Document of The World Bank Report No: ICR00004890 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A DEVELOPMENT POLICY LOAN (IDA 58760) IN THE AMOUNT OF SDR 63.5 MILLION (US$90 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR CLIMATE CHANGE AND GREEN GROWTH DEVELOPMENT POLICY FINANCING June 25, 2019 Environment & Natural Resources Global Practice Vietnam Country Management Unit East Asia Pacific Region i CURRENCY EQUIVALENTS (Exchange Rate Effective June 25, 2019) Currency Unit = Vietnam Dong (VND) US$ 1.00 = VND 23,297 FISCAL YEAR January 1- December 31 ii LIST OF ACRONYMS AFD Agence Française de Development AQM Air Quality Management BAU Business As Usual CC Climate Change CC-GG Climate Change – Green Growth CMU Country Management Unit CPEIR Climate Public Expenditure and Investment Review CPS Country Partnership Strategy CPF Country Partnership Framework DFID Department for International Development DP Development Partner DPF Development Policy Financing DRM Disaster Risk Management DWRM Department of Water Resources Management FCPF Forest Carbon Partnership Facility EE Energy Efficiency ERPA Emission Reduction Payment Agreement FIT Feed-In Tariff GDP Gross Domestic Product GNI Gross National Income GEF Global Environmental Fund GG Green Growth GGAP Green Growth Action Plan GHG Greenhouse Gas GIZ German Society for International Cooperation GoV Government of Vietnam GP Global Practice (WB units) GRS Grievance Redress Service IDA International Development Agency ICZM Integrated Coastal Zone Management IPF Investment Project Financing IUCN International Union for Conservation of Nature IWRM Integrated Water Resources Management JICA Japan International Cooperation Agency iii MARD Ministry of Agriculture and Rural Development M&E Monitoring and Evaluation MOF Ministry of Finance MONRE Ministry of Natural Resources and Environment MOST Ministry of Science and Technology MOIT Ministry of Industry and Trade MOT Ministry of Transport MPI Ministry of Planning and Investment NAP National Action Plan NCCC National Climate Change Committee NCCS National Climate Change Strategy NDC Nationally Determined Contribution PCU Program Coordination Unit PDO Program Development Objective PDP Power Development Plan PEMSEA Partnerships in the Environmental Management for the Seas of East Asia PM Particulate Matter PPA Power Purchase Agreement PRAP Provincial REDD+ Action Plan PSIA Poverty and Social Impact Analysis PV Photovoltaic REDD Reduced Emissions from Deforestation and Degradation SEC Specific Energy Consumption SEDP Socio-Economic Development Plan SP-RCC Support Program to Respond to Climate Change VGGS Vietnam Green Growth Strategy Senior Global Practice Director: Karin Erika Kemper Sector Manager: Christophe Crepin Project Team Leader: Stephen Ling; Thu Thi Le Nguyen ICR Team Leader: Stephen Ling; Thu Thi Le Nguyen iv VIETNAM CLIMATE CHANGE AND GREEN GROWTH IN VIETNAM TABLE OF CONTENTS Page # DATA SHEET A. Basic Information vi B. Key Dates vi C. Ratings Summary vi D. Sector and Theme Codes vii E. Bank Staff vii F. Results Framework Analysis viii G. Ratings of Program Performance in ISRs xvi H. Restructuring xvi 1. PROGRAM CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN 1 2. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES 7 3. ASSESSMENT OF OUTCOMES 18 4. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME 30 5. ASSESSMENT OF BANK AND BORROWER PERFORMANCE 31 6. LESSONS LEARNED 34 7. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING 36 AGENCIES/PARTNERS Annex 1 Bank Lending and Implementation Support/Supervision Processes 37 Annex 2. Beneficiary Survey Results 39 Annex 3. Stakeholder Workshop Report and Results 39 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR 39 Annex 5. Comments of Co-financiers and Other Partners/Stakeholders 39 Annex 6. List of Supporting Documents 40 Annex 7. List of Related Bank Lending and Non-Lending projects in Vietnam 42 Annex 8. Status of Policy Actions, Pillars, Program Indicators, Implementation 43 Annex 9. Status of Indicative Triggers for DPF-2 and DPF- 3 63 v A. BASIC INFORMATION Climate Change and Country: Vietnam Program Name: Green Growth in Vietnam Program ID: P155824 L/C/TF Number(s): IDA-58760 ICR Date: 05/28/2019 ICR Type: Core ICR SOCIALIST REPUBLIC OF Financing Instrument: DPL Borrower: VIETNAM Original Total USD 90.00M Disbursed Amount: USD 87.60M Commitment: Revised Amount: USD 90.00M Implementing Agencies: Ministry of Environment and Natural Resources, Socialist Republic of Vietnam Co-financiers and Other External Partners: B. KEY DATES Process Date Process Original Date Revised / Actual Date(s) 06/30/2017 Concept Review: 11/11/2015 Effectiveness: 11/28/2016 Appraisal: 02/22/2016 Restructuring(s): Approval: 06/24/2016 Mid-term Review: 06/30/2017 Closing: 06/30/2017 C. RATINGS SUMMARY C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Implementing Quality of Supervision: Satisfactory Not Applicable Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: vi C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem No Quality at Entry (QEA): Program at any time None (Yes/No): Quality of Supervision Problem Program at any No (QSA): None time (Yes/No): DO rating before Satisfactory Closing/Inactive status: D. SECTOR AND THEME CODES Original Actual Sector Code (as % of total Bank financing) Agriculture, Fishing and Forestry Forestry 20 20 Irrigation and Drainage 10 10 Public Administration Other Public Administration 40 40 Energy and Extractives Other Energy and Extractives 20 20 Transportation Other Transportation 10 10 Theme Code (as % of total Bank financing) Environment and Natural Resource Management 140 140 Climate change 120 120 Adaptation 40 40 Mitigation 80 80 Environmental policies and institutions 20 20 E. BANK STAFF Positions At ICR At Approval Vice President: Victoria Kwakwa Victoria Kwakwa Country Director: Ousmane Dione Achim Fock vii Iain G. Shuker Practice Manager/Manager: Christophe Crepin Christophe Crepin Program Team Leader: Stephen Ling ICR Team Leader: Stephen Ling ICR Primary Author: Emine Velidedeoglu F. RESULTS FRAMEWORK ANALYSIS Program Development Objectives (from Project Appraisal Document) The program development objective is to (a) improve inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action; (b) develop and safeguard selected natural resources services; and (c) promote selected cleaner production systems. Revised Program Development Objectives (if any, as approved by original approving authority) PDO was not revised. (a) PDO Indicator(s) Original Target Values (from Formally Revised Actual Value Achieved at Indicator Baseline Value approval Target Values Completion or Target Years documents) Indicator 1: Pillar 1. Policy Track 1.1 -PDO (a): Number of coastal provinces adopted their provincial integrated coastal zone management program and are under early implementation. Value quantitative or 0 provinces 5 provinces 0 provinces Qualitative) Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Partially Achieved. Even though no provinces have formally adopted provincial integrated coastal zone management programs as directed by the policy delivered under (incl. % DPF-1, 24 out of 28 coastal provinces have issued and implemented strategies, plans, or achievement) projects related to ICZM. 5 provinces have developed or are in the process of developing their coastal inventories to inform the development of their ICZM programs. 9 provinces have developed local data management systems on ICZM linking with the national data management system. 19 provinces have established or are in the process of setting up coastal setback lines. Formal adoption of ICZM programs is delayed by the need for prior development and vii i adoption of a Master Plan on Sustainable Exploitation and Use of Marine Resources, with which provinces will have to ensure that their provincial programs are consistent. The Master Plan was in turn delayed (now expected to be finalized by 2021) due to new requirements under the Law on Planning, which was promulgated in 2017, after DPF-1. While these new developments impact the timing of the approval of the ICZM Master Plan, they also further strengthen the foundations of the policy reforms engineered by the DPO, and reflect a further deepening commitments of the Government to this critical and complex reform agenda. Meanwhile, development of the key building blocks for ICZM in a large number of Provinces demonstrates meaningful progress in this result area over a larger number of coastal provinces than the original target. These updates in the policy reform agenda of the government would have been reflected in DPO 2 if the operation had moved forward. Data Source: ICZM Review Reports from provinces presented at the State of the Coast Consultation Workshop on April 25, 2019 at MONRE, and Vietnam Sea and Island Institute. Indicator 2: Pillar 1. Policy Track 1.2 -PDO (a): Number of priority sectors and provinces for which climate change and green growth investment programs are identified, reported to, and information used by the NCCC to review progress in implementing priorities and to develop recommendations. Value quantitative or 0 sectors; 0 3 sectors; 8 0 sectors; 18 provinces Qualitative) provinces provinces Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Substantially Achieved. As of April 2019, MPI has identified climate change and green growth investment programs in 18 provinces (13 in the Mekong Delta and 5 in the Central (incl. % Highlands). MPI is also in the process of identifying climate change and green growth achievement) public investment programs in a further 5 provinces in the Central Coastal region. This Government processes bringing together national and sub-national levels have helped in (i) raising the awareness of government officials and leaders of the needs and the ways to monitor the expenditures for CC&GG projects/programs to implement NDC actions and fulfill the targets agreed in the Paris Agreement 2015; (ii) building capacity in monitoring CC-GG expenditures to prepare for the NDC2 (the review and update currently being undertaken with the planned submission for the first half of 2020); and (iii) to inform recommendations on CC& GG investment for sustainable development of ix Mekong Delta (in response to Resolution 120 on Mekong Delta’s Sustainable Development, issued by the Government in 2018). The envisaged reviews of key sector ministries have not been completed to date as MPI decided to prioritize the provincial level given that recent expenditure reviews had been conducted at the central level, including the CPEIR supported by the Bank covering 2010- 2013 budgets, and a subsequent review of 2014-2016 budgets of 5 key ministries, but these are still part of the Government priorities as reference points in support of the post 2020 climate change action planning.. Data Source:: MPI reports on Climate and Green Growth Public Expenditure and Investment Review in the Mekong Delta (CPEIR-Mekong), 2018; Climate and Green Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR- Central Highlands), 2018; and the Review of the National and International Financial Mechanisms to carry out the NDC's tasks in Vietnam to 2030. Indicator 3: Pillar 1. Policy Track 1.3 -PDO (a): Percentage increase in the number of projects and programs meeting climate change and green growth policy objectives in selected sectors and provinces. Value 19.5% decrease (Mekong Delta quantitative or 0 15% increase Qualitative) 8% increase (Central Highlands) Date achieved 01/29/2016 12/31/2019 12/31/2017 Comments Not Achieved. Although the number of projects within the provinces assessed showed an aggregate decrease to 2017, the volume of investment involved showed an aggregate (incl. % increase of around 14%. This is considered to be a more meaningful indicator of success, achievement) but wasn’t used in the original results framework as MPI felt at the time that it was too ambitious. Based on the review of the 13 Mekong Delta Provinces carried out by MPI, the number of climate change and green growth public investment projects increased from 928 in 2015 to 1402 in 2016 but reduced to 825 in 2017 (an overall decrease of 11% from 2015- 2017). Despite that, the total budget allocated to climate change and green growth investment projects increased from VND 8,210 billion in 2015 to VND 9,807 billion in 2017 (equivalent to a 19.5% increase from 2015-2017). Based on the review of the 5 Central Highland Provinces carried out by MPI, the number of climate change and green growth public investment projects increased from 290 in x 2016 to 313 in 2017 (an increase of about 8%). The total budget allocated to climate change and green growth investment projects decreased slightly from VND 3,030 billion in 2016 to VND 2,994 billion in 2017 (a decrease of about 1.2%). has also provided training to provinces on the use of the CC and GG investment projects and program identification and tracking framework. Participation included officials from DPI, DARD, DONRE, DOIT, DOT, DOC, PPC Office. As a next step for provinces and line ministries to report on climate change and green growth investments, MPI is discussing within the ministry inclusion of a reporting template in the next cycle of budget call. MPI has completed the assessment of the design of climate change and green growth projects against the adaptation and resilience objectives. The review proposed a number of key recommendations, which will be reported to the NCCC/Government as part of MPI submission for development of the next five-year SEDP. Data Source: MPI reports on Climate and Green Growth Public Expenditure and Investment Review in the Mekong Delta (CPEIR-Mekong), 2018; Climate and Green Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR- Central Highlands), 2018. Indicator 4: Pillar 2. Policy Track 2.1a -PDO (b): Number of provinces with water source protection corridors delineated on maps and with an action plan to address threats to the integrity of these protection corridors (in compliance with Decree 43 and the DPF 2 circulars) Value quantitative or 0 provinces 6 provinces 20 provinces Qualitative) Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Achieved. Twenty provinces have established water protection corridors, including geographic coordinates or detailed descriptions of the boundary. About 20 more (incl. % provinces are in the process of establishing these corridors. The provincial decision achievement) establishing the protection corridors clarifies the protection purposes of each corridor, for example to protect the resources from pollution as they are used for domestic water supply, or to protect the river embankments from erosion or land encroachment as they are channels for water running out. The decision also includes actions and assignment of responsibility to different provincial departments for implementation. Data Source: Provincial Decisions to establish the list of water source protection corridors, including geographic coordinates, specific sites, and responsibilities and actions to be taken by each provincial technical department and related commune’s and xi district’s people committee. Indicator 5: Pillar 2. Policy Track 2.1b -PDO (b): Number of hectares of farms utilizing more advanced and efficient irrigation practices for selected crops Value quantitative or 50,000ha 400,000ha 320,000 ha Qualitative) Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Partially Achieved. 320,000ha of farms were utilizing more advanced and efficient irrigation practices by the end of 2018 (almost 80% achievement of target). MARD has (incl. % indicated that the target of 400,000 ha by 2020 should be achieved. This indicator is achievement) therefore considered on track to reach the original target. The increased uptake of advanced, water-saving irrigation has been especially high in regions that are particularly vulnerable to climate change, such as the Central Highlands and Mekong Delta. 