates in the budget, the annual planning and budgeting cycle. The main risks to and a CC-response overview in the ASBR for 2015. Out- achieving these objectives will be political difficulties in pur- comes in the long run would be a progressive improvement suing intergovernmental coordination and a lack of capacity in analysis and presentation of the CC budget, which would at provincial and sector level. As above, technical assistance be a major input to its subsequent financial and performance will help to address some of these risks. monitoring as outlined in the following sub-sections. Long term, the Climate Budget could be formulated as Preparation of Climate Change Response a rolling program based on an annually updated Medi- Expenditure Estimates um-Term Fiscal Framework. As per Chapter 4 Recom- TCCRE application in the annual planning and budget mendation 5 (Box  4.1), there are significant advantages in cycle will provide CC-response spending data79 for the reviewing long-term expenditure commitments framed in next budget. Use of the Guide for the 2015 budget prepa- a fixed-term plan in light of changes in the fiscal environ- ration will generate estimates of CC-response expenditures ment. Such an approach would be particularly appropriate against adaptation or mitigation objectives for all projects for CC-response planning, which by definition needs to also included in that year’s budget. These amounts could be have a long-term horizon, and in recent years has been subject entered as memorandum80 entries in the state and provin- to fiscal constraints, as the data reviewed in Chapter 3 attest. cial budgets for projects not exclusively dedicated to CC- While fixed-term planning has served Vietnam relatively response (for which the total budget entry would be recorded well, technology now allows a more flexible approach, and as an appropriation). Total CC-response allocation across good fiscal management practice gives increasing empha- government at all levels could then be reported in the State sis to reviewing investment commitments in light of future Budget estimates book and an overview of climate change recurrent costs of assets and fiscal space to manage the over- spending included in the Annual State Budget Report all budget deficit. Such far-reaching changes can be made (ASBR).81 The action plan would aim to include estimates only over the long term, but a review of the current system of CC-response spending for 2015 in the ASBR for that could be initiated in the medium term and a roadmap drawn year. These estimates would give an initial baseline and pic- up for a long-term adoption of more integrated budgeting ture of CC-response resource allocation across all levels of practices in CC-response planning and budgeting. It is sug- gested that an activity to carry out such an analytical review 79. N  ote that, as defined in Chapter 2, the term CC-response expenditure be included in the proposed action plan. The main output refers to that element of project expenditure assessed to be climate relevant. would be a roadmap for initiating a rolling plan framework Projects with a CC-­ response component of expenditure are designated as CC-relevant projects for purposes of reporting total CC-relevant project for the climate change budget, with longer-term implications spending. for modernization of current planning and budgeting. Risks The entries are assessed values and not transaction-based. They are of signifi- 80.  cance to the GoV’s CC-response policy, but cannot be directly monitored by arise mainly from the tendency for agencies to operate within MOF Treasury. narrow established mandates and the consequent reluctance See report for 2013 at http://www.mof.gov.vn/portal/page/portal/mof_en/ 81.  to change current practices. State_Budget/dosb/asbr?p_folder_id=94850424&p_recurrent_news_ id=94848411. 95 Reporting on All Climate Change Relevant Projects: (including any ODA associated with this proposed national A Basis for Monitoring Actual Climate Change CC-response reform action plan). Budgeting, accounting, Response Spending and reporting on outputs from activities would represent an MOF should instruct all line ministries and provincial increased proportion of CC-response spending included in finance departments to report actual CC-relevant project the SEDP, State Budget, and accounts. The outcome would spending. The MOF Treasury would have no responsibility be a more comprehensive and financially accountable cov- to report expenditure against the memorandum level budgets erage of CC-response spending. Risks in this area relate to for CC-response activities in projects with multiple develop- ensuring that TABMIS operations do not pose high fiduciary ment objectives. However, it is critical that Treasury records risks and that satisfactory reports can be generated by TAB- total spending on all CC-relevant projects be made available MIS (and MPI) to meet both DP and GoV financial report- to all sector ministerial and provincial managers, as well as ing requirements. to MPI and MONRE, to enable them to provide an over- view of implementation of the climate budget by applying the Improving In-Year M&E and Reporting CC-relevance rules used in the TCCRE. Effective Climate Budget M&E is an essential element of Implementation of the TCCRE and MOF reporting on accountability for public spending. As outlined in Chap- CC-relevant projects may need to be phased. Introducing ter 1, the whole process of M&E on CC-response spending the recommended changes to all provinces and all line min- is inhibited by limited definition of project objectives, lack istries will be a substantial task, and it may best be phased of verifiable performance indicators, and highly decentral- over, for example, a three-year period. A first phase could ized management of many national CC-response programs. consolidate the work already done with the CPEIR selection Implementing the TCCRE and strengthening reporting on of ministries, since these cover the bulk of the central govern- policy implementation and expenditure will help address ment CC-response spending. It should also include a more some of these issues, but the Government, under the leader- extensive selection of provinces that have a significant climate ship of the NCCC, MPI and MONRE, should formulate a change response program. Following phases would then roll detailed work plan to strengthen all aspects of CC-response out to all ministries and provinces. project and program monitoring against objectives, targets, and milestones. These factors are the basis for the recommen- MPI and MONRE can use project-level data to generate dation in Chapter 4 to develop a CC-response linked M&E reports on CC-response spending. Some simple (perhaps system and strategic KPIs to assess CC-response impact. The Excel-based) software82 should be developed to allow MPI requirements for M&E differ between adaptation and mitiga- and MONRE to generate regular reports from TABMIS tion policies, and specific high-level requirements for these are project-level reports. This application should help overcome discussed further in section 5.3. the present gap in reporting and data sharing by different levels of government. All CC-response spending by project, M&E is required throughout the CC-response pro- line ministry and province can thus be made accessible to gram and needs significant long-term capacity building. all managers throughout government. The present record- As described in Chapters 1 and 4, the TCCRE and CC- keeping, most often confined to department/division level, relevance assessment process will help to establish clearer can then be replaced with regular CC-­ expenditure reporting. objectives and targets, but these must be formally monitored The new system should also convey much more information at project and program level and then evaluated as part of the on the nature of the projects because of the more detailed Climate Report against high-level KPIs. Finally, they should CC-project design requirements (see below) and TCCRE be subject to external review by the State Audit of Vietnam assessment procedures. and the National Assembly. Implementation will take some time and extensive training at all levels, but initiating the TABMIS-based activities will provide a sound mecha- development of such a system will, in itself, give credibility nism for DP financing of CC-response support. Aligned to the GoV’s CC-response program and will be welcomed with Chapter  4 Recommendation 5 (Box 4.1), pilot work by the international community. The key outputs sought in on channeling ODA through TABMIS, already in place for the first stages of implementation will be a review of current NTPs and being initiated for provinces, should be accelerated practices and assessment of needs. On this basis a roadmap for establishing CC-response M&E, including high level Including the possibility of applying the World Bank developed BOOST 82.  application to this task. 96 indicators for tackling vulnerability and reduction of GHG would increasingly reflect policy developments and achieve- emissions, can then be prepared and financed. ments in relation to the GoV’s adaptation and mitigation goals. While, as discussed in section 5.3, these goals will be Preparation of the Pilot Climate Report developed independently of the annual planning and bud- geting cycle, key elements will be progressively incorporated A pilot Climate Report in mid-2016 will be a key out- in the SEDP five-year plans and the next 10-year SEDS; put. As noted at the outset and further emphasized in the and these policies will increasingly influence project design, preceding sub-sections, it will take several years to establish priority-setting, and budget allocations. an operational Climate Budget that is fully integrated with the SEDP strategy and the annual planning and budgeting cycle. The initial pilot report would necessarily be relatively simple—essentially a report of performance against the Cli- 5.3 Climate policy and mate Budget appropriations and summary ASBR overview. institutional coordination Performance against key elements of the overall program that are already subject to some elements of M&E (NTP-RCC and strengthening and related NTPs, such as the NTP-EE) should be included, There are two primary concerns: (i) coordinated imple- as well as more general progress that has been made in incor- mentation of adaptation to climate change and mitiga- porating climate change in the annual planning and bud- tion of GHG emission actions; and (ii) developing the geting cycle and progress in delivery of NCCS and VGGS. CC-response finance architecture to finance identified In subsequent years, with improved information generated policy-delivery gaps. As outlined in Chapters 1 and 4, by more extensive CC-focused M&E, the Climate Report adaptation and mitigation policy development have signifi- should provide more substantive reporting of: cantly different technical requirements. Adaptation policy is • Progress toward harmonized policy objectives included an immediate priority and is furthest advanced in practical within the NCCS, VGGS and related programs (both in implementation by having established the strategic and tech- terms of expenditure against policy objectives, and also nical basis in terms of maintaining an oversight of vulnera- impact assessment of interventions). bility of different sectors and regions of Vietnam. Mitigation policy has also become a domestic priority, as particularly • A consolidated assessment from all sectors and provinces reflected in VGGS, but should also be highly connected to of progress toward adaptation and mitigation objectives global processes and negotiations under the UNFCCC. Fis- and targets. Reporting against policy objectives and cal policies, particularly those directly linked to fossil fuels adaptation and mitigation outcomes allows key areas for and energy SOEs, also need to be considered—sound fiscal policy revision and reform to be identified as the Climate management is needed to achieve CC and GG targets. Adap- Report develops over the years. tation and mitigation policy development is discussed sepa- The pilot report should apply available data to assess rately in the following sub-sections. progress in implementing the NCCS and VGGS. It is important that the TCCRE data is used initially to report Adaptation Policy Coordination progress on the current major CC-response policy state- Adaptation and DRM specialists should jointly develop ments. As time goes on, increasing emphasis should be given more integrated vulnerability assessments and forecasts to assessing progress against the overall adaptation and mit- to better link risk reduction to vulnerability. The knowl- igation policy objectives, using objectively verifiable perfor- edge platform on which adaptation and DRM are based mance indicators. This reporting task should be under the should be improved through regular updating and uptake aegis of the CCWG. Technical assistance should be sought to of scientific developments in forecasting and vulnerability design the format and content for both the ASBR overview assessments. This should be maintained as a priority for the and the pilot Annual Climate Report, which will be sent to national CC-related programs. Approaches to vulnerability the Chair of the NCCC for guidance and endorsement. This should cover the realm of climate change-related effects, from work should also aim to produce a roadmap for development low frequency/high impact events (e.g. cyclones) to high fre- of the Climate Budget and the annual Climate Report over quency/low incremental impact (e.g. high tide saline intru- the medium to long term. Over time, the Climate Report sion of rice fields). 