23 provinces have issued their own local policies to encourage advanced, water-saving irrigation.The Master Plan on Irrigation to 2020 has also been revised to 2030 with the use of advanced, water- saving irrigation as one of the solutions for implementing the agriculture restructuring plan. Data Source: MARD’s report at the national review of the implemenation of the irrigation efficiency action plan in May 2018. The estimates of area are based on established government reporting systems, under which information is passed and aggregated from the commune to district, provincial and then central ministry level. Several operations rely on these reporting systems, and they are generally considered robust, and free of systematic bias. Indicator 6: Pillar 2. Policy Track 2.2a -PDO (b): Percentage increase of coastal forest area Value quantitative or 0 10% increase 4.5% increase. Qualitative) xii Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Partially achieved. By the end of 2018, an additional 14,100 ha of coastal forests were planted (as compared to the baseline of 310,695ha). This is an increase of 4.5%. (incl. % achievement) By 2020, a total increase of 21,600 ha of coastal forest is expected as compared to the baseline (MARD’s Submission Note No-733 /BC-BNN-TCLN).The expected level by 2020 is 9,400 ha lower than the target originally set in the Program 120 on Coastal forest Development and Protection (2015). The series target was set in accordance with the government’s existing target, but this has subsequently been revised downward as MARD has indicated that (i) the original target was too ambitious as they had overestimated the land available for coastal forest planting; and (ii) planned plantation ground are becoming more difficult for planting and survival of newly plannted seedling due to increasing erosion or high tides. For some areas, it takes two to to three years to prepare for sufficient mud siltation grounds before the planting can start. Hence achievement under the indicator is still in line with government targets. Data Source: MARD’s Report on the implementation of Plan 120 on coastal forest protection and management submitted to the Government in January 2019.The estimates of area are based on established government reporting systems, under which information is passed and aggregated from the commune to district, provincial and then central ministry level. Several operations rely on these reporting systems, and they are generally considered robust, and free of systematic bias. Indicator 7: Pillar 2. Policy Track 2.2b -PDO (b): Percentage reduction of the annual rate of net emissions (accounting for reduction in emissions and increase in sequestration as a result of changes in forest cover and forest quality) in selected priority provinces (measured in tons of CO2e/year) Value 7 percent reduction quantitative or 0 Measurement will be relative to forest Qualitative) conducted in 2021 reference level of 2000-2012 reference period) Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Partially Achieved. The next measurement for verification of sequestration (which is a significant technical undertaking) is expected to take place in 2021, following the end of (incl. % the current phase of SP-RCC.Therefore there is no verified data that can be used to xii i achievement) measure the percent emission reductions as compared to baseline. However, forest plantation and enrichment is under progress in three selected north central region provinces under the target program for sustainable forest, and it is therefore expected that there has been considerable progress under the indicator, even if the level of achievement has not been quantitatively assessed against the target at this time. Data source: North Central Region Emission Reduction Project’s draft Project Appraisal Document at WB’s Decision Meeting in March 2019. Indicator 8: Pillar 3. Policy Track 3.1a -PDO (c): Number of city Air Quality Management (AQM) plans adopted Value quantitative or 0 3 5 Qualitative) Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Partially Achieved. Five provinces have adopted a plan for improvement of air quality. These provinces are Hai Phong, Can Tho, Nam Ha, Hoa Binh and Yen Bai. (incl. % achievement) The target has been exceeded according to the literal definition of the indicator. It is only rated as partially achieved as, given the delay in the issuance of the Circular on the content of AQM plans (following the same, recently-resolved constraint in the enabling policy framework that also impacted indicator 9), these are not yet compliant with MONRE guidelines. Although the plans include actions for sound AQM planning, they could be strengthened through evidenced-based source apportionment. The planned guideline from MONRE expected after the recently issued Decree 40 will provide guidance for further strengthening. Data Source: Provincial Decisions to issue air quality management plan. Indicator 9: Pillar 3. Policy Track 3.1b -PDO (c): Percentage of enterprises in 6 sectors/industries that are part of and report to the emission registry (in conformance with the reporting criteria defined in the Circular on emissions inventories) Value quantitative or 0 60 % 0 Qualitative) xiv Date achieved 01/29/2016 12/31/2019 04/30/2019 Comments Not Achieved. Although the governing Circular was drafted, the emissions registry has not been established due to constraints in the enabling policy framework. Therefore, no (incl. % sectors/industries have reported to it. The enabling legislation constraint was just lifted achievement) with the issuance of Decree 40 (in May 2019), and hence the registry is expected to be established soon. Indicator 10: Pillar 3. Policy Track 3.1c -PDO (c): Percentage of NOx emission reductions in light-duty road transport in target year as compared to a business-as-usual (BAU) case. Value quantitative or Projected trend 6.85% reduction 7.49% Qualitative) under BAU case in target year Date achieved 01/29/2016 12/31/2019 12/31/2018 Comments Achieved. NOx emission reductions reached 7.49% in 2018. (incl. % Data Source: Vu Anh Tuan (2019) – Report commissioned by MOT based on MOT data. achievement) The estimates are expected to have relatively low margins of error as the calculations are based on vehicle numbers taken from the national vehicle registry, which should be effectively comprehensive, and coefficients of vehicle usage in rural and urban areas based on a survey of 50,000 users. Indicator 11: Pillar 3. Policy Track 3.2a -PDO (c): Percentage energy saved in selected end-use sectors as compared with BAU case Value Projected trend of 3.2 percent Measurement will be annual energy use energy saved for carried out in 2020. quantitative or of selected end- selected Qualitative) use sectors to industrial 2019, under BAU segments, scenario cumulated to the target year) Date achieved 01/29/2016 12/31/2019 4/30/2019 Comments Partially Achieved. MOIT plans to survey energy consumption in industries in 2020 at the end of the current SEDP and SP-RCC. Therefore it is not possible at this stage (earlier xv (incl. % than planned end of the DPO series) to report on the quantitative achievement against the target at present. achievement) However, MOIT and DOIT have clearly focused on promoting implementation of new energy efficiency policies through awareness raising and technical capacity building, including training DOITs and enterprises on monitoring and reporting of energy consumption and energy efficiency efforts. It is evidenced that industries, especially those listed as energy intensive, are in the process of applying energy saving measures, including the use of low-energy lighting systems, inverters, improvement of production processes and technology, reduction of machine idling times, etc. Energy management ISO 50001 is applied by a number of factories and initial data show encouraging performance. Data Source: MOIT’s Energy Efficiency Plan and related websites. Indicator 12: Pillar 3. Policy Track 3.2b -PDO (c): Percentage increase in installed capacity of grid- connected non-hydro renewable energy Value quantitative or 0 (270 MW) 250% (960 MW) 905% (2,714.8 MW) Qualitative) Date achieved 01/29/2016 12/31/2019 05/30/2019 Comments Achieved. As a result of the policies from the DPF series, the total new installed capacity of grid-connected non-hydro renewable energy is 2714.8 MW, mostly coming from solar. (incl. % The percentage increase (over the baseline) is 905%, exceeding the target by more than 2.5 times. For solar, it is expected that PPAs accounting for 2,500 MW of additional achievement) installed capacity will be signed by the end of June 2019. The details for each RE technology is given in Annex 8. Data Source: Electricity Vietnam (EVN) Official Website1. Indicator 13: Pillar 3. Policy Track 3.2c-PDO (c ): Expected Greenhouse Gas (GHG) emissions reduction associated with electricity generation and consumption to 2030 as compared to the baseline emissions pathway in Vietnam's (intended) Nationally Determined Contribution 1 Source: http://evnhanoi.vn/tin-tuc-evnhanoi/tin-trong-nganh-dien/5517-khoang-2500-mw-dien-mat-troi-bo-sung-vao-he-thong- dien-trong-thang-6 xvi Value 24.9 million tons of CO2 equivalent (cumulative) by quantitative or 0 To be finalized by 2030 as compared to Qualitative) end of 2016 baseline Date achieved 01/29/2016 12/31/2019 05/30/2019 Comments Achieved. Cumulative GHG emission reductions associated with the 2,714.8 MW of increased installed capacity of grid-connected non-hydro renewable energy are (incl. % estimated to be 24.9 million tons of CO2equivalent by 2030. If the additional solar achievement) investments do materialize by the end of June 2019 (see indicator above), the emission reductions will increase to 46.6 million tons of CO2 equivalent. Although the target value was not calculated by approval of DPF-1, the fact that installed capacity for renewable energy greatly exceeded the targets indicates that the emissions reductions would also have done so. Data Sources: World Bank estimate using capacity factor data for wind, biomass, and solid waste to energy from “Analysis of future capacity scenarios for Vietnam report” (Green Innovation and Development Centre, October 2017) and for solar from “National assessment of development potential of grid- connected solar photovoltaic (PV) projects in Viet Nam until 2020 with a vision to 2030” in Hanoi on January 24, 2018. Emissions factor data for wind and biomass from “World Bank Tool for GHG Accounting for Generation and Energy Efficiency Operations”. Emissions factor data for waste-to-energy from IPCC 2006 Guidelines for National Emission Inventories Volume 2, Chapter 2, Table 2.2. Given the lack of data related to energy savings in the industrial sectors, the indicator only includes the emission reductions from the renewable energy investment. G. RATINGS OF PROJECT PERFORMANCE IN ISRs Date ISR Actual Disbursements No. GEO IP Archived (USD millions) H. RESTRUCTURING (IF ANY) Not Applicable xvi i 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal 1. This ICR report provides an evaluation of the first operation in an originally intended programmatic series of three Development Policy Financing (DPF) operations designed to provide support to the Socialist Republic of Vietnam for its climate change and green growth reform agenda as a contribution to improving sustainability and quality of growth. It was built from the experience and platform provided by a first DPF series (from 2012-2014) and related Bank engagements. The DPF engagements has been a key contributor to the government’s strategy for continuing and building on the momentum of climate policy reforms and the convergence between green growth and climate change policies that were initiated under the first DPF series. 2. Approval of the proposed second operation by the Government of Vietnam (GoV) was delayed for reasons outside the scope of the DPF series itself, resulting in the need to prepare an ICR for the first operation alone. The government approached its legally mandated debt ceiling (at the end of 2016, Vietnam’s public debt-to-GDP (Gross Domestic Product) ratio reached 63.6 percent, close to the legally mandated ceiling of 65 percent of GDP), and following Vietnam’s graduation from the International Development Agency (IDA) on July 1,2017, it faced a higher cost of borrowing at IBRD terms. This has impacted the Bank lending portfolio as well as the other development partners (DPs) supporting climate policy lending, Japan International Cooperation Agency (JICA) and Agence Française de Development (AFD). Further DPF support in line with the broad design of the original series is still expected, but due to the delays will now be processed as a stand- alone operation, as the series has lapsed due to limitations on the time allowed between consecutive operations. 3. The macroeconomic framework was deemed adequate at the time of appraisal for the Climate Change and Green Growth Development Policy Financing (CC&GG DPF) in mid-2016. Macroeconomic stability and sustainability had been broadly maintained, although at the time, rapidly rising public debt and low (and declining) forex reserves were of some concern. In the years prior to appraisal, although inflation had moderated significantly, the authorities had maintained policy interest rates unchanged since late 2014, which had contributed to low and stable rates of core inflation. The countercyclical fiscal policy introduced in the aftermath of the global financial crisis was appropriate to offset weak domestic demand, but called for a credible medium-term fiscal consolidation plan to to address the rising public debt level. The fiscal deficit had peaked at 7.4 percent of GDP in 2013, and while significant reduction had been achieved and the risk of acute debt distress was still deemed low, the fiscal deficit remained elevated at 5.5 percent as of 2015. 4. Thirty years of rapid and inclusive economic growth had raised Vietnam’s status to that of a lower- middle-income country, creating opportunities for people and businesses. Its GDP growth per capita had averaged 5.5 percent a year since 1990, yielding per capita gross national income (GNI) of US$1,980 in 2015. Growth had been inclusive: incomes had risen across the income distribution, while growth in inequality had declined. Growth had bolstered shared prosperity and achieved strong gains in poverty reduction: the percentage of people living in extreme poverty (US$1.9 per day) stood at less than 3 percent. Key social indicators had improved substantially: the population was better educated and had a higher life expectancy and a lower maternal mortality ratio than that of most countries at a similar income level. Access to basic infrastructure including electricity, clean water and modern sanitation had also risen drastically, from less than half to more than 75 percent of the population. Despite rapid and significant reductions in poverty, significant pockets remained, particularly in vulnerable coastal areas and the Mekong River and Red River deltas, where populations are highly exposed to impacts associated with climate change, including sea level rise. 5. The effects of climate change on Vietnam’s development achievements and future growth objectives 1 required strengthened resilience planning and financing to stem impacts, particularly among the poor who are often disproportionately affected. Vietnam does and will increasingly experience significant impacts from climate change, largely attributed to high and increasing exposure to gradual-onset impacts associated with rising sea levels, ocean warming and increasing acidification, combined with sudden-onset impacts from tropical cyclones and increasing heat extremes. Climate risks to coastal economies are aggravated by the loss of mangrove forests, excessive drainage and groundwater extraction, and overfishing. Droughts, salinization, extreme temperatures, and changes in growing seasons and floods2, compounded by sub-standard housing in exposed areas and a lack of assets to buffer shocks3, strongly impact the livelihoods of poor rural and urban households. Over the preceding 25 years, extreme weather events had resulted in 0.4 to 1.7 percent of GDP loss4. By 2050, a 1–3 percent loss in real GDP was predicted from climate change impacts. 6. At the same time, Vietnam urgently needs to curb its own GHG emissions growth. Although Vietnam’s GHG emissions are moderate in absolute terms, they are disproportionate to the size of its growing economy. From 2000 to 2015, CO2 emissions nearly quadrupled and, between 2000 and 2010, carbon intensity of GDP increased by 47 percent. This leaves Vietnam as the 13th most carbon intensive economy in the world and the 4th amongst low and middle-income countries in East Asia (vs. 33rd and 5th respectively for total emissions).5 The growth in GHG emissions and related air pollution is mostly associated with increasingly coal-based power generation and an expanding transport sector. There is a high risk of long-lived investment in polluting technologies locking the country into a high emissions trajectory for decades to come, particularly in relation to the continued reliance on coal to meet much of the country’s growing energy demand. 7. The National Climate Change Strategy (NCCS) and Vietnam Green Growth Strategy (VGGS) set out a vision for re-orienting Vietnam’s economy towards quality of growth, resilience, advanced and efficient technologies, and increasing parity and mature relations with other advanced economies. The 2016-2020 Socio-Economic Development Plan (SEDP)6 demonstrated government commitment to climate change and green growth goals through its emphasis on accelerating reforms that strengthen the country’s resilience to climate change and promote a low carbon, green growth development path. The SEDP recognized that actions taken during the 2016–2020 period have and will continue to help the government scale up policy implementation, building on the achievements of the 2011-2015 SEDP period, while laying the groundwork for the implementation of specific climate commitments articulated in the NDC for the post-2020 period. 8. The operation supported the government’s Support Program to Respond to Climate Change (SP -RCC), 2016-2020, which provides a platform for policy reform to effectively implement climate change and green growth actions prioritized in the NCCS and VGGS, 2016–2020 Socio-Economic Development Plan (SEDP), and Nationally Determined Contribution (NDC). As such, the SP-RCC supports a very broad policy agenda that is organized under 8 headings: (i) disaster preparedness and climate monitoring, including development of hydromet and climate information services; (ii) food and water security, including water resources management and climate-smart agriculture; (iii) sea level rise and disaster risk in vulnerable areas, focusing on 2 World Bank. 2015. Climate Change and Poverty in Vietnam. Projections for a 50-year return period under a high climate scenario, assuming no protection, along with an overlay of flood models and present socioeconomic data suggest that 40 percent of today’s Vietnamese poor will be exposed to flooding 3 World Bank. 2015. Climate Change and Poverty in Vietnam: A Qualitative Analysis. Analysis was undertaken in Bac Ninh, Hoa Binh, Kon Tum, An Giang, and Kien Giang Provinces. 4 World Bank. 2016. Vietnam Systematic Country Diagnostic 2016- Priorities for Inclusive and Sustainable Growth. 5 Trends in global CO2 emissions: 2016 Report. European Commission, Joint Research Centre (JRC), Directorate C - Energy, Transport and Climate; PBL Netherlands Environmental Assessment Agency. 6 The SEDP serves as Vietnam’s five-year development plan, elaborating the objectives of the 2011 –2020 Socio- Economic Development Strategy (SEDS) for the 2016–2020 period and identifying specific measures and resources that are needed for its implementation. 2 increasing the resilience of coastal areas and the Mekong Delta; (iv) sustainable forest management and biodiversity, including REDD; (v) reducing GHG emissions, focusing particularly on the energy and transport sectors; (vi) government capacity for climate change response; (vii) resilient community development; and (viii) climate finance, including mobilization of public and private investment. Bringing the climate change and green growth reform agendas together has also allowed for broader linkages to be built across line ministries and around both agendas. For example, whilst focusing primarily on mitigation, the VGGS has also supported dialogue on adaptation and resilience, particularly related to water resources and forests. 