97 Project-level M&E systems must be linked to high-level communications and bi-annual updates to UNFCCC. Via assessment against key adaptation indicators. Further sector and national MRV systems, detailed GHG emission improvements to and enhanced harmonization of the existing data should be collected and presented to the NCCC, who M&E templates and practices for climate change adaptation consequently will be in a better position to strengthen and and DRM can lead to a comprehensive yet practical M&E enhance efficiency in the national climate change mitigation system, built on international best practices in a locally tai- response. As with adaptation M&E, a starting point is to lored way. The initial focus should be on strategically import- review current progress and draw up a roadmap to achieve a ant outputs and outcomes to avoid overloading practitioners working MRV system. and decision-makers with high volumes of low quality data. The process of harmonization needs practical and usable Key tasks for implementing mitigation policy are to: medium-term vulnerability indicators to lead to the eventual (i)  review current mitigation activities and develop outcome of more effective management of risk and vulnerabil- consolidated mitigation targets for post-2020 and an ity. Activities should be put in place to research and develop a implementation roadmap for low-carbon options; and linked M&E system for adaptation and DRM based around (ii)  establish a consistent fiscal policy framework to vulnerability to enable more collaborative working relation- encourage reduction of fossil fuel use. A well-coordinated ships between agencies working on CCA and DRM (such team in mitigation policy and market preparedness should as the Department of Dyke Management and Storm Con- work under an appropriate governmental entity to review trol and the Disaster Management Centre, both in MARD, current mitigation responses. The team should review all and the Department for Hydro-Meteorology and Climate current responses and activities related to mitigation policy, Change in MONRE). The National Platform on Disaster building on the framework provided in the National GHG Risk Reduction and Climate Change Adaptation may be an Management Program (Decision 1775 of 2012), the NTP-EE effective vehicle to promote harmonization of vulnerability and the VGGS/GGAP (including already established sector reduction, if this body can be effectively institutionalized specific reduction targets). Its main outputs would be rec- and help oversee the creation of a more unified response to ommendations for consolidated GHG reduction targets vulnerability. for the post-2020 period, in combination with a roadmap toward implementing mitigation policies consistently and as cost effectively as possible, while highlighting policy risks Mitigation Policy Coordination and measures to reduce these. The critical role of phasing Vietnam needs MRV systems and national target setting out indirect fossil fuel subsidies and subsequently applying a mechanisms to pursue low-carbon green growth and carbon price in the future to both tax and investment deci- attract financial and technical support. Internationally sions should be examined in this context, which also relates agreed MRV systems (for GHG emissions) are key to develop- to the objectives of the GHG plan on carbon credit. The ing Nationally Appropriate Mitigation Actions (NAMAs),83 main risk in developing and applying such a policy frame- but also more widely provide a valid assessment of progress in work is the need to develop ownership and agreement from mitigation. As with high-level adaptation M&E, such national key stakeholders—such as enterprises (including SOEs) and sector systems will be implemented only over the long and communities under a comprehensive engagement term. Activities to this end should be initiated by MONRE, approach. which is managing the national GHG inventory, but in close collaboration with line ministries and provinces who are in The role of REDD+ as part of an overall coherent frame- charge of the sector MRV of various emission sources. Tech- work for mitigation needs to be determined. REDD+ nical knowledge transfer and capacity building efforts must is part of a mitigation response as it reduces emissions and be established to support the implementation of sector-based enhances carbon sequestration. In addition, REDD+ under- MRV systems and further alignment to the national GHG takings have significant benefits in reducing vulnerability and inventory. Enhanced quality in GHG emission data will building resilience, and forest investment related to REDD+ potentially allow Vietnam to apply more detailed methodol- should be more broadly considered as a comprehensive cli- ogies using IPCC guidelines, which will elevate the national mate response tool rather than a sequestration mechanism. The positioning of REDD+ as a tool within the mitigation 83.  See http://unfccc.int/files/focus/mitigation/application/pdf/towards_nama_ framework should be further streamlined and integrated readiness_inVietnam.pdf, details may be referred to in Chapters 1 and 4. under a national CC-response, including climate-change 98 adaptation CCA benefits, and roll-out of REDD+ should costs, elements of cross-subsidy and direct subsidy financed by be monitored by the NCCC. It is equally important that EVN exist. EVN is at present subject to a detailed study of its efforts undertaken by REDD+ support the objectives of the financial situation, and the data from that study could provide NFDS, and implementation at central and provincial level a basis for review of quasi-fiscal activity through EVN. Such and REDD+ policy approaches are mutually supportive. a review may be included in the scope of the mitigation policy specialist group at an appropriate time and build on relevant The Fiscal Environment and Climate Change existing and ongoing studies. Institutional and Policy Risks The broad fiscal environment can have a determining influence on the implementation of CC-response policy. 5.4 Action plan summary Like any other area of policy, CC-response spending and use matrices of tax instruments will be subject to fiscal constraints. The earlier proposal to initiate a move toward a MTFF should Activities described above need to be considered and help to make such effects more predictable, but so far, no developed further by the GoV for practical and detailed firm commitment has been made to establish such an envi- implementation. The concepts outlined in the preceding sec- ronment. Such elements of policy are outside the scope of tions are set out in a preliminary way to help initiate this task. the CPEIR, but because a potential deterioration in mac- Table 5.1 below presents a draft summary Results Framework ro-fiscal policy adds to the risks of instituting a stable and (RF), which lists all of the activities proposed in the preced- productive Climate Budget (as evidence by the findings in ing section in a form that defines activities and sub-activities Chapter 3), MPI and MOF should begin to take these factors needed to implement the major CPEIR recommendations. into account each year in assessing the Climate Budget and It defines each activity in terms of its objectives and sub- the Climate Report. General fiscal risks posed by SOEs are activities, outputs and outcomes expected, linkages to other well recognized.84 This aspect is also beyond the scope of the activities (in terms of contribution to or from these activi- CPEIR, but needs to be taken into account in a macro-fiscal ties), and the level of implementation risks that may be faced context. and have to be mitigated. This RF is a working document that will be further reviewed by GoV authorities and may be Some SOEs have a more direct bearing on CC-response added to or modified before or after the release of the CPEIR. expenditure estimation. The CPEIR is concerned with spe- cific risks posed by SOEs that are directly involved in imple- The Results Framework provides a basis for developing an menting CC-response policies. If these policies are under- Action Plan (AP) that can be implemented and monitored taken through SOEs rather than directly by the GoV budget, by the GoV and any participating DPs. Once agreement the expenditure in the State Budget may not represent actual is reached on broad structure, priorities, and sequencing, spending but rather a transfer to the SOE, again with some the agreed set of activities can be set in a time-bound action element of fiscal risk.85 These risks should be quantified and plan, showing resource needs of each element and milestones expenditure data adjusted to the extent possible in assessing to be achieved against performance indicators over the AP CC-response policy effectiveness. implementation period. A template for such an action plan is presented in Table 5.2. At present, this AP template simply Energy SOEs’ quasi-fiscal activities can directly affect mit- reflects the RF activity structure and will be changed as that igation policy financing and implementation. EVN is the structure is modified. Beyond those structural changes, how- major investor and provider of electricity to the public and its ever, the full participation of GoV agencies will be necessary transmission of prices directly affects consumption of electric- to define fully the feasible milestones that can be achieved in ity. Though the GoV is taking steps to ensure EVN’s finan- implementing the plan. It is also suggested that this frame- cial viability, there are continuing price and policy pressures. work incorporate all relevant ongoing CC-response activities While the Electricity Law requires that tariffs should reflect that are already contributing to the objectives of building up a CC-response PG infrastructure; these could include current 84. S  ee Box 2.1 and World Bank (2013), Vietnam Fiscal Transparency Review: NTPs and the SPR-CC. The AP is designed to eventually be Analysis and Stakeholder Feedback on State Budget Information in the Public taken over by the GoV for implementation. Domain, pp. 39–40. 85. See forestry case study in Annex I for reference on the role of SOEs. 99 Table 5.1. Draft Results Framework for a Climate Budget and Financing Action Plan: Key Activities, Objectives and Risks Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 1. Climate Planning and Budgeting Reform Objective: Establish a Climate Budget, a Climate Report, and CC-Response Financing Report 1.1 Preparation of 1.1.1 Conduct CC-response Clearly defined Essential precursor Low risk: Part of the 2016–2020 mainstreaming CC-response strategies to strengthen established process SEDP discussions with in each sector of the the annual CC-relevant line ministries SEDP and CC-response CC-response Objective: and provinces action plans planning and Strengthen budgeting cycle strategic direction 1.1.2 Enhance CC-response Priority sector policy for CC-response/ strategy for line ministries and regulations reforms Green Growth and provinces identified and/or plans in relevant initiated sectors and 1.1.3 Establish a regional provinces strategy to coordinate A regional CC-response efficient and effective strategy policy paper sector and provincial to define key elements CC-responses of a regional strategy approach to climate change 1.2 Adoption of the 1.2.1  Develop the TCCRE Final Guide document Critical input for Low risk: Possible TCCRE Guide Guide, including released and circulated implementation delays in approval improved project of all CPEIR (and likely technical Objective: documentation, to apply Detailed CC-objectives recommendations assistance To guide and in the annual investment in project documents required); capacity build capacity in and recurrent budget and IDD Linkage/ building for policy ministries, process convergence with implementation line ministries, Staff trained APRF (guide, will take more time. and provinces Mount a series of 1.2.2  workshops, and Likely to best use a Clearly defined and in design and workshops to train development of phased approach classified CC-response assessment of staff at all levels in champions) with a focus on expenditures in annual CC/GG-relevant classifying and assessing the main CC budget expenditures CC-relevant expenditures stakeholders and develop champions 1.3 Preparation of 1.3.1  Compilation of total A clear statement of the Central element Low risk: CC-response CC-response spending Climate Budget and its of Climate Budget Dependent on estimates (the for the annual budget law objectives in the ASBR, and a basis for training and draft Climate and inclusion in ASBR which can be monitored accountability application of Budget) for CC-response TCCRE. Should spending progressively Objective: improve To provide an overview 86 of CC-response spending across line ministries and provinces 86. Note this overview is at a memorandum level of budget appropriation as described in the text. 100 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 1.4 Reporting on all MOF to instruct 1.4.1  Issuance of reports on A critical step in High initial CC-GG relevant finance departments CC-relevant projects producing the risk: Ensuring projects by line in line ministries and Climate Report compliance ministry and provinces to report on Application of FD and monitoring the across all finance provincial finance actual spending in all reports by MPI, line Climate Budget departments, line departments CC-relevant projects and ministries, and provinces ministries and expenditures87 to produce CC-response Effective provinces will be Objective: To outturn estimates implementation a major task in ensure that all 1.4.2  MPI, line ministries, and of TCCRE Guide 2014; training and CC-response provinces to use MOF Compilation of (2.2) will be key to capacity building managers are data to record estimated aggregate CC-response success should mitigate aware of actual CC-response spending in estimates risks to low over the spending on each element of the CC medium term CC-GG relevant budget projects relative to the budget 1.5 Harmonize and 1.5.1  A review of current M&E Review document This objective will Moderate risk: strengthen practices and analysis of be implemented in Implementing an CC-response M&E critical needs based on the long-run and effective M&E international experience will have limited system faces Objective: To and preparation of a initial impact on a number of establish verifiable roadmap to establish other activities business process indicators and CC-response M&E Roadmap document weaknesses milestones, and Establishing and capacity track performance 1.5.2  Initiate pilot M&E effective M&E, constraints, and is against targets for strengthening for key Pilot M&E systems however, is critical typically a long- all CC-response areas of the CC-response initiated for the long-term term project spending (technical assistance will success, credibility, be required) and financing of Training and the CC-response capacity building budget should mitigate risks to medium Ensuring once a basic system consistency is piloted between APRF and TCCRE and linking M&E 1.6 Enhancing use of 1.6.1 Pilot selected Coordinate ODA and country systems CC-response ODA GoV reports on spending projects at central on CC-response Objective: To and provincial level increase the to manage budgeting Improve Paris-Busan aid number of ODA and reporting through effectiveness targets for CC-response TABMIS aid-on-budget and use projects that use of country systems SEDP, budget, Develop better reporting 1.6.2  and TABMIS for and reconciliation managing budget between GoV data on and payments CC-response, ODA and processing DP data A s per text, MPI would provide MOF with a list of all such projects and expenditures included in the Annual Development Budget. Finance Departments would 87.  