9. The CC&GG DPF series was designed to build upon the experience and lessons of the earlier 3-operation Climate Change DPF series, which supported the 2011-2015 phase of SP-RCC. Lessons included the need for: (i) sustained programmatic and multisectoral engagement on climate, particularly given the incremental steps needed to effect policy reform in Vietnam; (ii) an effective cross-sectoral platform to capture synergies between the efforts of separate ministries; and (iii) high-level engagement supported by targeted TA. 10. Rationale for Bank Assistance. Climate change was a priority under the Bank’s FY12-16 Country Partnership Strategy (CPS), which supported the government’s 2011–2015 and the 2016–2020 SEDP and was organized around three pillars: (a) competitiveness; (b) sustainability; and (c) opportunity. By strengthening Vietnam’s climate resilience and promoting a low-carbon and green growth development path, the DPF series was intended to contribute directly to the sustainability pillar of the CPS, which promoted investments and policies to increase the sustainability of Vietnam’s development and to improve resilience in the face of economic and climate shocks. 11. The series is a significant component of the Bank Group’s broader climate change engag ement strategy in Vietnam. The DPF series helped the government provide leadership on a transformative climate change and green growth agenda to address increasingly complicated trade-offs across sectors, institutions, and administrative and geographic boundaries. The DPF strategically engaged senior government leadership on the reform of policies and focused on areas of climate actions supported by the World Bank Group and other DPs’ investment programs for a low-carbon, climate-resilient economy, which explicitly aimed to help the Government implement its policy reform agenda and deliver climate results at a large scale. This includes investment programs such as support to energy efficiency financing in the industrial sector and promotion of climate resilience in the Mekong Delta Region. The policies promoted under the DPF aimed to leverage the evidence-based analytical policy dialogue, capacity strengthening, and climate- relevant information that the Bank had supported over previous years. Annex 7 summarizes related Bank lending and non-lending in Vietnam. 1.1 Original Program Development Objectives (PDO) and Key Indicators (as approved): 12. The program development objective is to (a) improve inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action; (b) develop and safeguard selected natural resources services; and (c) promote selected cleaner production systems. 13. The following program results and indicators (Table 1) were agreed during appraisal and included in the Program Document for DPF-1: 3 Table 1: Program Results and Indicators BASELINE (January 2016) TARGET (December 2019) Pillar 1: Improving inter-sectoral coastal Pillar 2: Developing and safeguarding Pillar 3: Promoting selected cleaner planning and public investment finance selected natural resources services production systems programming across selected key sectors in support of climate change and green growth action. 1.1: Number of coastal provinces that 2.1 a: Number of provinces with water 3.1 a: Number of city air quality have adopted their provincial integrated source protection corridors delineated management (AQM) plans adopted coastal zone management programs and on maps and with an action plan to Baseline: 0 Target: 3 are under early implementation address threats to the integrity of Baseline :0 provinces these protection corridors (in 3.1 b: Percentage of enterprises in 6 key Target: 5 coastal provinces (20% of conformance with Decree 43 and the sectors/industries that are part of and provinces) DPF-2 Circulars) report to the emission registry (in Baseline: 0 provinces conformance with the reporting criteria 1.2: Number of priority sectors and Target: 6 provinces (10 percent of defined in the DPF-2 Circular on provinces for which climate change and provinces) emissions inventories) green growth investment programs are Baseline: 0 percent Target: 60 percent identified, reported to, and information 2.1 b: Number of hectares of farms used by the NCCC to review progress in utilizing more advanced and efficient 3.1 c: Percentage of NOx emission implementing priorities and to develop irrigation practices for selected crops reductions in light-duty road transport recommendations. Baseline: 50,000 ha in target year as compared to a Baseline: 0 sectors and 0 provinces Target: 400,000 ha business-as-usual (BAU) case Target: 3 sectors; 8 provinces Baseline: Projected trend under BAU 2.2 a: Percentage increase of coastal case in target year 1.3: Percentage increase in the number forest area Target: 6.85 percent reduction of projects and programs meeting Baseline :0 percent Target: 10 % climate change and green growth policy 3.2 a: Percentage energy saved in objectives in selected sectors and 2.2 b: Percentage reduction of the selected end-use sectors as compared provinces annual rate of net emissions with business-as-usual (BAU) case Baseline: 0 percent increase (accounting for reduction in emissions Baseline: Projected trend of annual Target: 15 percent increase and increase in sequestration because energy use of selected end-use sectors of changes in forest cover and forest to 2019 Target: 3.2 percent quality) in selected priority provinces (measured in tons of CO2e/year) 3.2 b: Percentage increase in installed Baseline: 0 [reference is the average capacity of grid-connected non-hydro annual rate of net emission (forest renewable energy reference level) based on reference a Baseline: 0 percent (270 MW) 2000-2012 period] Target: 250 percent (960 MW) Target: 7 percent of reduction of annual rate of net emission in the 3.2 c: Expected GHG emissions selected priority provinces relative to reduction associated with electricity forest reference level generation and consumption to 2030 as compared to the baseline emissions pathway in Vietnam’s Nationally Determined Contribution Baseline: 0 Target: To be finalized by end of 2016 4 1.2 Revised PDO The PDO and indicators were not revised. 1.3 Original Policy Areas Supported by the Program (as approved): 14. The operation supported government policy reform priorities identified under the SP-RCC (2016-2020). Through the DPF engagement, the Bank has been a key partner in guiding the development, implementation and progress monitoring of the SP-RCC, which in keeping with the economy-wide CC&GG objectives, covers a broad range of activities. To maintain a manageable and effective focus, however, the DPF series incorporated policy tracks and results indicators from a selected subset of the SP-RCC policy matrix. This was identified and developed with line ministries and in discussion with DPs through a cross-ministerial program preparation process coordinated by the Ministry of Natural Resources and Environment (MONRE) and involving the Ministry of Agriculture and Rural Development (MARD), Ministry of Industry and Investment (MOIT), Ministry of Science and Technology (MOST), Ministry of Transport (MOT), Ministry of Planning and Investment (MPI), and Ministry of Finance (MOF). The selection was based on those areas with great potential for transformational change through policy-level interventions, which captured synergies between sectors and between climate change and green growth, and where the Bank could leverage complementary sector engagements. These revolve around (i) coordinated planning and financing of CC-GG investments, (ii) the critical role of robust natural resources management to withstand climate change, and (ii) the nexus between resource efficiency, climate mitigation and environmental health7. The operation supported six priority policy tracks: two under each of three pillars aligned with the PDO (see the table 2 below). These were not the same as the policy areas supported under the earlier Climate Change DPF series but assessed where the reforms of the first series needed to be extended or complemented. For instance, the earlier focus on disaster risk management was replaced with more emphasis of coastal resilience and forest, the focus on broad IWRM measures shifted to water resources protection and irrigation efficiency, and the focus on development of advisory services shifted to a wider set of regulatory activities for energy efficiency, renewable energy investment, and air quality management (AQM). Table 2: Original Policy Areas Supported by the Program PILLARS/Policy Tracks Rationale Pillar 1: Improving Inter-Sectoral Coastal Policies under this pillar aimed to support the GoV’s efforts to Planning and Public Investment Finance improve inter-sectoral planning and financing for climate change and Programming across Selected Key Sectors in green growth. The two policy tracks aimed to tackle both key area- Support of Climate Change and Green Growth based cross-sectoral obstacles that arise in development across the Action long low-lying coast of Vietnam in the face of climate impacts and Policy Track 1.1: Enabling Area-Based Adaptation actions that support better inter-sectoral mobilization of resources for and Resilience in Coastal Areas climate change and green growth. Both policy tracks recognize the Policy Track 1.2: Improving Mobilization of need for effective cross-sectoral coordination of planning and financing Resources for Climate Change and Green Growth to address Vietnam’s key climate change and green growth challenges. Pillar 2: Developing and Safeguarding Selected Policies under this pillar aimed to support the GoV’s efforts to Natural Resources Services enhance the enabling environment to increase selected natural 7 In practice, this means that the DPF series places less emphasis on the DRM and capacity-building aspects of the SP-RCC. Although important parts of the national climate change and green growth agenda, these areas were judged to be less policy focused and more effectively addressed through several other Bank IPF operations. 5 Policy Track 2.1: Improving Water Protection and resources services for climate change and green growth. This pillar Use Efficiency includes policy tracks that deliver integrated and mainstreamed climate change and green growth responses into both public and private natural resource investments in water and forest sectors. Both policy tracks include policy actions that promote linkages between climate change and green growth. Improved forest management is an effective way of achieving climate, environmental, Policy Track 2.2: Enabling the Development of and employment objectives. Both water and forest resources underpin Forest Resources Services conventionally measured economic growth by providing inputs to agriculture, manufacturing, and services and by increasing the productivity of agriculture and the reliability of infrastructure services through climate control. Forest products are also an important source of rural livelihoods. Pillar 3: Promoting Selected Cleaner Production Policies under this pillar aimed to support the GoV’s efforts to shift to Systems selected cleaner production systems for climate change and green Policy Track 3.1: Engaging in AQM with an Initial growth action. The reforms aimed to support innovation, convergence, Focus on Planning, Inventory, Industrial and integrated AQM policies in Vietnam by acting on no-regret permitting, and Cleaner Transport priorities in selected sectors, generating co-benefits between initiatives that address local air pollution and greenhouse gas emissions. The pillar also supported reforms that remove the barriers for moving sustainable energy to scale. As the pollution sources that cause local air pollution, an important challenge targeted under the government’s Green Growth Strategy, and climate change are often the same or are Policy Track 3.2: Engaging in Low GHG Emissions closely related, they require many of the same or similar interventions, Energy Production and given that air pollution source structure is usually complex and covers many sectors, there is a strong interdependency between the two policy tracks. Therefore, some reforms supported within policy track 3.1 (initially transport) and 3.2 (energy efficiency in the industrial sector and renewable energy) were expected to be integrated through the development and implementation of full-scale air quality planning. 1.4 Revised Policy Areas (if applicable): N/A 1.5 Other significant changes 15. The first policy operation (DPF-1) was designed as part of a programmatic series of three operations to support the Government’s SP-RCC from 2016 to 2020. This ICR is assessing results as of early 2019 of the planned series but following only one operation (DPF1). During preparation of the DPF-2 operation, which was at pre-appraisal-stage with several prior actions completed, fiscal constraints led to significant delay in the ability of the Government and the Bank to proceed with the negotiation and approval of the DPF-2, which cause the programmatic series to lapse due to limitations on the time between successive operations (DPF-2 could not be negotiated and submitted to the Board within 24-months following the Board approval of DPF- 1). The policy reform dialogue however remained strong under the umbrella framework of the SP-RRC leading to the decision to continue the engagement under a new DPF operation which is now therefore currently being prepared. 16. The series was designed in coordination with JICA and AfD, who also committed to providing policy lending to the 2016-2020 phase of SP-RCC. JICA provided two budget support operations of ¥10 billion each in 2016 and 2017. AfD has delivered €100 million in budget support to SP-RCC in two disbursements as originally planned, although with a delay of more than one year (two tranches of €50 million disbursed in March and April 2019). 6 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 17. The expected series of operations contained a selective and cohesive subset of six policy tracks and ten prior actions defined to achieve targeted results. All prior actions of the DPF 1 have been completed (see table 3 below). Table 3: Status of Prior Actions for the first DPF Policy Track Prior Action Status DPF-1 Prior Actions Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: The government has developed and adopted the National Action Plan setting Delivered Enabling Area- priorities for the integrated management of coastal zones Based Adaptation and Evidence: The Recipient, through its Prime Minister, has issued Decision Number Resilience in 914/QD-TTg dated 27th May 2016, adopting the National Coastal Zone Action Plan Coastal Areas setting priorities for the integrated management of coastal zones. (MONRE) Policy Track 1.2: The government has established CC and GG as a priority direction for Delivered Improving implementation under the SEDP 2016–2020 Mobilization of Resources for Evidence: The Recipient, through its Prime Minister, has issued Decision Number Climate Change 40/2015/QD-TTg dated September 14, 2015 governing the principles, criteria and and Green norms for allocation of state budget funds for development investment during the Growth period of 2016 to 2020, and has submitted Socio-Economic Development Plan 2016- 2020 to the National Assembly to establish climate change and green growth as a priority under this plan. (MPI) Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1: The government has developed and adopted a policy guiding the establishment and Delivered Improving Water management of water source protection corridors Protection and Use Efficiency Evidence: The Recipient, through its Prime Minister, has issued Decree Number 43/2015/ND-CP dated May 06, 2015 regulating identification and management of water source protection corridors. (MONRE) The government has developed and adopted a policy on advanced and efficient Delivered upland irrigation Evidence: The Recipient, through its Minister of Ministry of Agriculture and Rural Development, has issued Ministerial Decision Number 1788/QD-BNN- TCTL dated May 19, 2015 adopting an action plan to develop advanced irrigation and water saving for upland crops in support of the restructuring of water resources sector. (MARD) 7 Policy Track Prior Action Status Policy Track 2.2: The government has developed and adopted a policy on the development of coastal Delivered Enabling the forests Development of Forest Resources Evidence: The Recipient, through its Ministry of Agriculture and Rural Development, Services has submitted to the Prime Minister, a draft decree governing the management, protection, restoration and development of coastal forests to address climate change. (MARD) The government has developed and adopted guidance for the preparation of Delivered provincial forest carbon action plans Evidence: The Recipient, through its Minister of Ministry of Agriculture and Rural Development, has issued Ministerial Decision Number 5414/QD-BNN- TCLN dated December 25, 2015 approving the guidelines for Provincial REDD+ Action Plan (PRAP) preparation to govern the preparation of provincial forest carbon action plans. (MARD) Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: The government has developed and adopted the NAP on AQM Delivered Engaging in Evidence: The Recipient, through its Prime Minister, has issued Decision Number AQM with an 985a/QD-TTg dated June 1, 2016 adopting the National Air Quality Management Initial Focus on Plan and Decision No. 16/2019/QD-TTg dated March 28,2019 on roadmap for Planning, exhaust gas emission of in-used and importer vehicle. Inventory, (MONRE) Industrial The government has adopted regulations on vehicle emissions standards and on Delivered permitting, and fuel quality Cleaner Evidence: The Recipient, through its Ministry of Transport, has issued Circular Transport Number 33/2015/TT- BGTVT dated July 24, 2015 promulgating the national technical regulation on Euro 4 standard for new assembled, manufactured, and imported vehicles, and, through its Ministry of Science and Technology, has issued Circular Number 22/2015/TT-BKHCN dated November 11, 2015 on the issuance and implementation of national, technical regulations on gasolines, diesel fuel oils, and biofuels. (MOT) Policy Track 3.2: The government has developed and adopted new energy efficiency labeling Delivered Engaging in Low standards for non-ducted air conditioners GHG Emissions Energy Evidence: The Recipient, through its Minister of Ministry of Industry and Trade, has Production issued Ministerial Decision Number 13550/QD-BCT dated December 10, 2015 announcing the minimum energy performance and labelling standards for non- ducted air conditioners The government has developed and adopted procedures for the development of Delivered projects, for setting an avoided cost tariff, and a standard PPA for biomass and procedures for the development of projects and a standard PPA for waste-to-energy Evidence: The Recipient, through its Ministry of Industry and Trade has issued: (a) Circular Number 29/2015/TT-BCT dated August 31, 2015 governing contents, sequence and procedures for preparing, appraising and approving biomass energy development and utilization plans; (b) Circular Number 32/2015/TT- BCT dated October 08, 2015 governing project development and standard power purchase agreements for power generation projects using solid wastes; and (c) Circular Number 44/2015/TT-BCT dated December 9, 2015 governing project development, setting an avoided cost tariff, and standardized power purchase agreements for 8 Policy Track Prior Action Status biomass power projects. 