report only on total expenditures in each of these categories (possibly further details may be developed over time). 101 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 1.7 Preparation of Preparation of a pilot 1.7.1  CR mid-2016 A central marker Medium risk: Climate Report CR by mid-2016 and of achievement Producing a pilot (CR) roadmap toward full of CC-response CR should be establishment of the policies achievable; the Objective: Roadmap document Climate Budget and CR main risks lie in the To strengthen by January 2017 The CR will be sent quality of the final accountability to to the Chair of the product. Technical the GoV, the NA, NCCC for guidance assistance will help and the public and endorsement both to assure on performance initial quality and against the Dependent establish a credible CC-response on effective roadmap for future policies and coordination of all developments budget activities outlined above Successful initiation of the Climate Budget and CR will substantially enhance international credibility and encourage external financing Input from APRF implementation 1.8 CC-response 1.8.1  Review of Climate Review document Dependent on Medium risk: financing report Budget, CR, and ODA successful CR As per above, (CCR-FR) and identification of Draft CCR-FR dependent on all future CC-response Will enhance preceding inputs Objective: To financing needs international and quality of final review the Climate credibility and product Budget and its encourage external financing, identify financing major financing gaps, and initiate action to seek appropriate sources of finance 102 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 2. Climate Policy and Institutional Coordination and Strengthening Objective: Harmonize policy implementation, strengthen coordination and enhance the climate finance architecture 2.1 Strengthen policy 2.1.1  Enhance the role of A document to the Advance the Medium risk: coordination the NCCC to oversee NCCC that explains the CC-response Capacity and priority the implementation of links of core strategies within frameworks advancement can setting between the NCCS, VGGS, and under the NCCC to other of financial be structured in a adaptation National REDD+ Action (CC-related) policies and instruments step-wise approach and mitigation Program, and coordinate programs but might not policies, with and harmonize Provide be sufficient to enhanced links to implementation with A document review with prioritization and ensure significant the budget and related strategies and recommended criteria a route towards progress towards planning cycle programs, including the for prioritization more effective CC the next five-year NTP-EE and DRM delivery, including SEDP. Financial Objective: To Activity reports and consistency mechanisms to progressively 2.1.2  Review existing program/ report on capacity between tools be transparent, enhance the project priority setting assessments (including APRF) accessible and linkages between criteria/frameworks available for Report on FMs in relation the NCCS, and consolidate a periodic high-level to: (i) CC-response VGGS and other synchronized set of review cycle; and (ii) policy climate-related criteria for overall priority delivery as assessed programs to the setting and financial by harmonized M&E planning and allocation to provide increased budget cycle, with 2.1.3 Strengthen technical alignment between FMs identified funding capacity in the SO of the and policies mechanisms for priority setting by NCCC, MPI, MONRE, the NCCC line ministries and provinces to enhance the coordination capacities and technical foundation to link planning and budgeting to a strategic CC mitigation and adaptation response, for the NCCC’s decision making 2.1.4  Create clear linkages between the NCCS and VGGS toward the planning and budget cycle 2.1.5 Strengthen the alignment between financing mechanisms (FMs), budgeting and mitigation/adaption policy delivery to promote a more harmonized and effective CC-response 103 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 2.2 M&E and Develop a harmonized 2.2.1  System as operated by A cross-cutting reporting M&E system across the SO of the NCCC and and harmonized strengthened mitigation and adaption focal points/program M&E system which and harmonized responses as per the offices in line ministries will allow the across mitigation NCCS, VGGS and their and provinces NCCC to formulate and adaptation action plans, as well as synchronized responses other climate-related priority setting programs, led by the SO for an effective Objective: of the NCCC mitigation and To create a adaptation harmonized M&E Link national and sector 2.2.2  response and reporting M&E and reporting system across systems to the climate all main climate planning and budget response cycle mechanisms and actions and 2.2.3 Enhance efficiency linked to related and quality in M&E programs and information flows actions, led by the provided to the NCCC by NCCC’s SO the SO, based on inputs from focal points and units in line ministries and provinces 2.3 Coordinate 2.3.1 Strengthen and Reports on better Closely linked Low risk: and harmonize institutionalize the harmonization of climate to M&E system Development implementation National Platform on change adaption and development at requires a high of adaptation and Disaster Risk Reduction DRM response actions project/program level of scientific DRM responses and Climate Change level, but focused and technical adaptation Enhanced institutional primarily on nation- inputs and capacity Objective: alignment, coordination wide assessment building. Links Strengthen the 2.3.2 Coordinate and more effective to international coordination and and harmonize distribution of Highly dependent concerns with harmonization of implementation of CC information between on international respect to implementation adaptation measures MARD and MONRE and linkages and vulnerability should of adaptation and and DRM actions within other ministries, as per support encourage ODA DRM responses and between MONRE, monitoring reports to support, which will MARD, and other line the NCCC reduce vulnerability ministries and between over the medium actions in the Community and long term Based Disaster Risk Management Program, NAPCC, NTP-RCC, and CC action plans of line ministries and provinces 104 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 2.3.3 Undertake vulnerability Active participation in assessment in a the National Platform on coordinated manner, in disaster risk reduction priority geographical and climate change areas, hazards and adaptation as per sectors for both CC reports of the Forum adaptation and disaster risk reduction Published CC scenario and disaster risk updates, Officially require the 2.3.4  vulnerability mapping use of CC-scenarios for and specific guidance to mainstreaming actions sectors in use of climate in provincial socio- future tools economic plans and sector plans Legal document requiring active use of 2.3.5  Capacity building for climate change scenarios relevant stakeholders, in particular in Reports on capacity provinces, for improved building needs and new vulnerability-related capacities in the NCCC’s project design using SO, related focal points climate change scenarios in line ministries and provinces and standing offices of related programs 2.4 Consolidation 2.4.1  Establish an inter- A review of current and A consolidated Medium initial of mitigation ministerial technical potential mitigation GHG emission risk: As above, targets and working group on targets, and proposal reduction target progress is highly enhancement of mitigation to review and for consolidated national is highly linked dependent on implementation consolidate national and sector mitigation to the financial scientific and of mitigation and sector science- targets mechanism and technical inputs. policy based mitigation targets climate budget Mitigation efforts (after 2030) with unified Clarity on post-2020 as described in are also highly Objective: national GHG baseline mitigation targets in component 1 dependent on Consolidate and reference levels, relation to domestic progress in global national, sector based on the latest and international Communication of agreements to and provincial available GHG emissions funding sources for mitigation targets reduce GHG mitigation targets inventory communication to to UNFCCC should emissions. and strengthen the UNFCCC be combined with International implementation of a clearly defined support for mitigation actions Comprehensive GHG reference level sustained effort emissions MRV system and mechanism to in this area seems monitor emissions likely—providing High-quality communications to a credible, UNFCCC accountable program can be Enhanced energy sector mounted reform and enhanced marked based regulation of the energy sector will lead to GHG mitigation 105 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 2.4.2 Communicate Long-term integration of consolidated national mitigation policies and targets to UNFCCC in plans into the SEDP and the context of a post- a better environment 2020 global agreement for formulation and (differentiated for implementation of domestic efforts and NAMAs targets to be achieved with international financial and technical support) Set up a MRV system for 2.4.3  inventory, monitoring, and reporting of GHG emissions, based on consolidated mitigation targets, and with clear definition of roles of line ministries and provinces, in support of reporting to the NCCC and to the UNFCCC (national communications and biannual updates reports) 2.4.4 Review current mitigation frameworks (including REDD+) and develop a roadmap for implementation, including through mainstreaming in the SEDP (2016–2020) 2.4.5  Enhance sector reforms to reduce indirect subsidies on fossil fuels and introduce a carbon price to support energy efficiency, renewable energy and emissions mitigation as well as strengthening of public fiscal space 106 Component/Activity/ Objective Tasks/Sub-Activities Outputs and Outcomes Linkages Risks/Comments 2.5 Strengthening 2.5.1 Review arrangements Report on climate Links to CCF-FR Medium risk: climate finance for mobilizing, managing finance architecture in (1.7) and M&E Changes in the architecture as and delivering relation to policies and provide essential fiscal environment overseen by the financial resources CC-response targets to information to clearly have to be NCCC (both international the NCCC identify climate taken into account. and national) for finance architecture Inadequate FM Objective: a coordinated Targeted fiscal gap gaps unable to fill Enhance implementation of the filling through available climate finance climate finance country’s climate change financial instruments architecture gaps architecture for and green growth CC-response as Policy decisions by priorities, in line with is overseen by the NCCC to support ODA regulation and the NCCC and CC-response and ministries’ mandates, and identify key policy maximize financial report that to the NCCC and fiscal risks and opportunities gaps Based on synchronized 2.5.2  priority setting criteria, harmonized M&E, and CC-objectives, develop a financial architecture that delivers a CC-response and target appropriation to relevant domestic and international financing mechanisms in combination with policy enhancement, for NCCC approval 2.5.3  Establish and build capacity for national implementing entity (or entities) to be accredited and able to access international climate finance 107 Table 5.2. Climate Budget and Financing Action Plan: Results Monitoring Framework Key AP Milestones88 Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility 89 Outputs 1 Climate Planning, Budgeting, and Financing 1.1.1 Conduct CC-response Strategy Initiate Complete mainstreaming directions in discussions with SEDP by June CC/GG relevant 2015 line ministries and provinces 1.1.2 Enhance CC-response Initiate Complete strategy for line ministries and provinces 1.1.3 Establish a region- Regional Review PM MPI, relevant based program to strategy paper by decision line ministries coordinate efficient review and August [tbd] and provinces and effective sector decision 2014 and provincial CC-responses 1.2 Adoption of the MPI, MONRE PG: CC TCCRE Guide and MOF appraisal 1.2.1 Develop the TCCRE Finalized Document TCCRE Same as process Guide, including Guide in use available estab- 2015 improvement improved project in SEDP by July lished tool documentation, to 2014 for SEDP apply in the annual process investment and recurrent budget process 1.2.2 Mount a training Workshops (#) [tbc] [tbc] [tbc] MPI in PG3.3 program for staff at Trainees (#) coordination CC- response all levels focusing with MONRE capacity on classifying building and assessing CC/GG-relevant expenditures in relation to their sector policy and spending priorities 1.3 Preparation of MPI and MOF PG4: Support CC-response of budget estimates (the draft law to Climate Budget) CC-response 1.3.1 Compilation of Statement of November Established Established total CC-response the Climate 2014 practice practice spending for annual Budget in the budget law and 2015 ASBR inclusion in ASBR  his matrix is a template to be developed further by the GoV: in many cases it identifies the need for further review which would develop a roadmap and define 88. T milestones to be reached to give assurance of systemic improvement. These are preliminary and broad suggestions; detailed responsibilities would be determined by the GoV. 89.  