18. Despite the delay in approval of further operations under the series, the reform process under the policy tracks has continued to move forward, strengthening the respective legal frameworks. Of the 21 indicative policy triggers for DPF-2 and DPF-3 originally identified in the DPF-1 Program Document, 14 are delivered, 4 have been partially delivered, and the remaining 3 have progressed well but their issuance has been delayed due to their inclusion in larger pieces of legislation or to the need to first issue enabling legislation, which will ultimately provide a stronger legal basis for action. In particular, the new Planning Law issued in 2017 and aiming at strengthening the linkage between master planning and the socio-economic development strategy, and between national, sub-national and sectoral planning, has impacted planning processes. For instance, the development of coastal functional zoning (original DPF-3 trigger), will now be subsumed into the preparation of a boarder Integrated Coastal Resources Master Plan. On air quality management, MONRE has prepared ministerial circulars to guide cities and provinces to prepare their multi-sectoral air quality management plans, and to develop an emission permitting system. However, their adoption was held up due to the need to first approve a (Government level) Decree under the Law on Environmental Protection, which provides the legal force for MONRE to mandate the implementation of these new systems. This has now been issued. In general, where these legal complications have arisen, alternative or complementary policy actions have moved ahead. Table 4. Summary of Indicative Triggers for DPF-2 and DPF-3 Status (at the time of DPF-1 Approval) PILLARS/Policy Tracks DPF-2 Indicative Triggers DPF-3 Indicative Triggers Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: Specific guidance directing provinces in the Coastal functional zoning to guide Enabling Area-Based development of provincial integrated provinces in the development of functional Adaptation and coastal zone management programs zoning under provincial integrated coastal Resilience in Coastal (Delivered) zone management program (Progressing Areas with some delay due to integration into Coastal Zone Master Plan – see details providing earlier) Policy Track 1.2: Establishment of a CC and GG investments The review of the design of a selected Improving Mobilization projects and program identification and number of major CC and GG projects and of Resources for tracking framework (Delivered) programs against adaptation and resilience Climate Change and objectives (Work completed and will be Green Growth formally submitted as part of a larger review of progress against SEDP) Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1: Guidelines for protecting the quality and The list of all priority water source Improving Water function of water sources, including protection corridors identified and adopted Protection and Use drinking water intakes (Partially Delivered; at provincial level (Delivered) Efficiency the protection of river banks & beds will now be given higher legal force through a Decree which is at the final stage of approval by the Prime Minister) Policy on incentive to encourage the Guidelines for encouraging efficient development of small irrigation systems, irrigation for selected priority crops and more advanced and efficient irrigation (Delivered) system (Delivered) Policy Track 2.2: Technical guidance for the development of Guidelines for review forest types in coastal Enabling the coastal forests in coastal provinces provinces including appropriate system Development of Forest (Delivered) serving the monitoring and reporting on 9 PILLARS/Policy Tracks DPF-2 Indicative Triggers DPF-3 Indicative Triggers Resources Services coastal forests (Delivered) Report on the development and adoption The updated National forest carbon action by at least three provinces of forest carbon plan (Delivered) action plans (Delivered) Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: Guidance on complete AQM planning and An emission permitting system for Engaging in AQM with on emission inventories for implementation of the NAP at industrial an Initial Focus on implementation of the NAP at provincial/ sector level (Delivered) Planning, Inventory, city level (delayed due to need to issue Industrial permitting, enabling Decree No. 40/2019/ND-CP) and Cleaner Transport The road map for the regulation of exhaust The road map for the regulation of exhaust gas emissions from in-used motorcycles, gas emissions from in-use vehicles (cars, mopeds in cities and provinces (Delayed trucks, buses) (Delivered) due to need to amend Law on Road Transport) Policy Track 3.2: New energy efficiency labeling standards Energy savings and efficiency benchmarks Engaging in Low GHG for household refrigerators (Delivered) in plastics and pulp and paper sectors Emissions Energy (Delivered) Production Energy savings and efficiency benchmarks A support mechanism (including FIT) for in the steel and beverage sectors grid-connected wind power (Decision No. (Delivered) 39/2018/QĐ-TTg) and a master plan for the development of wind power (Partially Delivered; master plan no longer being developed due to new regulations under new Planning Law) A support mechanism (including FIT) and a standard PPA for solar energy (Decision No. 11/2017/QĐ-TTg), and a master plan for the development of waste-to-energy (Partially Delivered; master plan no longer being developed due to new regulations under new Planning Law) 19. Under Pillar 1, progress with the reforms has contributed to the improvement in coastal planning and mobilization of resources for climate change and green growth in key sectors. Guidance on coastal function zoning will now be given more weight through development of a Coastal Zone Master Plan.  Policy Track 1.1 “Enabling Area-Based Adaptation and Resilience in Coastal Areas”: Under DPF-1, the National Coastal Zone Action Plan has provided a framework with priority actions for MONRE to coordinate integrated coastal zone management planning in Vietnam. The originally planned DPF-2 Indicative Trigger, which formalized procedures to guide provinces on the development of provincial integrated coastal resource management programs, was adopted as a MONRE Circular8 on December 29, 2017. The planned DPF-3 indicative trigger on guidance for provinces on coastal functional zoning under their respective programs is now part of the larger Integrated Coastal Zone Master Plan, which will provide more emphasis on linkage to sectoral and sub-national planning. Policy focus on coastal management is further strengthened with the country’s recent emphasis on developing the Blue 8 This was originally planned as a MONRE Decision. A Circular provides a stronger legal basis in Vietnamese law. 10 Economy9. The policies require coastal provinces to establish the ICZM steering committees to provide oversight and coordination of activities on the coast, map activities of different sectors in coastal areas, develop zoning plans for exploitation of coastal resources, pilot co-management of fishery resources, establish coastal set back zone taking into account climate change impacts and sea level rise scenarios, and carry out marine and biodiversity monitoring. Engagement of the Bank under the DPF, together with expertise under associated TAs and lending have helped improve the quality of the policy and buy-in from different stakeholders, especially from provincial actors who are the key implementors of the policy.  Policy Track 1.2 “Improving Mobilization of Resources for Climate Change and Green Growth”: Under DPF-1, the 2016-2020 SEDP placed new emphasis on climate change. The originally planned DPF-2 Indicative Trigger did materialize as a DPF-2-ready Prior Action through an MPI Decision adopted on July 16, 2018, establishing a regulation on the identification, classification and reporting of its public climate change and green growth-related investment allocations. The originally planned DPF-3 indicative trigger on the “review of the design of a selected number of major CC and GG projects and programs against adaptation and resilience objectives” has been completed at the technical level, but its formal issuance is delayed as it will serve as an input into MPI’s assessment of the 2016-2020 SEDP, expected in early CY 2020. 20. Under Pillar 2, envisaged triggers for the original DPF series have been delivered, strengthening protection and green growth potentials for key water and forest resources.  Policy Track 2.1 “Improving Water Protection and Use Efficiency”:  Water Source Protection: Under DPF-1, Decree 43 required provinces to issue lists of designated water source protection corridors. The originally planned DPF-2 trigger on protecting the quality and function of water sources has been partially delivered with the adoption of regulations on the identification of sanitary protection zones for sources of water supply as MONRE Circular 24 on September 9, 2016. A second planned Circular regulating the protection of beds, banks, and alluvial grounds of rivers has been developed but incorporated into a wider PM Decree strengthening the legal impact but also inducing delay in its issuance: it is currently in the final stages of approval within the government, expected by end of CY 2019. The indicative DPF-3 trigger, disclosure of the list of all priority water source protection corridors, has already been met. Provinces are required to provide detailed descriptions of the protection sites including the length of the corridor, where the section of the river or stream protected is with geographical coordinates and commune name, and to specify implementing responsibilities of provincial departments and districts and communes. Communes are responsible for establishment of demarcation of the protection corridor on the ground. DONRE is responsible for disseminating information on the protection corridors and to monitor their establishment and the demarcation.  Water Use Efficiency: The action plan on advanced irrigation and water savings for upland crops, the DPF-1 prior action, sets the objectives and prioritizes actions (including planning, investment, research and technical guidance) for irrigation efficiency improvements for high value crops with identified markets, such as cashew nut, coffee, pepper, vegetables, and fruits, while tailoring interventions to locales where crops are most productive and especially vulnerable to climate change. The plan requires MARD to prioritize efficient irrigation systems for upland crops amongst irrigation investments, to provide agricultural extension services for good practices, such as drip and sprinkler irrigation, and to establish farmer demonstration sites for climate smart agriculture 9 Resolution 36 of the Central Party Committee issued on October 22,2018 establishes Blue Economy as a key priority for the period up to 2030. 11 approaches. The originally planned DPF-2 indicative trigger, “the policy on incentive to encourage the development of small irrigation systems, infield irrigation systems, and more advanced and efficient irrigation systems”, has been adopted in the form of a Government Decree on May 16, 2018, which lays out a variety of incentives and financial support available to farmers’ organizations for small-scale water storage and more efficient technologies. MARD has also issued legal Guidelines for application of efficient water use practices for a number of priority crops (DPF- 3 indicative trigger), including coffee, grapes, tea, oranges sugarcane, dragon fruit, grapefruit, and others, as originally planned in the policy matrix of the DPF series.  Policy Track 2.2: Enabling the Development of Forest Resources Services  Coastal Forests for Resilience: The DPF-1 prior action, Government Decree governing the management, protection, restoration and development of coastal forests to address climate change. The policy specifies the use of provincial budget for coastal forest inventory, study and applying techniques for protection and development of the forest. It also covers operating costs of the management units for the forest protection. Budget from the central government covers forest protection and plantation, addressing erosion and preparation of planting ground from siltation. The policy encourages investments from individual and private sectors in these activities and provide incentives including getting full benefit from their investment or exemption from land fee. Ecotourism and recreation activities on coastal forest areas are required to pay for forest environment service. The originally planned DPF-2 indicative trigger on technical guidelines including cost norms for the development of coastal forests was adopted by MARD in April 2016. The originally planned DPF-3 indicative trigger, a MARD Decision for review and adjustment of provincial forest masterplan including coastal forest system, was integrated into Decree 156 under the Law on Forestry and issued in November 2018.  Reduced Emissions from Deforestation and Degradation (REDD)+: The MARD Decision on the Guidelines for Provincial REDD+ Action Plan preparation (DPF-1) provided instructions and a framework for provinces to develop actionable plans to protect and develop forests in a manner that sustains incomes and contributes to the reduction of greenhouse gas emissions. Priority activities focus on forest deforestation and degradation reduction, sustainable management and increase of carbon sequestration. So far, Provincial REDD+ Action Plans (PRAPs) have been developed for fourteen provinces (DPF-2 indicative trigger), six of which are under the World Bank supported Emission Reduction Program. The original DPF-3 trigger, the National REDD+ Action Program, was adopted by the Prime Minister in April 2017. 21. Under Pillar 3, while the government has made considerable progress to enhance the enabling environment for renewable energy and energy efficiency, a stronger legal and regulatory basis is needed before specific regulations on Air Quality Management (AQM) can move forward as planned.  Policy Track 3.1: Engaging in AQM with an Initial Focus on Planning, Inventory, Industrial permitting, and Cleaner Transport: Following the launch of the National Action Plan on AQM (DPF-1), the MONRE Pollution Control Department progressed in the finalization of two DPF-2 regulations on cities’ AQM planning and industrial emission inventories and registration. The National Action Plan on AQM aims to better control of emission sources, especially those from the industry, power and transport sectors, improved ambient air monitoring with more air quality monitoring stations in urban areas, identifying PM2.5 and PM10 sources in big cities for mitigation measures. It requires MONRE to disclose air pollution data and big cities to carry our source apportionment of PM2.5 and PM10 and develop multi-sectoral cost effective AQM plans. The National Action Plan on AQM emphasizes continued policy development to regulate air quality planning, monitoring, PM10 and PM2.5 emission and national regulations and 12 standards. In line with this, the government has recently amended the legal framework10 requiring cities having the population of more than 200,000, craft villages and localities where there are many air pollution sources to do assessment of the ambience air pollution and identify reasons and measures for improvement. Data on air quality of a number of cities including Hanoi is being disclosed. MOT is tasked to increase air quality control in transport sector. In addition to the application of EURO4 emission standard since 2017, a DPF-1 prior action, a roadmap of emissions standards for in-use and used cars was approved by the Prime Minister in March 2019. In-use cars manufactured after 2008 will be inspected starting January 1, 2020, for EURO-2 standard, and those manufactured between 1999- 2008 will be inspected starting January 1, 2021, for Level 2 standard. The planned DPF-3 trigger to regulate emission permitting system for the major emitting industrial sectors is included in the recently issued Decree 40. The emission permit is required to constitute a part of the certificate confirming the completion of environmental protection facilities of industrial infrastructure before putting into operation. In order to move forward with the planned DPF-2 trigger on regulating emissions from in- use motorcycles and mopeds, the government has assigned MOT to lead preparation of an amendment of the Law on Road Transport to include a legal basis for the inspection of in-use motorbikes, which is expected to be submitted to the National Assembly for consideration in 2021. The planned DPF-3 indicative trigger on emissions regulations for in-use and second-hand imported cars was recently adopted in March 2019.  