108 Key AP Milestones Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility Outputs 1.4 Reporting on CC/ PG3: (new GG-relevant projects element) CC by line ministry and expenditure provincial finance reporting departments 1.4.1 MOF to instruct Issuance of Pilot Phased Compre- MOF and MPI finance departments reports on reports develop- hensive in line ministries and CC-relevant issued in ment reporting provinces to report projects July 2014 of CC- on CC- on actual spending relevant relevant in all CC/GG-relevant projects projects projects and expenditures 1.4.2 MPI, line ministries, Survey of line Phased MPI and provinces to ministries and plan to be use MOF data to provincial use prepared record estimated (%) CC-response spending in each element of the CC budget 1.5 Harmonize and MPI and PG3.3: strengthen MONRE CC- response CC-response M&E capacity 1.5.1 A review of current Needs analysis Undertake building M&E practices and and roadmap review and analysis of critical prepare needs based on roadmap international best practice 1.5.2 Pilot M&E Pilot M&E Imple- strengthening for strengthen- ment M&E key areas of the ing in key line strength- CC-response ministries and ening provinces 1.6 Enhancing use of country systems 1.6.1 Pilot selected Number of Initiate Extend MOF, MPI and PG3: (new CC-response ODA ODA projects pilots program DPs element) CC projects at central on TABMIS expenditure and provincial level reporting to manage budgeting and reporting through TABMIS 1.6.2 Develop better Reduced Review reporting and lag time for current reconciliation reconciling process between GoV data ODA data and on CC-response ODA develop and DP data roadmap 109 Key AP Milestones Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility Outputs 1.7 Preparation of MPI, MOF and PG3: (new Climate Report (CR) MONRE in element) CC 1.7.1 Preparation of a Pilot CR Prepare Implement coordination expenditure pilot CR by mid-2016 Roadmap roadmap roadmap with line reporting and roadmap to put and ministries and Climate Budget and initiate provinces CR fully in place by pilot CR January 2018 1.8 CC-response PG 5.2: financing report Strengthen- (CCR-FR) ing inter- 1.8.1 Review of Climate Pilot CCR-FR Design Implement national Budget, CR, and ODA pilot roadmap financing and identification of CCR-FR future CC-response in line financing needs with data available; prepare roadmap for future use 2 Policy Coordination and Institutional Strengthening 2.1 Strengthen policy PG 1 and 2 coordination and priority setting between adaptation and mitigation policies with enhanced links to the budget and planning cycle 2.1.1 Establish technical Teams Establish Deploy MONRE PG 1 and 2 teams in MONRE, established (#) teams and teams and MPI in SO, MPI and line Survey impact annual [tbd] coordination ministries to review of teams plans with line existing program/ for their ministries and project priority setting deploy- provinces criteria/frameworks ment and consolidate a synchronized set of criteria for overall priority setting and financial allocation 2.1.2 An analysis and FM review; Undertake Implement MPI and PG 1 review of options roadmap review and roadmap MONRE to strengthen and for FM prepare prioritize the linkages development roadmap between financial mechanisms (FMs), budgeting and policy delivery 110 Key AP Milestones Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility Outputs 2.1.3 Capacity building on Number of Capacity Capacity MONRE, PG 3.3 technical issues for stakeholders building building MPI and line the SO of the NCCC participating sessions sessions ministries and focal points in in the sessions for the for the line ministries and SO, line SO, line provinces on the ministries ministries linkages between and and climate response provinces provinces activities and the budget and planning cycle 2.2 M&E and reporting MONRE, PG1 and ST1 strengthened MARD and and harmonized MOT across mitigation and adaptation responses 2.2.1 Expert working Review paper Working Identifi- Pilot groups in MONRE, and pilot groups in cation of period for MOT and MARD scheme MONRE, M&E and selected to review current MOT and reporting projects M&E and reporting MARD templates on har- templates and identified and pro- monized requirements and estab- posal for M&E and and to provide lished harmoni- reporting recommendations for zation templates further harmonization 2.2.2 Review the current Review paper Review of Proposal SO of NCCC M&E and reporting and proposal current for and selected information flow for enhanced practice enhanced line ministries from provinces and efficiency in the SO informa- and provinces line ministries to the of the tion flow SO and NCCC, and NCCC and proposed options for selected enhanced efficiency in line the information flow to ministries the NCCC and provinces 2.3 Coordinate and harmonize implementation of adaptation and DRM responses 111 Key AP Milestones Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility Outputs 2.3.1 Conduct technical Report of Review is Review MARD and PG 1 assessment on options initiated completed MONRE options to strengthen for further and and institutionalize the enhancement capacity National Platform on and strength- building disaster risk reduction ening of the activities and climate change National initiated adaptation combined Platform with capacity building activities 2.3.2 Establish technical Combined Review Presen- MARD and PG 1 team to undertake DRM and CCA initiated tation of MONRE vulnerability vulnerability the review assessment in high assessment for key priority geographical stakehold- areas with a combined ers at the DRM and CCA focus National Platform 2.3.3 Legal document TBD TBD MONRE and PG 3.2 requiring the active MARD use of climate change scenarios in provincial and local planning 2.4 Consolidation of mitigation targets and enhanced implementation of mitigation policies 2.4.1 Formulate inter- Report with Inter- First draft MONRE, MPI, PG 2 ministerial technical consolidated ministerial report MOF and key working group national and technical circulated line ministries to review and sector specific working to key consolidate national targets group stake- and sector specific estab- holders science-based GHG lished targets for the post- 2020 period 2.4.2 Actions to enhance TBD TBD TBD MPI, MOF, PG 2 energy sector reform MOIT and and enhanced marked energy SOEs based regulations of the energy sector 112 Key AP Milestones Target Component/Activity/ Performance 2017 and Objectives/ Sub/Activity Indicator 2014 2015 2016 Beyond Responsibility Outputs 2.4.3 Recommendations for Sector specific Recom- Pilot MOIT, MONRE ST 1.1 an effective sector- MRV scheme medations phase and MARD based GHG MRV formu- for the system which will feed lated for sector- into the national GHG the most based inventory energy MRV sys- intensive tem and sectors later distri- bution of GHG data to the national inventory 2.5 Strengthening climate finance architecture as overseen by the NCCC 2.5.1 Review of climate Report of Review Draft MPI, MONRE PG 1+2 finance architecture in finance initiated report and MOF the context of national architecture circulated polices and climate to key response targets stake- holders 2.5.2 Capacity building TBD TBD TBD MOF, MPI and PG2 initiatives for national MONRE implementation entity (or entities) to be accredited and access to international climate finance 113 ANNEXES 115 ANNEX I: Case Study— Mainstreaming Climate Change Response: Institutions and Targets in the Forestry Sector Globally, anthropogenic emissions from land use account for benefits from sustainable use. The climate change mitigation approximately 10% of total GHG emissions. Reducing emis- benefits of forests are included in the VGGS (Solution 5 on sions from land use, including the forestry sector, is consid- GHG reduction), as well as MARD’s target to reduce GHG ered as one of the most cost effective approaches to climate emissions in the agriculture and rural development sector by change mitigation. 20% by 2020 relative to Vietnam’s 2000 baseline, equiva- lent to a CO2 reduction of 18.87 million tons.91 Reversing Despite registering a decline in the contribution of forests deforestation and forest degradation can make a significant to national GDP, mainly due to an undervaluation of forest contribution to achieving this target. services, Vietnam’s forests, covering an area of 13,862,043 ha,90 of which special-use forest cover 2,021,995 ha (14.58%), Coordinated action is needed to link these objectives to over- protected forest 4,675,604 ha (33.72%) and production for- all national, provincial and sector targets, with milestones set est 6,964,415  ha (51.70%), continue to play an important and progress tracked over time. Additionally, the linkages role in Vietnam’s economic development. In Vietnam, the between the NFDS, the NPFPD and overall forestry sector 2006–2020 National Forest Development Strategy (NFDS) development have not yet been clearly elaborated in a way emphasizes the continuing importance of protecting for- that encourages coordinated CC-response action by all of the ested areas, increasing forest coverage, and supporting forest- agencies involved. related job creation. The national strategy’s objectives are con- sistent with CC-response objectives to increase the resilience There is scope to improve linkages between the NFDS, of forest dependent communities in forest areas and mitigate NPFPD and CC-related policies, bringing together com- GHG emissions through increased CO2 sequestration. In mon aspects to deliver co-benefits in forest development and Resolution 24 (NQ/TW, 2013), Vietnam identified forests as CC-response. For example: an important component of its national CC-response both in • To increase forest productivity and sustainability, the terms of climate change adaptation (e.g. promotion of resil- NPFPD sets a target for national forest cover to reach ient and sustainable land use) and mitigation (through car- 44%–45% by 2020. Resolution 24, NCCS, VGGS and bon sequestration and reducing forest loss and degradation). REDD+ also set a target of 45% for the purpose of cli- The National Plan on Forest Protection and Development mate change adaptation and mitigation. Other com- (NPFPD) identifies key intervention areas, including plan- mon policy elements apply in the areas of sustainable tation of anti-sea erosion mangroves, watershed forest plan- forest resource management, job creation and poverty tation, increasing productivity of production forests and reduction. enriching natural forests. The National Climate Change • Delivery of the NPFPD could be advanced through the Strategy (NCCS) integrates the forestry sector through its REDD+ approach to payment for ecosystem services contribution to disaster preparedness as well as its mitigation  ARD’s Decision 3119 /QD-BNN-KHCN dated December 16, 2011 91. M  ased on MARD’s Decision No.1739/QĐ-BNN-TCLN dated July 31, 2013 90. B approving the GHG Emission Reduction in Agriculture and Rural Develop- announcing the national forest status in 2012. ment Project. 