Policy Track 3.2: Engaging in Low GHG Emissions Energy Production:  Energy Efficiency: Minimum energy performance standards and labeling schemes for new household air conditioning (DPF-1 prior action) and refrigerators (DPF-2 indicative trigger) are both in effect. These cover large and growing electricity consuming segments of the residential sector in Vietnam. The standards and labeling policies are the first mandatory minimum energy performance standards on both new and imported air-conditioners and refrigerators in Vietnam and are the first phase of a roadmap that calls for a regular update of the standards every five years. The DPF also supported industrial sector EE benchmarks for high energy consuming sectors (steel, beverage, plastics, and paper). All planned Circulars have been adopted over the past two years. These benchmarks provide specific energy consumption (SEC) quotas for new, expanded, and renovated facilities as well as a schedule for existing facilities to comply with respective SEC levels. The policies also provide the reporting template for each enterprise and the process for provincial Departments of Industry and Investment (DOITs) to monitor implementation (these reports will be subject to regular energy audits by certified energy auditors). The provision of energy performance data by enterprises and the ability of DOITs to properly understand the data provided to them remains a challenge; however, parallel efforts to enhance the capacity of these stakeholders is being provided by technical assistance from several development partners, including the World Bank.  Renewable Energy: A biomass energy avoided cost tariff was established under DPF-1. The planned solar PV support mechanism and standard power purchase agreement (PPA) (part of DPF-2 indicative trigger) were adopted in 2017. A revised support mechanism for wind (part of DPF-3 indicative trigger) was also recently approved in November 2018 which is expected to address some of the shortcomings of the original FIT approved in 2014. The support mechanisms included Feed-in Tariffs (FITs) for utility-scale solar PV and wind, exemptions for import duties for goods used as fixed assets for the projects, exemption and reduction of land use charges, and a net metering regulation for solar rooftop FITs. Master plans for waste-to-energy and wind (part of DPF- 2 and DPF-3 indicative triggers, respectively) are no longer being approved due to new 10 Decree 40/2019/ND-CP dated May 13, 2019 amending a number of decrees guiding the implementation of the Law on Environment Protection. 13 requirements under the Law on Planning, however, there has been steady progress in strengthening the investment framework for renewable energy, as supported through the DPF and related Technical Assistance (TA). 2.2 Major Factors Affecting Implementation: 22. The government commitment to the policy reform program has been strong, and progress has continued despite the reduction in associated lending. The development of the current phase of the SPRCC recognized that climate change is a complex threat, requiring short- to longer-term action, and that while earlier engagement laid the foundation to address climate challenges and capitalize on green growth opportunities, a sustained effort was critical during the 2016–2020 period. The SP-RCC program was approved by the Prime Minister under Decision No. 2044/QD-TTg dated October 24, 2016, and the policy matrix is reviewed and endorsed annually by formal decisions of the Prime Minister in addition to reviews of progress by the National Climate Change Committee (NCCC). This ensures that there is strong accountability at the highest levels of government for the policies being discussed, identified and developed under the program. 23. The program was underpinned by extensive analyses carried out by the Bank (see annex 7) and other Development Partners, particularly JICA and AfD, but also including the German Corporation for International Cooperation (GIZ), United Nations Development Program (UNDP) and the Asian Development Bank (ADB). Bank support provided largely through a Programmatic ASA (Vietnam Climate Resilience and Green Growth – P148188) early in 2015 included mobilizing global knowledge and technical expertise to support priority ministries (especially MONRE, MPI and MARD) to provide inputs into policies and to enhance their implementation readiness. For example:  Reforms to integrated coastal zone management supported under the program were rooted in over twenty years of knowledge generation, capacity building, and good practices on ICZM in Vietnam supported by DPs (including the Bank, ADB, the Partnerships in the Environmental Management for the Seas of East Asia (PEMSEA), GIZ, and the International Union for Conversation of Nature (IUCN), among others).  Technical assistance was provided to the development of protocols for classification of expenditures by their contribution to climate change and green growth.  Necessary support for efficient irrigation was informed by the Bank’s Irrigated Agriculture Improvement Project.  Support was provided for careful consultation with coastal provinces to ensure their full understanding of and buy-in to the framework for managing and sustainable use of coastal forest.  Priorities for improvement of air quality management were informed by the Bank’s Exploring a Low Carbon Development Path in Vietnam Report (2015) which highlights the benefits of addressing local air pollution and GHG emissions in concert, and the necessity to focus on the transport sector. Other materials were used to highlight the importance of including research on PM2.5 in the AQM National Action Plan.  Low carbon transport policies have been supported by sectoral TA, including an assessment of mitigation options aimed to feed into MOT’s roadmap for emissions reduction.  The content of energy policies was informed by a Programmatic ASA for Clean and Sustainable Energy, an industrial energy efficiency project, and grants from the Partnership for Market Readiness, including recipient-executed work on efficiency benchmarks for key industrial sectors and Bank- executed work on pathways for low carbon energy development. 24. The design of SPRCC emphasized cross-sectoral policy dialogue and coordination, and both the Bank of JICA provided support to MONRE to strengthen that function. Cross-sectoral policy dialogue was key to a 14 number of policy reforms. For example, MONRE worked closely with MOT, MOC and MOIT and business associations during development of the AQM National Action Plan, and with MARD to coordinate policy actions on ICZM and coastal forests. A small SP-RCC Program Coordination Unit (PCU) within MONRE was supported by JICA and to a lesser extent the Bank to strengthen coordination, monitoring and reporting functions. Collaboration and coordination between the three DPs supporting SP-RCC was strong and included semi-annual joint review missions, alongside technical assistance and support missions carried out individually by each DP with their different areas of focus. From the Bank side, participation of different GPs in the policy dialogue and in work on related technical assistance added value to the program. 25. Risks identified during preparation were relevant, and mitigating measures were largely effective. The risks that were cited in the DPF-1 Program Document were based on lessons learnt from the first phase of SPRCC and Bank’s first Climate DPF series and provided a strong foundation to support implementation. Measures included provision of extensive and ongoing technical assistance to address risks associated with the complexity of the policy agenda and limited institutional capacity, provision for structured consultations with both public and private stakeholders to mitigate political risks, and close monitoring of progress with strong accountability to maintain momentum across a wide range of policy engagements and agencies. Although the macro-economic analysis did point to the high public debt burden, the severity of constraints on borrowing as the government approached its debt ceiling were not foreseen, and fiscal constraints on further borrowing were not identified as a key risk to the series. However, the level of public debt was not exceptionally high, and it was the concurrent imposition of the debt ceiling with the graduation to IBRD terms that precipitated the severe reduction in borrowing. The additional policy steps required for adoption of provincial ICZM programs and AQM regulations were also unexpected, but could have been readily addressed through adjustments in the policy matrix, if DPF-2 and DPF-3 had gone ahead. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: M&E Design 26. A robust results framework was established. Preparation of the DPF series developed a results framework adopted by all development partners and by the Government for the SPRCC as whole, although only relevant elements were used for the DPF series itself. A Program Document for the SP-RCC was also prepared and adopted by government, laying out the objectives and an evaluation plan for the Program, as well as matrix elaborating the results indicators and targets, as well as M&E arrangements for each.The specific results indicators and targets reflected meaningful achievements under the PDO, whilst linking to the specific policy actions in each of the policy tracks. These were a mixture of strategic process and outcome-oriented indicators, given that most of the areas targeted are complex (as evidenced in other countries around the world) and do require long-term efforts to show significant results on the ground, and in some cases (e.g. ICZM and AQM) were starting from a low base. The inclusion of quantitative and outcome-oriented results indicators (e.g. areas of farmland under more efficient irrigation and coastal forest planted, emissions reductions from forestry and cars, reduction in industrial energy use and increase in installed capacity for renewable energy generation) was ambitious in the context of a DPF addressing areas of climate and natural resources management where implementation typically takes several years. Nevertheless, attribution of the results achieved to the envisaged (and largely delivered) suite of policy actions across the series is robust and where necessary enhanced by the method of evaluation of the indicators – e.g. the estimate of increase in renewable energy generating capacity only includes those investment projects that were prepared in accordance with policy instruments included within the policy matrix. In some cases, e.g. increase in forest plantation, the results are linked to investments that originated from the inclusion of climate objectives in the SEDP (i.e. track 1.2 prior action under DPF-1), including via the climate-related Target Programs. 15 27. Selected indicators were also largely appropriate to the level of institutional capacity, although some relied on external support for measurement. The tracking of most indicators relied on existing government monitoring and reporting systems, largely based on annual ministerial reports that aggregate data from the provincial level, with due diligence from the Bank where necessary through its sectoral engagements. This applies to indicators on (i) provincial ICZM programs; (ii) provinces with water source protection corridors delineated and with an action plan to address threats; (iii) number of hectares of farms utilizing more advanced and efficient irrigation practices; (iv) increase in coastal forest area; and (v) number of cities AQM plans.11 Measurement of indicators related to financing (under policy track 1.2) benefited from the policies under the DPF series itself, which enabled MPI to report on climate change and green growth public investment allocations. Assessment of the indicator on renewable energy was possible through regular monitoring from EVN and MOIT. Two indicators where the lapse in the DPF series (and the related need to prepare an ICR in a short time period) had an impact on measurement are those related to forest carbon and energy efficiency improvements in the industrial sector. These rely on reports from the government that will not be available until 2021 and 2020, respectively, as initially agreed in the context of the series of 3 operations with an initial closing expected in 2021. For the NOx emissions from road transport and GHG emissions related indicators, while this is not part of the regular reporting process from the government, the Bank team planned to continue support the measurement of progress through a separate TA. Some indicators and targets could have been more precise. For example, a few indicators included both absolute numbers and percentages when only one would suffice (e.g., those for ICZM program development and renewable energy). The indicator on the increase in climate-change and green growth financing shouldn’t have used the number of projects as the same set of investments could be packaged in a variety of different numbers of projects. The volume of investment is a more appropriate metric, although there had been reluctance to use this by MPI, as it was felt to be harder to achieve. M&E Implementation 28. The MONRE Department of Climate Change (DCC) leads the SP-RCC 2016-2020 and collaborates with line ministries to coordinate the policy dialogue and provide overall accountability, including the M&E of progress and quality of the policy reforms. MONRE established a full time PCU which is directed by the Deputy Director General of the MONRE Department of Climate Change and staffed with officials from the department, the International Cooperation Department, and other relevant departments within the MONRE and contracted experts. The institutional arrangements were similar to those adopted under the earlier Climate Change DPF series and first phase of SP-RCC, although JICA was unable to maintain TA support for the duration of the 2nd phase of SP-RCC. The Government established a network of climate change focal points in the line ministries that follow, coordinate, and report on the status of sector-specific climate change policy actions and benchmarks. Official communication related to policy actions between the MONRE and participating ministries is made at vice minister level via normal internal reporting lines. The focal point at line ministries oversees preparation and leads the discussion of technical elements of the policy actions and engages with sectoral technical experts for their technical inputs at policy dialogue. They also discuss the targeted analytical work with development partners to support policy development. This engagement builds greater ownership from line ministries to the policy dialogues under SP-RCC. The PCU was tasked with conducting monitoring and supervision and assisting line ministries and DPs in synthesizing and reporting on results of implementation of the DPF series as part of the SP-RCC coordination. The NCCC, chaired by the Prime Minister, provided high level oversight and guidance on strategic direction for policy development under SP-RCC. The Prime Minister endorses the annual policy 11 This likely would have also been the case for the percentage of enterprises in sectors/industries that report to emissions registry, had the DPF policies related to the indicator been approved and implemented as planned. 16 framework with policy actions which are proposed by line ministries in discussion with SP-RCC development partners. Annual meetings of the NCCC were convened to provide oversight and guidance to the overall climate change agenda and include the review progress under the SP-RCC. 29. The PCU performed its M&E function conscientiously during implementation in the face of a large coordination agenda with line ministries for monitoring policy reform across the whole of the SP-RCC matrix. The M&E reports of the program were prepared by the PCU in coordination with the line ministries and submitted to MONRE management who reported to the NCCC on behalf of participating ministries on implementation progress and results achieved. These reports mainly focused on progress toward delivery of the policy actions. The PCU shared the reports with DPs (in advance of the joint missions) to keep them informed of the implementation progress of the policy program. The limited resources number of full-time staffs at PCU, however, did affect the level of quality of communication, given the need to follow up across a large number of line ministries for collection of data and information to prepare quality report. M&E Utilization 30. During the implementation period the current phase of SP-RCC, monitoring has mainly focused on the progress in delivery of agreed policy reforms under the SP-RCC policy matrix. These were reported and discussed during Joint Supervision Missions of the three DPs supporting SP-RCC, as well as reported to annual meetings of the NCCC. Where the schedule of reforms was delayed, justifications were required from the relevant ministry, who were requested, and sometimes supported with TA, to accelerate delivery. In the course of supervision missions, however, progress against end-of-program indicators was also discussed and updated where the data were available (i.e. not for all indicators, as some were only due to be assessed at the end of the program as discussed above). 31. Given the ambition of monitoring results across a multi-sector policy development agenda and following lessons from the under the first phase of the SP-RCC (and associated Climate Change DPF series), DPs mobilized direct capacity support to the PCU, but capacity development is ongoing. Collection of data on outcome of a range of national climate policy objectives provides significant capacity challenges for government staff (national and local), which limited the selection of results indicators. For instance, no results indicator was included for uptake of energy efficiency standards for household appliances because data was lacking, although in the event, an external survey has provided a good picture of results. In other area, such as systematic data collection on industrial energy efficiency, capacity development is still ongoing. The quality of the monitoring reports that were provided in advance of joint-Development Partner varied with the level of support provided from JICA’s technical assistance program, which supported a portion of PCU staff time through 2017. During that time, the reporting included the rationale, projected policy impact, and linkage with broader climate change and green growth policy objectives for new policies considered under the SP-RCC. After the JICA TA support ended, the content of the reporting decreased, with most of the focus on checking off the status of agreed policy actions. The World Bank and the other co-financers therefore worked closely with the MONRE PCU to gather the relevant data through direct engagement with the concerned sectors. 