116 (PES) to local people for measurable forest protection and maintaining water for production and domestic supply, improvements. carbon sequestration, and protecting natural landscapes and • Harmonisation of CC and NPFPD policy through pri- biodiversity. oritisation and streamlining could be led by MARD at Based on a case study of the Loc Bac and Di Linh SFCs in national level, and extended through associated delivery Lam Dong Province, two functions of SFCs emerge: pro- institutions at provincial level. viding public services and stimulating business activity. For To further advance implementation of CC-response policies example, the SFCs contract local households to protect water- in the forest sector, it is necessary to strengthen coordination shed and forest areas at high risk of illegal cutting, mineral of sector and provincial policies, and to develop firm targets exploitation and encroachment. Payment for forest ecosystem at each level to improve monitoring. This may well require a services is made to local households at the provincially regu- strategic overview of the sector to harmonize the forest plan- lated rate of 300,000 VND/ha/year from the Provincial Fund ning process (primarily in MARD and DARD) as well as on Forest Protection and Development. Additional incentives enhance capacity in forestry-related provincial bodies in rela- for the sustainable use of forests by SFCs are needed, includ- tion to CC mitigation and adaptation. ing sharing of co-benefits under REDD+. For example, mangrove and watershed plantations were iden- The SFCs that are primarily engaged in commercial for- tified in the NCCC direction in February 2014 as investment est production also manage a certain area of protection and priorities under the SP-RCC financing mechanism. The special-use forest (around 18 percent of the land area) and are NCCC requested MARD to focus its resources for mangrove subsidized by the state budget to carry out forest protection plantation, and quickly finalize the mangrove afforestation and reforestation. While most of the special-use and protec- and development project to respond to CC for approval by tion forests are managed by the Forest Management Boards, the Prime Minister. which are fully subsidized by the GoV, some SFCs manage a limited area of special-use forests and a few dozen SFCs man- It is important to note that state-owned forest companies age protection forests. Key policy elements with respect to (SFCs) conduct most forest development and protection work these SFCs needing to be developed more clearly are: at local level. These SFCs were formerly state forestry enter- prises, most of which, since 2012, have been incorporated as • Drawing a distinction between commercially sustainable fully state-owned limited liability companies, with others set forest areas and areas that require CC-response related up as Forest Management Boards (FMB), and a few as share- activities, which represent public interests and should be holding companies. With respect to SFCs, the GoV is review- eligible for finance by the state budget. ing ways to implement its policy of equitizing these entities to • Identifying the nature of the CC-response expenditure encourage greater involvement of local communities and the in the state or provincial budgets as indirect subsidies business sector in their management and operation. The pub- and administrative support to SFCs rather than direct lic sector manages directly about 50% of total forest areas, investment. including all special-use forest, 65% of protection forest and 30% of production forest. • Clarifying objectives of SFC investments relating to CC-response and developing indicators to monitor and A number of issues need to be addressed to ensure the assess performance against targets set by the SFCs. effectiveness of SFCs in their role to promote participation in forest economic development and create incentives for In principle, revenue generation by SFCs, of which a significant effective CC-responses. For example, streamlining the legal portion is derived from payment for environmental services framework, including land use rights and planning, simpli- (PES), should provide an incentive to improve environmental fying equitization to attract investors, and adopting clearer management of forests. In practice, however, these payments business-oriented policies. Additional incentives are also are often not related to tangible services and performance indi- needed, such as the creation of long-term loan mechanisms cators; in many cases they have become a subsidy from viable for banks and/or credit organizations, payment schemes for enterprises (particularly hydropower stations) to the SFCs. The environmental services emanating from forests, including net effect may thus be a disincentive to clean energy produc- protecting land from erosion and sedimentation, regulating tion and a possibly negative effect on forest management. 117 The UN-REDD Program Phase II has been implemented The CPEIR proposal to review and mainstream CC- by MARD since July 2013, with the funding from Govern- response policies for all sectors as part of the 2016–20 SEDP ment of Norway. The main objective of the program is to and the 2015 annual plan and budget preparation will be enhance Vietnam’s ability to benefit from future results-based an important step towards clarifying CC-response policies payments92 from REDD+ and undertake transformational relating to the forest sector. Accordingly, it would be benefi- changes in the forestry sector. The Program focuses on com- cial for MARD to conduct a detailed review of forest man- pleting the establishment of required capacities and providing agement practices in relation to mainstreaming of CC-re- technical assistance to build up Vietnam’s emerging REDD+ sponse policies than has been possible in this CPEIR review. implementation framework, including capacities for REDD+ With the REDD+ program readiness activities underway in among national and sub-national institutions and key stake- Vietnam, including a clear emphasis on linking payments to holder groups. At this phase, the program will focus on six performance in achieving net reductions in CO2 emissions provinces to create REDD+ pilots at commune and provincial through better forestry management, the NPFPD could levels, and will closely work with key forest owners including extend the REDD+ approach to a wider array of ecological community groups, SFCs and FMBs. services. Further review could also suggest ways to develop closer linkages between REDD+ initiatives, CC-related The term “results-based payments” refers only to the basis for international 92.  transfer of funds to Vietnam. objectives, and general management of the forestry sector. 118 ANNEX II: International Experience in Climate Change Response Planning, Allocation, Tracking, and Evaluation of Expenditures II.1 Korea’s approach to on increasing strategic investments in the research and devel- opment of green technology. Meanwhile, a new position, climate change response Senior Secretary for Green Growth, was established in the Presidential Office. It played a key role in transforming pres- management93 idential endorsement into actual implementation of green growth initiatives. Furthermore, Korea established the Presi- In 2008, the Republic of Korea proclaimed “Low-Carbon, dential Committee on Green Growth (PCGG) as the highest Green Growth” as a new national vision, targeting GHG inter-ministerial institution. This Committee was co-chaired emissions to be reduced by 30 percent by 2020 from the by the Prime Minister and a representative of the private sec- BAU baseline. To achieve this vision, Korean leadership took tor. Through the Committee, the planning and implementa- a strategic approach in which the Government played an tion of green growth initiatives were monitored and encour- active role. The Government set up a governance structure aged to achieve planned outcomes. to implement green growth initiatives systematically, estab- lished a legal framework on low-carbon and green growth, To ensure a more holistic and consistent implementation, an and enabled fiscal policies and budget resources to support integrated legal approach was necessary covering the entire the initiatives firmly. social structure, including the economy, industry, technol- ogy, land use, environment, and national consciousness. As There are three key elements of the institutional arrangements a comprehensive law, the Framework Act on Low-Carbon, made by the Government: (i) a strategy and an action plan; Green Growth was enacted in 2010. Additional enactments (ii) high-level visibility for green growth policy; and (iii) the followed to support the response to climate change in major establishment of an inter-ministerial institution. The National fields such as sustainable transportation logistics, smart grids, Strategy (2009–2050) for Green Growth was adopted along and green buildings. with the Five-Year Plan (2009–2013) for Green Growth. Through this plan, climate change mitigation and adaptation With regard to fiscal adjustments that enabled Korea to objectives and programs were mainstreamed into all related implement green growth, there are three noteworthy points ministries. To deal effectively with climate change and attain to be considered: (i) green growth needs to be monetized in energy independence, the Government took actions such as the form of a budget policy; (ii) the central finance and plan- setting medium- to long-term mitigation goals, increasing ning agency has to play a leading role; (iii) a green growth the use of new and renewable energy sources, and strength- budget increase should not necessarily require a decrease in ening water resource management to increase climate change health and education budgets. adaptation capacities. In addition to creating new engines of growth on multiple fronts, the Government placed emphasis In order to monetize green growth, the first task was to identify green growth related expenditure. In formulating 93. Contribution from Sang Dae Choi, Senior Economist, World Bank. 119 the Five-Year Plan, about 680 budget activities in 26 agen- icy priorities such as green growth. Commonly, fiscal space cies were identified as green growth related. In doing this, a increases in the outer years of the medium-term expenditure goal-oriented, top-down consultation approach was taken. plan as base revenues increase and expenditure commitments The goal in Korea was to achieve a new national develop- phase out. ment paradigm creating new growth engines through clean energy, i.e., sustainable growth that reduces GHG and envi- In the meantime, at the outset, there was concern that a ronmental pollution. To achieve this goal, the PCGG set up green growth budget increase could come at the expense three objectives, 10 policy directions, and 50 core projects. of other crucial budget items such as health and educa- And then, through consultation among the PCGG, the tion. However, data since 2007 shows this was not the case. Ministry of Strategy and Finance as the central finance and The budget amounts and the share of the overall bud- planning agency, and other related ministries, budget activ- get allocated to such public goods were continuously ities to back up the 50 core projects were identified. The increased—health and welfare budgets increased from next issue was how much the Government should invest in 25.8 percent in 2007 to 28.5 percent in 2013, while educa- those budget activities. The Government established the tion increased from 13 percent to 14.6 percent over the same “two percent budget rule,” a policy whereby two percent of period. The necessary funds were mobilized through an GDP would be allocated for the implementation of green expenditure review process by cutting expenditure on pro- growth strategies. This amount was approximately seven to grams with low execution rates and poor performance. Using eight percent of total expenditure per year and exceeded the a performance-based budgeting system, Korea has two prac- UN Environment Programme recommendation of a mini- tical tools it can use: program assessment rating tools (PART) mum investment of one percent of GDP. Through this rule, and in-depth study. In the PART, the budgets of low per- the request for fiscal support in the Five-Year Plan for Green forming projects were cut by 10 percent or more compared to Growth was fully reflected in the Five-Year National Fis- prior budget allocations. In-depth study allowed the budget cal Management Plan (2009–2013), Korea’s medium-term authority and line ministries to cut their budgets if redun- expenditure plan, as well as in subsequent annual budgets. dant projects were identified. Additional resources were made available following efforts to reduce public administration Moreover, the central finance and planning agency was expenses by 10 percent. Evidently, budget allocation among encouraged to take a proactive stance in leading fiscal sup- green growth and other critical sectors does not need to be a port for green growth programs. First, green growth was a zero-sum game. priority on the presidential agenda and the PCGG commu- nicated continuously with the agency. Second, the Five-Year In terms of integration of green growth policies into a bud- Plan for Green Growth included an investment plan for 2009 getary framework, Korea’s approach has many good practices to 2013, which set forth the total amount projected and main applicable to other countries. However, in aspects of consol- programs targeted, all of which was agreed with the agency. idated management and reporting systems for green growth Third, Korea’s budget process and practice have been well budget activities, challenging issues to be addressed exist. aligned so to integrate policy into budget allocation in both Green growth related budget activities also go through a per- annual and medium-term plans. In particular, the medi- formance monitoring process with the other budget activities um-term expenditure plan was a key tool to integrate green under the PART and in-depth study scheme. When com- growth initiatives into the national budget. In its formula- pared with other cross-cutting sectors, such as R&D and gen- tion process, the President chairs the Fiscal Strategy Cabinet der sensitive budgets, however, green growth budgets need to Meeting (FSCM)94 annually that covers all fiscal and policy be improved in public financial monitoring and reporting. issues while setting final expenditure ceilings. In the meet- For example, R&D budgets are managed through the Fis- ings since 2009, green growth has been a core issue. A medi- cal Management Information System (FMIS) by allocating um-term perspective was particularly important where the an economic code. Gender sensitive budgets are managed by Government tried to shift resources towards emerging pol- assigning a special code in the FMIS, providing gender bud- get reports, and submitting them to the National Assembly by the National Fiscal Management Law. Green growth bud- 94. T  his Meeting was launched in 2004 and is composed of Cabinet members gets have not been managed in the FMIS, and there has been and Senior Advisors for the President, as well as private sector experts. In this Meeting, fiscal issues and related policy agenda are discussed, ultimately no separate reporting system yet on green growth budgets to endorsing medium-term expenditure ceilings by sectors and ministries. the National Assembly. 120 II.2 Tracking and evaluation ministries; and ii) inform the Parliament during the debate preparing the vote of the Finance Law. of expenditures for climate Outline of the DPT change policy in France95 The Climate DPT brings together a synthesis of State expenditures on actions to cope with climate change in all I. A Cross-Cutting Policy Document to Support the Climate Change Agenda in France dimensions from mitigation to adaptation over three years. It is prepared by the Directorate of Energy and Climate. The Since 2001 mitigation of and adaptation to climate change document gathers a coherent presentation of budgetary (i.e. have been established as national priorities in French law. Since subsidies and investments) and fiscal (i.e. tax credits) expen- then, France has set itself the ambitious goal of reducing its ditures over three years—i) expenses realized during the pre- GHG emissions by 75  percent between 2005 and 2050. This vious year; ii) budget adopted in the initial finance law for the goal has been translated into legislation through the Framework present year; and iii) budget proposed by the Government for Law for Energy Policy, 2005. The adoption of the EU Climate the year to come. However, it does not offer a comprehensive and Energy Package was also a priority for France during its evaluation of all measures and therefore it is not an impact European Union presidency in 2008 and is part of the afore- assessment document. It also centralizes the relevant per- mentioned goal. The EU Climate and Energy Package had been formance indicators from diverse programs, in line with the designed to help achieve a 20 percent cut in GHG emissions Constitutional Bylaw on Budget Acts of 2001 (Loi Organique from 1990 to 2020, a 20 percent share of renewable energies relative aux lois de finances), which has established a process in final energy consumption in the EU by 2020 and a 20 per- of public finance management based on policy performance cent improvement in energy efficiency. The Government has also measured by quantitative indicators. organized a national debate on the energy transition during the first semester of 2013. This will feed into the energy transition The establishment of the budgetary “climate-share” law, which will schedule the reorganization of France’s energy supporting the DPT mix and favor further energy savings. For budgetary expenditures, the amounts that are presented in The Directorate of Energy and Climate of the Ministry of the DPT are restricted to the “climate share” of wider expen- Ecology, Sustainable Development and Energy is involved in ditures. This share is evaluated by the authority in charge of the development and coordination of the French domestic each program, in coordination with the Directorate of Energy mitigation and adaptation policy,96 as well as with the report- and Climate. This climate share allows for tracking of: ing on national policies at the European and international • Expenses at a finer resolution than the actions presented level. However, numerous other directorates, ministries and in the State Budget. For example, it establishes the share of local authorities are involved in the implementation of the credit for spatial research financing satellites used to mon- climate policy. itor climate change within the wider European Program The State Budget is structured in missions, programs and on Global Monitoring for Environment and Security. actions, but mitigation and adaptation policies cannot be • The relative importance of mitigation in comparison restricted to one of these. Since 2008, the fight against cli- with other goals for which a policy is conducted. For mate change is one of the 15 cross-cutting policies which are example, it has been decided to allocate a climate share covered by a cross-cutting policy document (Document de of 50 percent for the Agri-environmental Grassland Pre- Politique Transversale— DPT). It has been created as a tool mium, as it helps to maintain carbon stocks in the soil to i) support the mainstreaming of climate change into all and increase the resilience of fragile soil. This Premium also brings benefits in terms of biodiversity and soil pro- tection that are accounted for in another annex of the 95. A presentation jointly prepared by the Greenhouse Effect Department State Budget project. of the French Ministry of Ecology, Sustainable Development and Energy (MEDDE/DGEC/DLCES) and ADETEF, the agency for international Examples of fiscal and budgetary expenditures technical cooperation of the Ministries in charge of economic and financial affairs and sustainable development. Climate change related (and especially mitigation related) pol- 96.  Respectively by the Greenhouse Effect Department and the National Obser- icies involve annual expenditures of a few billions euros (once vatory on the Effects of Climate Change. 121 taking into account only their climate share). A large share (systematic calculation of the carbon footprint, selectiv- of these expenditures are long-term oriented, with the high- ity matrix etc). est budgetary expenditures devoted to R&D and low-carbon transport infrastructure, and the largest fiscal expenditures When the benefits in terms of mitigation are to be integrated sustaining the thermal renovation of buildings. For some in wider socio-economic assessments, they are valorized on expenditures, such as the tax abatement for sustainable devel- the basis of a national normative value of carbon established opment (which encourages households to undertake thermal in the “Quinet” report (with a cost rising over time from renovation work for their housing), assessment of the public 30€ per ton of CO2 equivalent in 2010 to 100€ by 2030 and abatement cost (€ of public spending per tCO2e of emissions continuing to increase later on). This methodology is mainly avoided) is reported on a yearly basis in the framework of the used to help prioritize infrastructure projects, especially in Finance Law project. the transport sector. In other cases, the public cost of an action can be expressed in € per abated CO2 ton and then compared to this normative value. II. Evaluation Ex-ante evaluation, when elaborating the public policies With regards to adaptation, the generalization of the vulner- ability assessments is a key consideration for infrastructure Ex-ante socio-economic evaluations are a powerful tool to investments and territorial development projects. optimize the usage of comparable policies and measures. In this view, the assessment of the (social and public) cost of Independent audit and evaluation abatement is one of the main benchmarks to assess the effi- On a biennial frequency, France sends a report to the Euro- ciency of mitigation policies. pean Commission on the policies and measures that have Tools have been developed to facilitate the ex-ante evaluation been launched, their aggregated impact, in terms of pro- of public policies: jection of GHG emissions (top-down approach), and where possible, on their individual impact (bottom-up estimate). • SceGES enables the evaluation of GHG savings against France also regularly reports on its climate change policies BAU scenarios within a framework closely comparable to and measures to the UNFCCC through the National Com- the national inventories. Regarding the main measures munications (and biennial reports from 2013 onward). All of the national mitigation policy, evaluations are made these reports are subject to a review mechanism. public on a regular basis, for example in the updates of the National Mitigation Action Plan, the reports that The Court of Auditors (Cour des Comptes) makes regular are sent to the European Commission and the National audits of the various trading and special purpose accounts, Communications prepared for the UNFCCC. such as the one through which the carbon assets of France and the fee bate scheme are managed (the latter has been set • NECATER® has been developed to ensure the neutrality up to encourage the reduction of GHG emissions from cars). of GHG emissions induced by the investments financed Both have been evaluated in May 2013. The court also uses by the European Structural Funds and the State Regional its very broad powers of review and examination to publish Planning Contracts. in-depth evaluation of public policies. For instance, among • To mainstream the ex-ante evaluation of the GHG the main policies and measures included in the National Mit- impact of projects, the French Environment and Energy igation Action Plan, the Court recently published reports on: Management Agency (ADEME) has developed a set of tools to assess impact in terms of GHG emissions (Bilan • The policies in favor of the development of renewable Carbone, Clim’Agri, Dia’Terre) and maintains a data- energy (July 2013), completing an assessment of specific base for harmonized data of emission factors (ADEME tools that have been used to this end: the Contribution Base Carbone). Other tools, such as the Barometre Car- to the Public Electricity Service by which the guaranteed bone, enable finer evaluations of territorial development feed-in tariff for renewable energy is financed (July 2012) projects for specific territories. and the measures that have encouraged the development of biofuels (January 2012). • Projects financed by the French Development Agency (AfD) are also subject to an evaluation of their impact • The “white certificate” scheme to encourage energy effi- on the trajectories of emissions in a harmonized way ciency (October 2013). 122 Since the last constitutional reform of 2008, the role of the NCCAP has co-opted ongoing sector policies and reforms Parliament in the evaluation of policies launched by the Gov- that support climate change, including those in the Renew- ernment has been reinforced (article 51-2 of the Constitution). able Energy Act. While being independent from the legislative and executive branches of the Government, the Court of Auditors assists The NCCAP defines seven strategic priorities: food secu- the Parliament and the Government in the evaluation of pub- rity, water sufficiency, ecological and environmental stabil- lic policies (article 47-2). As an example, an evaluation by the ity, human security, climate smart industries and services, Court of the implementation of the EU Climate and Energy sustainable energy, knowledge and capacity development. It Package in France is ongoing at the demand of the Control envisions public action to prioritize climate adaptation while and Evaluation Commission of the National Assembly. establishing an enabling environment for the private sector to optimize mitigation opportunities. The NCCAP includes a detailed set of outputs defined over three successive six- II.3 Tracking public year periods that support a set of intermediate and long-term outcomes. expenditures contributing Integrity of the environment and climate change adapta- to the climate change policy tion and mitigation is one of five key results areas in the of the Philippines President’s “Social Contract” with the Filipino people. The medium term Philippines Development Plan (PDP) 2011– 2016 identifies climate risks as one of the major challenges I. Cross-Cutting Policy Defining the Climate Change to the country’s inclusive growth goals. Following an internal Agenda in the Philippines mid-term review on the progress made towards PDP targets, The Philippines has demonstrated a strong commitment to, the Government has prepared a three-year roadmap which and continued leadership on, a comprehensive reform agenda concretely defines how PDP targets will be achieved during focused on climate change in synergy with disaster risk reduc- the remainder of the PDP through 2016. tion. To guide policies and programs for institutional coordi- nation and financing of climate action, the Government has II. Institutional and Financing Framework to Support enacted Republic Act no. 9729 or the Climate Change Act 2009, the Climate Change Agenda which requires all government agencies to mainstream climate The Government has continued to strengthen the institu- change in various phases of policy formulation, development tional arrangements for delivering climate results, begun plans, poverty reduction strategies and other development with the establishment of the Climate Change Commission tools and techniques. The Climate Change Act was recently (CCC) in 2009. Constituted under the leadership of the Pres- amended by Republic Act No. 10174, establishing the People ident, the CCC provides a centralized platform for leading Survival’s Fund (PSF) to support local adaptation measures. climate policy development throughout Government as man- As mandated by the Act, the Climate Change Commission dated by the Climate Change Act. The climate policies and formulated the National Framework Strategy on Climate programs, however, are implemented by the respective line Change in 2010, followed by the adoption of a medium to agencies at the national level. To strengthen coordination and long-term plan to implement the strategy—the National Cli- delivery of results, the Cabinet has been reorganized into clus- mate Change Action Plan 2011–2028 (NCCAP). Recognizing ters around five key results areas, one of which is on climate the already high vulnerability to disasters from existing cli- change. In addition, the CCC and the National Disaster Risk mate variability and the increased risks from climate change, Reduction Management Council signed a Memorandum of the Government formulated a complementary law, strategy Understanding to strengthen the institutional arrangements and action plan—the Philippines Disaster Risk Reduction and in implementing the policy convergence on disaster preven- Management Act, the National Disaster Risk Reduction and tion and climate change adaptation. Management Framework and the Action Plan (NDRRMA)— The Government has also begun to actively mobilize financ- that adopt a paradigmatic shift towards disaster preparedness ing. A 2013 Climate Public Expenditure and Institutional and prevention. With these changes, the disaster risk reduc- Review found that the Government response to climate issues tion and management policies have converged