32. There was an active dialogue between the Government and DPs related to continued strengthening reporting and policy dialogue including by:  Including (i) a brief note summarizing the key expected or actual content of each policy action vis- à-vis climate objectives, and (ii) a note on whether the development of each policy action is being supported by development partners.  Summarizing the existing and expected policy achievements under each Theme, the original outcome indicators, any proposed changes to the Indicators, and notes on arrangements to assess 17 those indicators and any available evidence of progress to date.  Providing all the documentation for the Joint Mission, including copies of the supporting documents for each policy action well prior to the Joint Mission.  Organizing the next Joint mission around a series of thematic discussions on the policy actions needed to deliver on the new targets, convened by respective lead ministries, and including all key development partners supporting that theme or sector.  Sharing the schedule and proposed agenda for NCCC meetings at least 6 weeks in advance, to allow for convening a discussion amongst SPRCC partners of suggested agenda points related to policy issues, including potentially endorsement of proposals for the future development of the SPRCC process, and resolution of cross-sectoral policy issues.  Providing regular thematic discussions, led by respective Ministries and including all active partners, as well as periodic comprehensive monitoring, evaluation and reporting processes. 2.4 Expected Next Phase/Follow-up Operation (if any): 33. Vietnam needs more policy reforms to address increasing climate change impacts and moving forward with more sustainable growth. The Plan to Implement the Paris Agreement, adopted in October 2016, lays out a strategic framework to materialize the country’s adaptation priorities and commitment for GHG emission, and will the update of Vietnam’s NDC (currently in progress) will lay out the agenda for further action. In the immediate future, further DPF support to the current phase of the SPRCC, in line with the general scope of the original series, is still requested by Government counterparts to ensure continued engagement and financing for a successful conclusion to SP-RCC. However, due to the long delay in the approval of DPF-2 and consequent lapse of the original DPF series, a second DPF will now be processed as a stand-alone operation. The detailed content of the policy matrix has been updated from the original DPF- 2 design following the discussion with the Government counterparts, to add further value to the policy actions that have already been delivered. A concept note review for this new operation is expected to take place by the end of FY19, with approval in FY20. 34. In the medium-term, further support is also expected to be needed in the post-2020 period to support NDC implementation and the need for an increasing level of ambition. At the end of 2018, the Prime Minister also requested MONRE to take the lead in development of a climate change program for the post 2020 period (the Government Office’s Note No. 12054/VPCP-HTQT dated December 2, 2018). This program would aim to increase ambition and engagement for systemic action across the Government in support of the implementation of its NDC. MONRE requested the Bank team to take a leading role in collaboration with other DPs in supporting this process, and trust fund resources have been identified for a new 2-year Technical Assistance to identify ongoing policy, investment and coordination needs, and to identify options of Bank financing to support them. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy): Rating: Substantial 35. The DPF series remained highly relevant to the government’s policy objectives, and the policy engagement around it helped to shape them, as well remaining relevant to the Bank’s new Country Partnership Framework for Vietnam. The PDOs reflected a selection of key issues for addressing the challenges of 18 climate change, and the results indicators pointed to meaningful contributions to them, within the confines of showing short term impact on a complex, long-term agenda. 36. The CC&GG DPF remained highly relevant to Vietnam’s climate change agenda, which is a long-term and intensifying challenge that is critical to the broader national development agenda. The design of the DPF series was closely linked to a 5-year policy reform program under the SPRCC, and to objectives highlighted in the 5-year SEDP to accelerate investment and reforms that strengthen the country’s resilience to climate change and promote a low carbon, green growth development path. Since the approval of the DPF, the GoV has also ratified the Paris Agreement (November 2016), and adopted its first NDC. Technical assistance and policy engagement linked to the DPF have helped to shape revisions to the SP-RCC policy matrix, as well as the development and updating of the NDC objectives. Although it was beyond the scope of the DPF to address all climate priorities contained in the SPRCC and NDC, the policy tracks that were included are prominently reflected amongst their objectives (see Table 5 below). Table 5: Pillars/Policy Tracks and Linkages to SP-RCC and NDC PILLARS/Policy Tracks Linkage with SP-RCC Objectives Linkage with NDC Objective Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: Enabling Area- Goal Theme 3 – Proactive response to Respond to Sea-level Rise and Urban Based Adaptation and Resilience in sea level rise and disaster risk in Inundation (A3) Coastal Areas vulnerable areas Policy Track 1.2: Improving Goal Theme 8 – Increase investment Mobilization of Resources for Climate and diversify financial resources Change and Green Growth Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1: Improving Water Goal Theme 2 - Food and water Ensure Social Security (A2) Protection and Use Efficiency security in the context of climate change Policy Track 2.2: Enabling the Goal Theme 4 – Sustainable forest Manage and develop sustainable forest, Development of Forest Resources management and development enhance carbon sequestration and Services environmental services; conservation of biodiversity associated with livelihood development and income generation for communities and forest-dependent people (M6) Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: Engaging in AQM Goal Theme 5- Reducing emissions in Change the fuel structure in industry and with an Initial Focus on Planning, the SEDP process transportation (M3) Inventory, Industrial permitting, and Cleaner Transport Policy Track 3.2: Engaging in Low Goal Theme 5- Reducing emissions in Promote effective exploitation and GHG Emissions Energy Production the SEDP process increase the proportion of new and renewable energy sources in energy production and consumption (M4) Improve effectiveness and efficiency of energy use; reducing energy consumption (M2) 19 37. The CC and GG agenda also continued to be one of the main priority areas in the Bank’s Country Partnership Framework (CPF) FY18-22 for Vietnam. Focus area 3 (Ensure Environmental Sustainability and Resilience) states that the WBG will support the adoption of sustainable models for natural resource use and management; strengthen climate change resilience and mitigation efforts, and disaster risk and water resource management; and support a more sustainable energy generation path. The policy tracks are also highly relevant to the World Bank Group’s new 2025 Climate Targets and Actions, which emphasize mainstreaming climate action across government and within national planning and budget processes, as well as the need for action specifically on the transitions to cleaner energy and transport, as well as on climate resilient landscape and water resources management. 38. The design of the DPF series generally struck a sound balance between ambition and realism, both in terms of the breadth of policies, and the nature of the actions and indicators selected. Six policy tracks, comprising 10 prior actions (several of which relied on more than one policy instrument), under the responsibility of 5 ministries (MONRE, MPI, MARD, MOT & MOIT), reflects a policy agenda that was perhaps broader than necessarily, but still represented a select subset of the policy content of the SPRCC. The nature of the actions and associated results indicators varied between policy tracks, pragmatically including policies to directly shape incentives for action and outcome-oriented results in some cases (e.g. investment frameworks for renewable energy and the associated increase in generating capacity), and early planning steps and process indicators where needed (e.g. development of guidelines and adoption of provincial ICZM programs). The result was a policy matrix that allowed for building and maintaining momentum across a range of policy areas, whilst providing substantial aggregate impact. The combination measures aimed at integrating climate into general planning and budgetary frameworks, as well as sector- specific measures targeting key climate nexus areas such as energy, transport and forest and water resources, foreshadowed the priorities adopted by the Bank under its new 2025 Climate Targets and Actions. Although not all national climate priorities could be included, the PDO did reflect a selection of key climate issues, including established priorities for both mitigation and adaption, for which policy reform was required and typically with links to additional operational engagement by the Bank, which would complement policy action. These were coastal planning, mobilization of financing, natural resources (with a focus on forests and water), and cleaner production (with a focus on urban air quality, emissions from transport and green energy). 39. The choice of instrument, a series of three DPFs, was appropriate, given that: 1) Support was needed on policy reform, and the DPF series was accompanied by complementary TA and IPFs. A Program for Results would have given more opportunity to influence the way in which financing linked to SPRCC was channeled to climate investments, but the at the time of the design of the DPF series, P4R was a new concept to Vietnam, and a program of this breadth and complexity would not have been a natural candidate to pilot it. 2) Despite the lapse, the programmatic series was appropriate given that: (i) many policy changes in Vietnam require sequential policy actions (i.e. following the legislative hierarchy from Law to Decree to Circular); and (ii) it allows time to demonstrate and assess results of policy implementation. Implementation and results of environmental policies typically require a medium to long-term timeframe, as reflected in the lessons from other climate DPF series, including first Vietnam Climate Change DPF series (P122667, P127201, P131775), and operations in Mexico (P110849) and Morocco (P117801). 40. Implementation challenges have arisen during the policy reform program, both in relation to constraints on borrowing and therefore approval of subsequent operations, and the emergence of legal hurdles to the adoption of anticipated reforms (i.e. AQM regulations and provincial ICZM programs). Management of these challenges is beyond the scope of DPF-1 alone, but the advanced stage of preparation of DPF-2, and 20 subsequently the identification of a new DPF operation, provides documentation that the task team were aware of the issues and adjustments to the policy and results matrix were planned to address these. 3.2 Achievement of Program Development Objectives Overall Rating: Moderately Satisfactory 41. Achievement of the PDO is assessed to be moderately satisfactory, measured in terms of progress against the results indicators and broader impact of reforms across the three pillars of the DPF series, especially given that the early completion of the ICR due to the lapse of the original series. Although only 5 of 13 results indicators are assessed as fully achieved, there is an impressive progress in relation to almost all indicators, when considering that results have been assessed in early 2019, whereas the original target date was at the end of 2019, and that only one of the original three operations was approved. Moreover, had the series gone ahead as planned, the end-of-program assessment date would have been pushed back to 2020 or 2021, and identified issues with indicators and targets could have been addressed.12 Given the broad range of results that are linked to the policy actions under the planned series, it is reasonable to assume that all indicators would have met their targets. Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Rating: Moderately Satisfactory Pillar 1 supports the first element of the PDO – to improve inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action. There are three results indicators, one of which is assessed as substantially achieved, one as partially achieved, and one as not achieved. However, all three of these indicators could have been readily achieved if approval of further operations had provided the opportunity to make modest changes to the wording of the indicators. The policy actions developed and approved under this pillar have led to considerable progress in the development of coastal resources management, and to an increase and improved monitoring of budget allocations to climate change and green growth. to (a) improve inter- sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action; (b) develop and safeguard selected natural resources services; and (c) promote selected cleaner production systems. 42. Policy Track 1.1: Enabling Area-Based Adaptation and Resilience in Coastal Areas: Considerable progress has been made in a number of coastal provinces in their development and implementation of ICZM related activities, although no province has formally adopted provincial integrated coastal zone management programs as of April 2019 (against a target of 5 by end 2019) due to new planning procedures prescribed under the new Law on Planning. Under the 2017 Law on Planning in Vietnam, a national Master Plan on Sustainable Exploitation and Use of Marine Resources must be developed (expected by 2021) before provinces can formally adopt their own ICZM programs. Despite this delay, several provinces have made significant progress in strengthening their readiness for ICZM planning and programming. In accordance with the DPF-1 and DPF-2 policy actions, MONRE has taken a number of steps to advance coastal zone management planning, including establishing a National Coordination Committee involving key ministries and Provincial People’s Committee Vice-Chairs from all coastal provinces to support policy dialogue on coastal development in 12 See draft DPF-2 PD and minutes at QER meeting for evidence of the changes that were envisaged. 21 Vietnam. Coastal provinces continue implementing their ICZM activities in line with the guidance under new policies, organized under ICZM plans or projects. Up to now, 24 out of 28 coastal provinces have issued and implemented strategies, plans, or projects related to ICZM. 5 provinces have developed or in the process of developing their coastal inventories to inform the development of their ICZM programs. 9 provinces have developed local data management systems on ICZM linking with the national data management system. Multiple provinces have developed plans on ICZM implementation (including Quang Binh PPC in December 2016, Thua Thien-Hue PPC in January 2017, Quang Nam PPC in February 2017, and Quang Ngai PPC in September 2017) and set up the multi-sectoral coordination mechanism or provincial steering committee to provide overall guidance for coastal issues. In other provinces, including Binh Dinh, ICZM activities were organized as projects to that they can continue the implementation as guided by MONRE. Ninh Thuan, Khanh Hoa and Binh Dinh are preparing inventories to inform the development of their coastal programs. 19 provinces establish or are in the process of setting up the coastal setback line, s identifying a buffer zone behind the coastal line to protect people and assets from increasing climate risks of storm surge, erosion and sea level rise. The setback line was identified based on analysis of data on socio-economic development, population, physical and ecological processes and coastal landscape and consultation with stakeholders. Marine environment monitoring systems were also established in provinces to monitor sea water quality for aquaculture, biodiversity protection and tourism. As a result, they are strengthening their capacity to map their coastal assets, inter-sectoral coordination, enhancing communication, building human resources, and identifying potential sustainable financing schemes for ICZM. Government commitment to the coastal resources management agenda remains strong, with the Blue Economy13 having been recognized as a national priority, and even as new policy frameworks are in process, several provinces are still undertaking ICZM activities under older (e.g. Program 158) budget and work cycles. However, more capacity training to provincial staff is needed especially on linkage with other sectoral and provincial planning, which should be supported under the new approach to Master Planning. It is also critical that the National Coordination Committee to be more active for overall guidance and enhancing activities at provincial level. 43. Policy Track 1.2: Improving Mobilization of Resources for Climate Change and Green Growth: In total, 18 provinces had climate change and green growth investment programs identified, classified, and reported on (against a target of 8), although no sectors were included to date (target was 3) as MPI decided to focus its efforts at the provincial level. While the total number of climate change and green growth projects in those 18 provinces decreased by 10% between 2015 and 2017 (against a target of a 15% increase by 2019), the amount of financing (a more meaningful indicator) increased by 14%. The government mobilized a significant level of additional public financing on climate change and green growth, reflecting the new prominence these were given in the SEDP. Following the inclusion of climate change and green growth as a priority objective in the 2016-2020 SEDP, climate-related target programs (TPs) have been included in the government’s public investment budget, including over VND 659,000 billion (approximately USD 28 billion) for the TPs on Climate Change and Green Growth, Agricultural Restructuring, Sustainable Forestry Development, Sustainable Aquaculture Development and Treatment of Key Pollution Points. These TPs account for 33% of the total government investment budget for 2016- 2020. Actual allocation to the TP on Climate Change and Green Growth for 2016 – 2018 reached 65% compared with the total planned budget. MPI is now better equipped to report on climate change and green growth policy implementation to inform resource mobilization decisions. The reviews of climate expenditures in 18 provinces have helped 13 Resolution No. 36 dated October 22, 2018 of the Central Party Committee for development of the Blue Economy toward 2030. 