with climate has increased by two and one-half times in real terms over change policies on adaptation. On the mitigation side, the the past five years, reaching two percent of the total budget 123 by 2012. These expenditures have largely been focused on In particular, harmonizing differences in perspectives across adaptation and have been financed from domestic sources. agencies on what constitutes a climate response has been a In addition, since 2013 the Government has adopted the Pro- major challenge. In order to address this challenge, DBM and gram Budget Approach to channel its available fiscal space to CCC have jointly developed a common approach for identi- priority programs focused on delivering on each of the key fying climate programs, activities and projects. It consists of results areas. Appropriations to the climate change program a list of climate typologies, developed by the Commission, under this scheme have quadrupled from around USD 325 and guidelines on using the typologies to identify climate million in 2013 to over USD 1,200 million in 2014. response. All national departments were required to use the approach to tag their proposed 2015 budget for climate At the local level, Local Government Units (LGUs) are the change and to identify the portion of the budget for each of frontline agencies in the formulation, planning and imple- their programs, activities and projects that is directed towards mentation of climate change action plans in their respec- attaining climate change outputs and outcomes. tive areas. LGUs are mandated to formulate Local Climate Change Action Plans and Local Disaster Risk Reduction The results of the tagging effort have made it possible to Plans and to integrate climate change adaptation and disas- conduct a systematic review of the budget against climate ter risk reduction into their Comprehensive Land Use Plans, policies and plans and has informed the discussions on the in accordance with the Supplemental Guidelines issued by proposed agency budgets between the respective agency and the Housing and Land Use Regulatory Board. In order to the DBM. Lessons learned from the 2015 tagging effort are finance these plans, local governments are mandated to set expected to lead to refinements in the guidelines for the aside five percent of their general funds to address disaster tagging effort for 2016. This includes ways to increase the risk reduction with a specific focus on prevention. In addi- accuracy and reliability of the collected public expenditure tion, the national Government appropriated a first tranche of data. The initial results from this effort have also informed resources for the PSF, aimed at financing the climate adapta- the design and implementation of similar pilots to tag local tion programs of local governments and communities. government budgets that are to be undertaken during the last half of 2014. Following the devastating impacts of Typhoon Yolanda, the Government has begun to put in place a major initiative to Currently, systematic methods do not exist for tracking the Build Back Better. In parallel, the Government, under the disbursement of climate expenditures against the tagged bud- leadership of the Department of Finance, is strategically get amount. The Government is formulating, for implemen- engaged in mobilizing additional domestic and international tation in 2015, a Unified Accounts Code Structure (UACS) resources and is developing a new mechanism: the Climate that can track, monitor reliably and report accurately the Adaptation and Disaster Resiliency Fund to further scale up budgeted expenditures across Government. The CCC and the climate response and address existing financing gaps. DBM have taken initial steps to integrate the climate change This country-driven initiative aims to develop a new public/ expenditure tagging system within the new UACS by adding private fund for climate change and disaster resilience, con- some functionality to track expenditures against the climate sisting of a risk insurance and an investment window. tagged budgets. The specific scope of the tracking remains to be finalized. III. Implementing and Monitoring the Climate In order to ensure greater accountability of all public expen- Change Agenda ditures, the Government has introduced performance-based Despite a strong reform agenda and the substantial prog- and zero-based budgeting. Under these initiatives, govern- ress made in its implementation, the 2013 Climate Public ment departments have to define the outputs and outcomes Expenditure and Institutional Review identified important that are expected to be achieved from their respective pro- implementation gaps. In response the main oversight agen- posed budgets and identify indicators for measuring these cies (the Department of Budget and Management (DBM), outputs and outcomes. Budget approvals for the department’s CCC, NEDA, and DOF) have developed a three-year work programs are then based on the demonstrated success of those plan focused on strengthening the planning, execution and programs. Monitoring the performance of government pro- financing framework, enhancing accountability through grams focused on climate has been difficult due to the lack monitoring, evaluation and review and building capacity and of appropriate agreed climate indicators and by cumbersome managing change. reporting requirements. The CCC has taken initial steps to 124 develop a results-based M&E system for the overall climate Approach on climate change, as part of the 2015 budget plan- agenda that can also provide guidance on the result indica- ning and implementation process. This has entailed efforts tors and their monitoring for specific programs. The integra- to systematically review the formulation of the program in tion of these indicators into the performance-based budget- terms of its contribution to the climate agenda and to institu- ing would provide a powerful mechanism for increasing the tionalize convergence in planning and implementation across efficiency of public expenditures on climate. departments. In addition, selected case studies on the imple- mentation of some of the activities within the Program Bud- Beyond improved planning, financing and monitoring, get Approach for 2015 are expected to provide detailed track- ensuring the delivery of climate results requires an inventory ing of expenditures against budgets and the performance of of best practice examples that can be emulated and repli- expenditures against climate outputs and outcomes. cated. As part of establishing such practices, the Government has begun an implementation review of the Program Budget 125 ANNEX III: CPEIR Typology Annex III.1 National climate VGGS—17 Solutions Communication, awareness raising and encouragement of change and green growth support to implementation (GG1) policy objectives Improving energy productivity and energy use efficiency, reduce energy waste in production activities, transportation and trade (GG2) NCCS—10 Strategic Tasks Changing the fuel structure in manufacturing and Proactive disaster preparedness and climate monitoring— transportation (GG3) early warning, DRR (CC1) Promote effective exploitation and increase the proportion Food and water security (CC2) of new and renewable energy sources in the nation’s energy production and consumption (GG4) Protection and sustainable development of forests, increasing carbon removals and biodiversity conservation (CC3) Reduce GHG emissions through the development of sustainable organic agriculture, improved competitiveness of Suitable proactive response actions to sea-level rise in agricultural production (GG5) vulnerable areas (CC4) Review and adjust master plans for the production sectors and GHG emission reduction to protect the global climate system— gradually limit the development of “non-green” economic renewable energy systems, energy saving, agricultural and sectors, while creating favourable conditions for new green solid waste management (CC5) production sectors (GG6) Increase the role of Government in climate change response— Economic and efficient utilization of natural resources (GG7) integration and institutional capacity (CC6) Promote fast development of green economic sectors to Community capacity development to respond to climate create jobs, increase income and enrich natural capital (GG8) change—community capacity and livelihoods, public health and knowledge exchange (CC7) Development of sustainable infrastructure for transportation, energy, irrigation and urban works (GG9) Scientific and technological development for climate change response (CC8) Promote technological innovation and stimulate cleaner production (GG10) International cooperation and integration to enhance the country’s status in climate change issues (CC9) Sustainable urbanization—planning, infrastructure and green urban areas (GG11) Diversification of financial resources and higher effective investment (CC10) Develop new rural model with lifestyles in harmony with the environment (GG12) Promoting sustainable consumption and building green lifestyles (GG13) Mobilize resources to implement the Green Growth Strategy (GG14) Human resource training and development (GG15) Study to develop science and technology, issuing a system of economic and technical standards, and establish an information/data centre on green growth (GG16) International cooperation (GG17) 126 Annex III.2 The link between the climate change expenditure typology and the climate change, green growth and disaster strategy Three levels of the typology (pillars, category, task) are present in left-hand three columns, then the policy elements from NCCS (2011; “Strategic Objectives”), VGGS (2012; “Solutions”) and NSD (2007; “General responsibilities and solu- tions) are linked to the task level of the typology (empty white cell denotes no relevant policy element). 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD 1 CC Pillars: Policy & Governance PG1—A national PG1.1—Develop CC Increase the role of framework for adaptation guidelines Government in climate adaptation and and technical regulations change response— risk reduction. integration and institutional capacity (CC6) PG1.2—Develop/ Increase the role of Consolidate the system Adjust policy, planning Government in climate of laws, policies and and mechanism for change response— mechanisms (NSD1) CC response and integration and implementation across institutional capacity Consolidate government, enterprises (CC6) organizational structure and communities (NSD2) PG1.3—Manage and Increase the role of monitor implementation Government in climate of Adaptation policies change response— integration and institutional capacity (CC6) PG2—A PG2.1—Establish Greenhouse gas emission Review and adjust master comprehensive policy, tax and incentive reduction to protect plans for the production consistent structure for new and global climate system— sectors and gradually national clean energy, energy RE systems, energy limit the development of mitigation policy efficiency and low GHG saving, agricultural and “degrading” economic framework. emission solid waste management sectors while creating (CC5) favourable conditions for new green production sectors (GG6) PG2.2—Develop/ Increase the role of Review and adjust master Consolidate Adjust sector plan Government in climate plans for the production organizational structure and coordinate change response— sectors and gradually (NSD2) implementation among integration and limit the development of departments, enterprises, institutional capacity “degrading” economic and provinces (CC6) sectors while creating favourable conditions for Greenhouse gas emission new green production reduction to protect sectors (GG6) global climate system— RE systems, energy saving, agricultural and solid waste management (CC5) 127 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD PG2.3—Manage and Increase the role of Mobilize resources to monitor implementation Government in climate implement the Green of Mitigation policies change response— Growth Strategy (GG14) integration and institutional capacity (CC6) Greenhouse gas emission reduction to protect global climate system— RE systems, energy saving, agricultural and solid waste management (CC5) PG3—Action PG3.1—Action and Increase the role of Review and adjust master Consolidate the system Plans and Impact Sector Plans Government in climate plans for the production of laws, policies and Assessment change response— sectors and gradually mechanisms (NSD1) at national, integration and limit the development of provincial, and institutional capacity “degrading” economic sector level to (CC6) sectors while creating translate policy favourable conditions for and governance Greenhouse gas emission new green production into activity and reduction to protect sectors (GG6) delivery. global climate system— RE systems, energy Economic and efficient saving, agricultural and utilization of natural solid waste management resources (GG7) (CC5) PG3.2—CC Impact Increase the role of Review and adjust master assessments Government in climate plans for the production change response— sectors and gradually integration and limit the development of institutional capacity “degrading” economic (CC6) sectors while creating favourable conditions for new green production sectors (GG6) Economic and efficient utilization of natural resources (GG7) PG3.3—CC Capacity Increase the role of Review and adjust master Human resources building Government in climate plans for the production development and social change response— sectors and gradually mobilization (ND3) integration and limit the development of institutional capacity “degrading” economic (CC6) sectors while creating favourable conditions for new green production sectors (GG6) 128 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD PG4—Legal PG4.1—Mitigation Greenhouse gas emission Economic and efficient framework to instruments reduction to protect utilization of natural implement