22 to (i) raise awareness of government leaders and officials on financing needs for different climate change and green growth policy objectives; (ii) provide relevant information to the preparation of the NDC review and update process (currently ongoing); and (iii) inform recommendations for implementing Prime Minister Resolution 120 on the Sustainable and Climate-Resilient Development of the Mekong Delta (where 13 of the 18 provinces are located). MPI aims to institutionalize the policy on tracking climate expenditures across key line ministers and all provinces and cities. Pillar 2: Developing and Safeguarding Selected Natural Resources Services Rating: Moderately Satisfactory Pillar 2 supports the second element of the PDO – to develop and safeguard selected natural resources services. There are four results indicators, one of which are assessed as fully achieved, one as substantially achieved (which is on track to be fully achieved by 2020), and two as partially achieved. Of the two partially achieved indicators, the target for one would have been adjusted if the series had progressed, as a number of assumptions were found to be unrealistic, and the other won’t be quantitatively assessed until 2021 . The policy actions developed and approved under this pillar have led to improved management of water resources through protection of key rivers and a large increase in the adoption of water efficient irrigation techniques, and to an increase in the forest planting, especially of protective coastal forests. 44. Policy Track 2.1: Improving Water Protection and Use Efficiency: By the end of 2018, targets for both results indicators were exceeded and largely met, respectively. More than 20 provinces (target of 6) have established protection corridors for water sources and about 20 others are developing them. Detailed description of the protection sites including the length of the corridor, geographical coordinates and commune name for each section of the river or stream protected is provided. Around 320,000ha of farmland are under more advanced and efficient irrigation practices (against a target of 400,000ha; baseline was 50,000ha), and MARD expect the full target to be met by 2020. Provinces have taken concrete steps to establish protection corridors across key water sources in Vietnam. In total, more than 40 provinces have either completed their lists of water protection corridors or are well advanced in their development, and 22 provinces are working on their list of protection corridors specifically for hydropower and irrigation water reservoirs and canals. This level of progress is despite a fiscal constraint during the last two years of 2017-2018 in which every expenditure had to be included in the provincial Medium-term Investment Plan (MTIP) approved by the National Assembly, while the Decree on protection of water source corridors only became effective late 2018, and therefore was difficult for provinces to include in their MTIPs for approval by the Assembly. Following the planned DPF-2 trigger on the identification of sanitary protection zones for sources of water supply, provinces requested owners of water resources exploitation for domestic water supply to identify and submit the protection zones around drinking water intakes to DONRE for appraisal and approval by the Provincial People’s Committee. The establishment of protection corridor prevents encroachment of land which narrow the river follow and flood plain along both side of the rivers. The corridor protects the water source from depletion and pollution from the discharge of untreated wastewater to the water source. It also contributes to prevention of embankment erosion. Policies supported under this DPF series have helped promote the uptake of water-efficient irrigation practices and technologies. Following MARD Decision 1788 “on the action plan for developing advanced irrigation and water savings for upland crops in support of the restructuring of water resources sector”, several policy instruments (detailed in Annex 8) were adopted to increase water efficient irrigation. As a 23 result of the implementation of the action plan, the national government and many local government authorities have increased awareness of the potential and need for using more water-efficient irrigation practices to protect natural resources and the environment, to increase the efficiency of their public investments, and for improving incomes. Following the policy on “incentives to encourage the development of small irrigation systems, infield irrigation systems, and more advanced and efficient irrigation systems”, a number of provinces, including Lam Dong, Nghe An, Ha Tinh and Ninh Thuan, have provided support to farmer cooperatives for improvement of storage, canal and water saving systems for upland crops. Guidelines for application of efficient water use practices for of priority crops are being used in extension services to guide farmers to use appropriate water volume at different period of time for upland crops. According to MARD’s review of the first stage of implementation of the action plan in 2018, using water-efficient irrigation practices has led to an increase of crop productivity by 10-50%, with 80- 120% improvement for sugarcane in particular, a reduction of fertilizer uses by 5-30%, and an increase in rural incomes by 20-40%14. 45. Policy Track 2.2: Enabling the Development of Forest Resources Services: By the end of 2018, one forestry target had been partially met, and there is significant progress on the other, although it is not due to be assessed quantitatively until 2021. In total, 14,100 ha of new coastal forests had been planted (45% of the target), and it is expected that the target will be around 70% achieved by 2020, as MARD has indicated that: (i) they overestimated the land available for coastal forest planting; and (ii) planned plantation grounds are becoming more difficult for planting and survival of seedling due to increasing erosion or high tides. For some areas, it takes two to to three years to prepare for sufficient mud siltation grounds before planting can start. However, there is no verified data that can be used to measure the percent emission reductions for the forestry section (target: 7% reduction from 2000-2012), given that the next MRV exercise is not scheduled to take place until 2021. Policies and the broader reform agenda supported by this series have enabled an increase in forest land area for coastal protection, albeit slightly below the level originally envisaged. In part to support implementation of the Government Decree governing the management, protection, restoration and development of coastal forests to address climate change (DPF-1), the government established the Target Program on Sustainable Forestry Development with a budget of about VND 59,599 billion. The Decree also facilitates the implementation of the planned investment to restore coastal forest for resilience because it allows local communities to benefit from the restoration of the asset. MARD’s technical guidance on the integrated production of forestry, aquaculture, and agriculture inside coastal forest land areas aimed to provide the regulatory basis for generating sustainable income from coastal protection forests that are classified for protection functions. This has built on lessons and experiences from the implementation of integrated production systems in various parts of Vietnam including the Mekong Delta, Ca Mau, Thua Thien-Hue, Thai Binh, and Nam Dinh provinces. In Tra Vinh province, about 200 households have applied nature-based shrimp aquaculture in the mangrove forests. Further funds for coastal forest restoration are included in the MTIP. Significant progress has been made in setting up the policy framework at both the national and provincial levels to enable the preparation of REDD+ programming in Vietnam. With the MARD Guidelines on Provincial REDD+ Action Plan (PRAP) preparation, provinces have generated higher quality PRAPs that directly support the planning for future payments for emission reductions. Moving forward, it will be important for MARD, in collaboration with other relevant ministries and the government, to establish necessary conditions to attract and secure resources to implement REDD+ activities to leverage result- based payments and to support NDC Implementation. A broadly consulted benefit sharing plan has been 14 MARD’s report at the national implementation review of the action plan for irrigation efficiency in May 2018. 24 developed for a first jurisdictional Emission Reduction Payment Agreement (ERPA) (6 provinces of Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, and Thua Thien-Hue). Proceeds from the agreement would contribute to the implementation of the PRAPs. The expected outcomes of the ERP are the improved management of the existing 917,232 ha forests (of which 33,017 ha are coastal forests), the establishment of 65,265 ha of large timber plantations, rehabilitation and improved quality of 105,703 ha of poor natural degraded forest across the six North Central Coastal provinces. The payment of USD 51 million is envisaged from the Bank funded project for 10 million tons of CO2equivalent emissions. Key decisions have yet to be made on the transfer and ownership of emission reduction titles. Because of reforms under this track, forest plantation and enrichment are under progress in three selected north central region provinces under the TP for sustainable forest development. The impact of REDD+ on the actual state of forests in priority provinces will only be measurable during the upcoming monitoring cycle (results expected in 2021). Pillar 3: Promoting Selected Cleaner Production Systems Rating: Moderately Satisfactory Pillar 3 supports the third element of the PDO – to promote selected cleaner production systems. There are six results indicators, two of which are assessed as fully achieved, and one likely achieved. One was assessed as partially achieved because although there has been some progress under it, a quantitative assessment requires significant survey work by MOIT, that is not ready at the time of the ICR. Two indicators were impacted by a DPF-2 policy trigger that has not yet gone ahead as enabling legislation was first needed. One was rated partially achieved although it was exceeded in the literal sense, because related guidelines have not yet been issued by MONRE, and the other was not achieved. If the series had progressed, these indicators would have been amended. The policy actions developed and approved under this pillar have led to the development of actionable provincial AQM plans, improvements in energy efficiency of both industrial processes and household appliances, improvements in the emissions performance of new vehicles, and a very large increase in private investment in new renewable energy generating capacity. The improvements to vehicle standards and investment in renewables have been calculated to produce significant reductions in Vietnam’s emissions. 46. Policy Track 3.1: Engaging in AQM with an Initial Focus on Planning, Inventory, Industrial permitting, and Cleaner Transport: By the end of April 2019, the target of 3 cities adopting AQM Plans was exceeded, with 5 developed, and the target to reduce NOx emissions from light-duty vehicles by 6.85% was achieved. The target of 6 sectors/ industries reporting emissions was not achieved. Following the National Action Plan for Air Quality Management adopted by the Government in 2016, 5 provinces have issued plans for improvement of air quality. These provinces are Can Tho, Hai Phong, Hoa Binh, Nam Ha, and Yen Bai. The provincial AQM Plans include no regret actions to improve the ambient air quality, including reviewing AQM policies for revision, setting up air monitoring station, increasing communication on air pollution, disclosure of air pollution data, setting up automated continuous air monitoring system, assessing air pollution bearing capacity for industrial zones. The plans require industries to invest and install equipment to ensure no emission of air pollutants to the environment. These plans also require DONRE to undertake PM10 and PM2.5 inventory and industries to invest and upgrade technology to mitigate pollution. These are key elements constituting a sound AQM plan, showing positive efforts of provincial authority to take actions to improve air quality. With further guidance on the content of the plans expected from the central Government following the issuance of Decree 40, provinces could develop compliant AQM plans with improved assessment of the causes of ambience air pollution, including emission source apportionment, inventory and modelling of transboundary pollution contributions. The 25 Bank continues to have a strong engagement on AQM policy development through technical assistance15 to MONRE that provides international knowledge to guide reforms and provides an example for development of a city AQM plan. Hanoi municipality, which is under increasing pressure to take actions for air quality improvement, continues to move forward with carrying out air emission inventory and PM2.5 source apportionment for development of their AQM plan with support from the Bank. Hanoi is undertaking a one-year source apportionment campaign and air emission inventory covering pollutants of PM2.5, PM10, black carbon, organic carbon and precursors to secondary PM (SO2, NOx, NMVOC, NH3) and GHG (CO2, CH4). These data will provide a sufficiently robust air quality management model for Hanoi to develop an AQM plan with the most cost-effective multi-sectoral measures to reduce air pollution as well as GHGs. The target to reduce 6.85% NOx in transport sector compared to business as usual was achieved with the actual reduction of 7.49% after two years (2017 and 2018) implementation of the EURO4 emission standard for light duty road vehicles. This achievement is due to the Government effort to ensure strict implementation of the policy. In the transport sector, emission standards for new cars went into effect on January 1, 2017. As of that date, all new imported or manufactured cars must meet the Euro 4 standard in Vietnam. Vietnam Register is fully equipped to test vehicles at major seaports and has started in May 2019 its formal inspection of second-hand imported cars for EURO-4 standard. Standards for in-use road vehicles were adopted in March 2019 and will go into effect at the start of 2020 and 2021 for cars produced after 2008 and after 1999, respectively. The March 2019 policy also required all imported used cars to meet the Euro-4 standard, providing an effective measure to reduce emissions from this segment of the vehicle fleet. The broader dialogue around the DPF also enabled support to MOT to move forward on the climate mitigation agenda. This included TA, together with GIZ, to support MOT with a bottom up inventory of GHG emissions from the sector which enabled the modeling of emissions impacts of different mitigation options in the transport sector, as part of an ongoing policy dialogue to increase the level of ambition for GHG emissions reduction within the transport sector over time. This has enabled MOT to raise the ambition of its emissions targets, which will be reflected in the development of an implementation plan for the sector to meet its NDC commitments through 2030. The target of 60 percent of enterprises in 6 sectors/industries reporting to the emission registry (in compliance with the reporting criteria defined in the circular on emissions inventories) was not achieved. Preparation of the circular to guide industries to carry out emission inventory was advanced. However, issuance of this guidance was delayed due to delays in amending an umbrella legal framework, which was finally adopted as Decree 40 in May 2019. 47. Policy Track 3.2: Engaging in Low GHG Emissions Energy Production: Of the three original results targets, one has been achieved, and one has likely been achieved (although the target wasn’t formally established as the indicator would have been dropped). Progress against the third, the target of a 3.2 percent reduction in energy usage of selected sectors is advancing although the measurement is expected by MOIT in 2020. New installed capacity of grid-connected non-hydro renewable energy is 2,714.8 MW, against a target of 690 MW and counting only those investments developed under the new policy frameworks included in the DPF series as of the end of May 2019. An additional 41 solar power plants with 2,500 MW are expected to be installed by the end of June but are not included in the results indicator measurements. The projected cumulative GHG emission reduction impact through 2030 of these new investments in renewable capacity is 24.9 million tons of CO2 equivalent. The indicator on emissions reduction would have been dropped if DPF-2 had been processed, as it results directly from the 15 The Bank-led Global Pollution Management and Environmental Health (PMEH) Program supports MONRE and Hanoi to advance the air quality policy reforms and planning. 