global climate system— resources (GG7) CC policy (all RE systems, energy elements of CC/ saving, agricultural and GG policies) solid waste management (CC5) PG4.2—Adaptation Increase the role of Consolidate the system instruments Government in climate of laws, policies and change response (CC6) mechanisms (ND1) PG4.3—Mitigation and Increase the role of Adaptation Instruments Government in climate change response (CC6) PG5— PG5.1—Strengthen International cooperation International cooperation International cooperation and and integration to (GG17) cooperation, partnership with enhance the country’s integration and international community status in climate change diversification on CC issues issues (CC9) and PG5.2—Effective International cooperation Mobilize resources to Financial resources (ND4) strengthening of management and and integration to implement the Green CC investment coordination of foreign enhance the country’s Growth Strategy (GG14) effectiveness. and domestic investment status in climate change issues (CC9) 1 CC Pillars: Scientific, Technological and Societal Capacity (ST) ST1—Develop ST1.1—Information and Scientific and Promote technological Develop science and science and database development technological innovation and stimulate technologies related technology as development for climate cleaner production to natural disaster a foundation change response (CC8) (GG10) prevention, response and for formulating mitigation (ND7) policies, Study to develop science assessing and technology, issuing a impacts, and system of economic and identifying technical standards and measures on establish information/ climate change data centre on green adaptation and growth (GG16) mitigation. ST1.2— Proactive disaster Develop science and Hydrometeorology and preparedness and climate technologies related early warning system and monitoring—early to natural disaster climate change projection warning, DRR (CC1) prevention, response and mitigation (ND7) Scientific and technological Promote international development for climate cooperation and change response (CC8) integration (ND9) ST1.3—Biological Scientific and & genetic resource technological strengthening development for climate change response (CC8) Food and water security (CC2) 129 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD ST1.4—Survey and Suitable proactive assessment on CC response actions to sea- impacts level rise in vulnerable areas (CC3) Scientific and technological development for climate change response (CC8) ST1.5—Technology for Greenhouse gas emission Promote technological energy efficiency and low reduction to protect innovation and stimulate GHG emission global climate system cleaner production (CC5) (GG10) Scientific and technological development for climate change response (CC8) ST2—Improve ST2.1—Climate change Community capacity Communication, Human resources awareness of awareness building in development to respond awareness raising development and social climate change. curriculums of primary to climate change— and encouragement mobilization (ND3) to higher education community capacity and of support to establishments livelihoods, public health implementation (GG1) and knowledge exchange (CC7) ST2.2—Awareness of Community capacity Communication, Human resources climate change in diverse development to respond awareness raising development and social education and training to climate change— and encouragement mobilization (ND3) initiatives for post-school community capacity and of support to aged learners livelihoods, public health implementation (GG1) and knowledge exchange (CC7) ST3—Develop ST3.1—Support Community capacity Communication, Community awareness community livelihood building for development to respond awareness raising raising (ND5) capacity for communities in the to climate change— and encouragement responding to context of CC community capacity and of support to climate change. livelihoods, public health implementation (GG1) and knowledge exchange (CC7) Develop the new rural model with lifestyles Suitable proactive in harmony with response actions to sea- environment (GG12) level rise in vulnerable areas (CC3) Human resource training and development (GG15 130 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD ST3.2—Capacity across Community capacity Communication, Community awareness whole community in development to respond awareness raising raising (ND5) climate change response to climate change— and encouragement community capacity and of support to livelihoods, public health implementation (GG1) and knowledge exchange (CC7) Develop the new rural model with lifestyles in harmony with environment (GG12) Promoting sustainable consumption and building green lifestyles (GG13) Human resource training and development (GG15) 1 CC Pillars: Climate Change Delivery (CCD) CCD1—Natural CCD1.1—Coastal Suitable proactive Ensure safety for dyke, resources. protection and coastal response actions to sea- reservoir and dam dykes level rise in vulnerable systems (ND8) areas (CC3) CCD1.2—Saline intrusion Suitable proactive Ensure safety for dyke, response actions to sea- reservoir and dam level rise in vulnerable systems (ND8) areas (CC3) Food and water security (CC2) CCD1.3—Irrigation Food and water security Reduce greenhouse (CC2) gas emissions through the development of sustainable organic agriculture, improved competitiveness of agricultural production (GG5) Development of sustainable infrastructure for: transportation, energy, irrigation and urban works (GG9) CCD1.4—River dyke and Suitable proactive Ensure safety for dyke, embankments response actions to sea- reservoir and dam level rise in vulnerable systems (ND8) areas (CC3) CCD1.5—Water quality Food and water security Ensure safety for dyke, and supply (CC2) reservoir and dam systems (ND8) 131 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD CCD1.6—Rural Food and water security Reduce greenhouse development and food (CC2) gas emissions through security the development of Greenhouse gas emission sustainable organic reduction to protect agriculture, improved global climate system— competitiveness of RE systems, energy agricultural production saving, agricultural and (GG5) solid waste management (CC5) Development of sustainable infrastructure for: transportation, energy, irrigation and urban works (GG9) CCD1.7—Forest Protection and sustainable development development of forest, increasing carbon removals and biodiversity conservation (CC3) CCD1.8—Fisheries & Suitable proactive aquaculture response actions to sea- level rise in vulnerable areas (CC3) Protection and sustainable development of forest, increasing carbon removals and biodiversity conservation (CC4) CCD1.9—Biodiversity & Protection and Economic and efficient conservation sustainable development utilization of natural of forest, increasing resources (GG7) carbon removals and biodiversity conservation (CC4) CCD2—Resilient CCD2.1—Public health & Community capacity society. social service development to respond to climate change— community capacity and livelihoods, public health and knowledge exchange (CC7) CCD2.2—Residential and Food and water security Development of city area resilience (CC2) sustainable infrastructure for: transportation, Protection and sustainable energy, irrigation and development of forest, urban works (GG9) increasing carbon removals and biodiversity Sustainable conservation (CC4) Urbanization—planning, infrastructure and green Community capacity urban areas (GG11) development to respond to climate change (CC7) 132 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD CCD2.3—Transport Greenhouse gas emission Improving energy reduction to protect productivity energy use global climate system— efficiency, reduce energy RE systems, energy waste in production saving, agricultural and activities, transportation solid waste management and trade (GG2) (CC5) Changing the fuel structure in manufacturing and transportation (GG3) CCD2.4—Waste Greenhouse gas emission Promoting sustainable management and reduction to protect consumption and treatment global climate system— building green lifestyles RE systems, energy (GG13) saving, agricultural and solid waste management (CC5) CCD2.5—Disaster- Proactive disaster specific infrastructure preparedness and climate monitoring—early warning, DRR (CC1) CCD2.6—Strengthening Proactive disaster disaster risk reduction preparedness and climate monitoring—early warning, DRR (CC1) CCD3— CCD3.1—Energy Greenhouse gas emission Improving energy Enterprise and generation reduction to protect productivity energy use production. global climate system— efficiency, reduce energy RE systems, energy waste in production saving, agricultural and activities, transportation solid waste management and trade (GG2) (CC5) Promote effective exploitation and increase the proportion of new and renewable energy sources in the nation’s energy production and consumption (GG4). Development of sustainable infrastructure for: transportation, energy, irrigation and urban works (GG9) 133 2 Category Task Policy Elements NCCS Policy Elements VGGS Policy Elements NSD CCD3.2—Energy Greenhouse gas emission Improving energy efficiency reduction to protect productivity energy use global climate system— efficiency, reduce energy RE systems, energy waste in production saving, agricultural and activities, transportation solid waste management and trade (GG2) (CC5) Promote effective exploitation and increase the proportion of new and renewable energy sources in the nation’s energy production and consumption (GG4) Promoting sustainable consumption and building green lifestyles (GG13) CCD3.3—Infrastructure Food and water security Development of and construction (CC2) sustainable infrastructure for: transportation, Suitable proactive energy, irrigation and response actions to sea- urban works (GG9) level rise in vulnerable areas CCD3.4—Industry & Greenhouse gas emission Improving energy trade reduction to protect productivity energy use global climate system efficiency, reduce energy (CC5) waste in production activities, transportation and trade (GG2) Promote fast development of green economic sectors to create jobs, increase income and enrich natural capital (GG8) CCD3.5—Tourism Protection and sustainable development of forest, increasing carbon removals and biodiversity conservation (CC4) 134 ANNEX IV: Value Added of the CPEIR The CPEIR will enable policymakers within the Govern- and expected outcomes and an explanation of how these ment of Vietnam to assess the present status of their national are reflected in budget proposals. Specific screening response to climate change, and the policy and institutional and appraisal criteria can be used to ensure that climate readiness for scaling up access and delivery of climate and change is mainstreamed into investment projects. green growth finance. The CPEIR does this by utilizing a • Facilitates Vietnam’s “readiness” for accessing, administer- typology of CC-response expenditures to provide an early ing and coordinating flows of domestic and international indicative estimate of the public resources (including ODA) climate finance through the development of a typol- being channeled to address climate change, and by assessing ogy for classifying climate change expenditures, which the extent to which the national policy and institutional con- enables tracking of CC-response spending, and through text guides those expenditures. Moreover, the CPEIR builds a strategic action plan to implement the CPEIR recom- ownership across the Government for a targeted and priori- mendations, offering a sensible path towards developing tized CC-response by undergoing an iterative process involv- a climate change budgeting and planning system. ing sector agencies and provinces. Specifically, the CPEIR adds value by: Promoting coherence across sector policies and programs by fostering a link between the State Budget and climate Serving as an effective basis for a Government climate and green growth policy. The CPEIR: change and green growth resource allocation framework. The CPEIR: • Assesses the effectiveness of the institutional framework for climate change monitoring and reporting. The typology • Informs the Government’s climate change and green growth allows for the monitoring of the implementation of the decision making by generating statistics on the alloca- National Climate Change Strategy and Vietnam Green tion of resources, tracking climate change expenditures Growth Strategy. and providing a baseline to evaluate the climate change impact of public expenditures. • Measures needs through an analysis of the extent to which the Government’s institutional capability for CC-response • Provides a model to show how the budget process can be used meets Vietnam’s needs and is effective in translating policy to tag spending related to climate change, and to track actual goals into development outcomes. expenditures. This can be used to create more transpar- ency over the allocation of funds to programs, and spec- • Evaluates the quality of the decision-making process for adap- ification of the outputs to be delivered and the intended tation by analyzing the extent to which decision making outcomes (including all spending from state-owned takes climate change into account, which is critical for enterprises and external climate finance/extra-budgetary determining the public sector’s adaptive capability. The funds, if developed). CPEIR offers suggestions that help integrate climate change considerations into the decision-making routines • Provides a basis for the development of specific guidelines that are already in place. The methodology also provides on how climate change and green growth issues could be the basis for the development of monitoring systems to addressed in the project selection and appraisal process, evaluate the value of soft adaptation spending as this forms including requiring a description of policy objectives the basis of “adaptability” in the long term. 135