26 increase in renewable energy capacity, rather than representing a separate achievement. The DPF has led to improved energy efficiency of household appliances; although more data is needed to assess the impact of industrial sector energy efficiency benchmarks. The policy supported under DPF- 1 is the energy efficiency labelling standards for non-ducted air conditioners. New minimum performance standards and labeling for room air conditioners has raised energy efficiency for new air conditioners in one of the fastest growing markets in the region. A recent market assessment conducted by CLASP 16 indicates that market penetration of inverter air-conditioners (which are on average more efficient than single speed A/Cs) has increased by approximately 31%, as a result of the new policy. In addition: (i) all models surveyed on the market had Vietnamese energy labels, 99.8% of which were certified labels; and (ii) 62.8% of which have 4- or 5-star ratings, suggesting a further revision of the standard is needed (as anticipated in 2020 under Vietnam’s roadmap for standards and labeling, that calls for regular updates of the policies every five years). On industrial energy efficiency, the envisaged benchmark policies adopted in late 2016 and 2017 (DPF-2 and DPF-3 triggers) direct the steel, pulp and paper, plastics and beverage industries in taking energy saving measures. This was promoted by MOIT’s and DOITs’ prioritized awareness raising, training and capacity building of provincial authorities and industrial enterprises to ensure that they are able to meet the new standards. Investigations conducted by MOIT and DONREs to energy intensive users help them paying more attention to the requirement to use the resource efficiently. Energy savings measures are applied by industries especially those listed as energy intensive users. These measures range from the improvement of lighting system to the installment of inverter, improvement of production processing and technology, reduction of machine running time without production, application of ISO 50001, etc. A number of factories apply this energy management standards and initial result shows encouraging result 17 . As part of the new national energy efficiency program (approved by the Prime Minister in March 2019 18 ), it is expected that MOIT will be able to mobilize additional resources and technical assistance as well as further strengthen the monitoring and compliance regime to facilitate implementation of energy efficiency measures in the highly energy intensive industrial sector. Policy reforms have increased investment in renewable energy, particularly solar, and an anticipated reduction in GHG emissions from the sector. The DPF series included policy reforms that supported an ongoing improvement in the investment framework for new renewable generation capacity. Although there are still concerns amongst foreign investors in relation to provisions to manage sovereign risk, the improved frameworks have enhanced incentives for both domestic and foreign investors. The solar PV support mechanism [including feed in-tariff (FIT)] and standard power purchase agreement (PPA) adopted in 2017 have led to significant investment. While the policy will phase out at the end of June 2019, an updated FIT (with differentiated rates across regions in Vietnam) is planned to be approved by the end of June 2019 and will include a provision for a solar auction mechanism post 2020. A revised FIT for wind was approved in November 2018 and addressed some of the shortcomings of the original 2014 FIT. The biomass avoided cost tariff set in 2016 has also led to investment in the sector. Investment in waste-to-energy generation has been slow, due to difficulties for investors in accessing reliable supplies of solid waste. Thus far:  The solar FIT and standard PPA have led to 50 PPAs signed with 2,481 MW of installed capacity (as of the end of May 2019). It is expected that an additional 41 PPAs will be signed with 2,500 MW of 16 CLASP, 2019 (forthcoming). Vietnam Room Air Conditioner Market Assessment and Policy Options Analysis 17 The Metallurgy Factory (SADAKIM) is applying ISO 50001 and reports and energy saving of 67% in 2017-2018. Source: http://nscl.vn/nang-cao-hieu-qua-su-dung-nang-luong-tiet-kiem-bang-viec-ap-dung-he-thong-quan-ly-nang- luong-theo-iso-50001-tai-cong-ty-co-phan-co-khi-luyen-kim-sadakim/ 18 Prime Minister Decision 280/2019/QD-TTg 27 installed capacity by the end of June19.  One wind PPA has been signed with installed capacity of 34 MW19.  4 new PPAs totaling 190 MW of installed capacity have been commissioned for biomass19.  2 new PPAs totaling 9.43 MW of installed waste-to-energy capacity have been commissioned19. A World Bank analysis of the impact of these investments (not including the additional solar investments anticipated in June 2019) indicates that these will lead to cumulative GHG emission reductions of 24.9 million tons of CO2 equivalent as compared to a baseline scenario through 2030.20 If the additional solar investments do materialize, the emission reductions increase to 46.6 million tons of CO2 equivalent. 3.3 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 48. The objectives of the operation were, and remain, highly relevant to the Government strategy for climate change and green growth and the WB’s CPS/CPF strategy. The reform actions were rooted in the Government program and in concert with other parallel and reinforcing actions and supported by stakeholder actions. The objectives and implementation of this multi-sector operation have been complementary to the Bank’s various other activities in Vietnam, in a manner consistent with the current CPS/CPF and the country’s related program (Annex 7 table showing the Bank’s lending and non-lending projects in Vietnam). 49. Progress towards the results indicators is substantial across all policy areas except the development of the emissions register under the AQM policy track. Although fewer than half of the targets were fully met to date, the results have been evaluated ahead of schedule, following only one operation, instead of three, and without therefore the opportunity to make a number of small adjustments to the indicators to better reflect the ongoing implementation of the program. When set in the context that a single operation is being evaluated on the same set of results that were intended to reflect achievements from an entire series of three operations, progress on both delivery of policy reforms and related results indicators is impressive. Of particularly note are the achievements across a range of national outcomes – renewable energy generation capacity, reductions in emissions from new vehicles, volume of public climate investment, area of coastal forest planted, area of farmland under more efficient irrigation – that are ambitious for a DPF series to influence within a relatively short timeframe. 3.4 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above): (a) Poverty Impacts, Gender Aspects, and Social Development 50. Improvements in coastal planning and public investment planning, water resources protection and irrigation efficiency, coastal forest management, air quality management with cleaner transportation, and increase energy efficiency and renewable energy are pro-poor. The DPF brought into focus the relationship between poverty reduction and climate change agendas. A Study on Climate Change and Poverty carried out by the team in 2015 generated knowledge to better understand the relationship between climate change risks and the poor population in Vietnam. The study looks at the exposure of the 19 PPA and installed capacity data from Electricity Vietnam (EVN). 20 World Bank estimates, 2019. See Annex 8 for further details. 28 poor and distributional impacts to future climate risks. The analysis and results of this study suggested recommendations on how climate risks can be better addressed, including through reduced exposure and vulnerability, and increased adaptive capacity for the poor population. The selection of the focus of policy reforms for support under the DPF was based on the findings and recommendations of this study. 51. The policy reforms supported under DPF1 have overall positive impact on the poor and vulnerable groups. A Poverty and Social Impact Analysis (PSIA) carried out during the preparation of the DPF series provided recommendations to the counterparts for improvement of the policy actions with regard to social and poverty aspects. The PSIA showed that the policy reforms would enable increased access to coastal resources, reduced health exposure to natural hazards and air pollution, increased income from efficient and less use of water for agriculture, better management of forest and efficient energy consumption. The ICZM policy enables the poor to have more chances of accessing and exploiting coastal resources efficiently as well as provides opportunities to increase resilience to respond to disasters and climate change. Policies to mobilize more resources to address climate change impacts and promote green growth actions also benefit the poor. Encouraging irrigation efficiency brings positive impacts for farmer households, including the poor as long as they are provided with the same opportunities to access water saving measures as wealthier households. The poor benefit from the policies on sustainable management of coastal forest through opportunities to access to coastal forests for livelihood development, including to benefit from their own investments in forest-based livelihoods within areas contracted for their management. An increase in renewable electricity generation contributes to improvement of the living environment, reduced air pollution, and less diseases related to pollution, especially amongst the poor, the disadvantaged and the vulnerable. Energy efficiency labeling helps households to reduce their monthly energy costs from using more energy efficient appliances. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer- term capacity and institutional development) 52. The CC and GG DPL series contributed to strengthening institutional capacity at the central and provincial levels including MONRE, MARD, MPI, MOIT, and MOT and their provincial Departments through development of policy frameworks and provision of related TA. In terms of overall coordination of the climate policy agenda, the dialogue and accountability have been elevated to the highest levels of government, which will have a lasting effect on the importance given to these issues. MONRE has obtained experience and recognition for their role in policy coordination and monitoring, but the reliance of the PCU on external support means that these functions are not yet fully institutionalized. Significant institutional development and strengthening was also associated with policy actions under specific tracks, at both the ministerial and provincial levels. For example:  While formal adoption of provincial ICZM programs was delayed, MONRE VASI benefitted from a significant consultative process with coastal provinces to understand policy and regulatory needs as it relates to coastal zone management planning. A number of provinces continue implementing their ICZM Plans and taking actions to prepare for the development of ICZM program once the Master Plan has been adopted. These ongoing activities have been informed by the technical guidelines that have been prepared in line with the DPF policy actions.  MPI is now able to identify, classify, and report on its climate change and green growth expenditures. While more effort is needed to institutionalize this, MPI has already piloted the system within 18 provinces. CPEIRs were carried out for provinces in vulnerable region, including the Mekong Delta, the Central Coast, and the Central Highland to assess where more actions and budget is needed to address climate risks. Many of the investments have involved local priorities such as rehabilitation of dykes and water infrastructure, and restoration of mangroves. 29  MARD’s action plan on irrigation efficiency (DPF-1) helped build a platform for policy dialogue with provinces and other key stakeholders. Progress made over the past few years has increased awareness and technical capacity of local government authorities on the benefits of more efficient irrigation practices and technologies. MARD has developed pilot areas in different regions to demonstrate different water saving techniques and communicated the results they bring. Water saving including its contribution to lower the production cost is disseminated amongst farmers association and actual benefit is convincing to farmers for their application. In areas facing water shortage, including in the Central Highland, more and more farmers are applying sprinkle or dipping for their upland crops. (c) Other Unintended Outcomes and Impacts In parallel to the preparation of the DPF-2 operations, the Bank team continues to work with the Government, particularly counterparts in MONRE and MPI to support the design of the next phase of the Government’s climate change program, alongside a coordination platform, building on the results, achievements, experience and lessons of SPRCC, and in support of the further implementation of Vietnam’s NDCs. This process is already involving a wider group of DPs than those who supported the current phase of SPRCC is intended to lead to a longer-term program of policy reform and investment, and an associated coordination structure in support of the iterative NDC implementation and revision process. 4. Assessment of Risk to Development Outcome Rating: Moderate 53. Implementation and sustainability risks were rated as substantial at Appraisal of DPF-1, to be mitigated through accountability mechanisms within SPRCC and parallel support in the form of advisory support and technical capacity building. These measures appear to have been largely successful. A high level of commitment to delivery of the SPRCC policy matrix, not least due the fact that these were approved by the Prime Minister. Commitment to policy implementation has also been evident through concerted action being taken to implement adopted policy reforms in all tracks (the exception of the AQM policy track being due to the fact that the new regulatory instruments have not yet been adopted). For those anticipated policy triggers for which an additional unforeseen policy step is required, there may be some risk of delivery, but it is likely to be minor given that overall commitment to the areas of reform is strong, and that the passage of additional enabling legislation should increase the legal force of the reform. Drafted AQM regulations require passage of a wide-ranging umbrella Decree (it has just been adopted as Decree No.40/2019/ND-CP) under the Law on Environmental Protection, and the formal adoption of provinces’ ICZM programs requires first that a Master Plan on Sustainable Exploitation and Use of Coastal Resources be issued, with which they should be aligned. The new umbrella Decree and linkage to the Master Plan will strengthen the eventual policies, and in both cases, there continue to be dedicated units within MONRE to lead the policy agenda, as well as ongoing technical planning activities at the provincial or municipal level. Engagement in the SPRCC policy process through the DPF has helped to identify where additional policy steps are required, and if DPF-2 and DPF-3 had gone ahead, suitable adjustments would have been made. 54. Where tangible outcomes have already been generated from the policy reforms, these are unlikely to be reversed, particularly where adoption pays for itself, such as the adoption of technologies for more efficient use of water in irrigation or energy. The impact of policies adopted under related policy tracks are likely to expand as they are rolled out across a wider number of provinces. 55. Sustaining adopted policy reforms is more challenging where there are associated costs that have not fully been provided for, or which are uncertain going forward, e.g.: 30  Increased investment in renewable energy generation capacity has been achieved at the cost of higher feed-in tariffs. The power purchase agreements for the investments already made have already been locked in, so their reversal is very unlikely, but the higher tariffs are not likely to be sustainable in the longer run. This is already being addressed, however, through the development of auction systems (initially for solar power), which offer the potential of significantly reducing the costs of renewable energy. High feed-in tariffs are effectively pump-priming renewable markets, so that they can reach the scale at which they can begin to operate efficiently. Given the wider global trends in renewable energy prices, this is unlikely to be a major risk.  Investments in forest restoration and development of Vietnam’s REDD+ policy framework are predicated on there being international market for forest carbon in future, which is still not assured beyond some limited funds. However, the development of REDD+ plans and programs have extensive spill-over benefits to forest sector planning more broadly, and to the extent to which this risk can be mitigated within Vietnam, it already is through the establishment and expansion of forest payment-for-environmental-services systems. 56. Although risks to the results which have already been generated or are in the process of so being are modest, there remains a risk to the broader development outcome of the climate reform process, if SPRCC is not succeeded by an ongoing process. The policy steps taken thus far have generated considerable results on the ground, as well as awareness, momentum and confidence, but are yet not at the scale required to meet ever-intensifying climate challenges. Institutionalizing an ongoing process of increasing ambition and transformative action requires continued active engagement and support for integrating climate in general planning and budgeting processes, as well as identifying priority actions in specific sectors. This wide-ranging effort faces the familiar barriers related to technical complexity, maintaining political focus and will, and the need to investment in strong coordination and monitoring systems (which are not yet institutionalized). In addition, as the bar on climate action increases, the costs of the required measures may also rise (to the extent that they can’t be offset by improved technologies and increasing economies of scale), which presents a particular challenge to Vietnam in the face of its graduation to middle income status, constraints on government borrowing, and the ongoing paucity of highly concessional international climate finance. These factors require ongoing, post-2020 close engagement and support from the Bank and other development partners for increased policy reform, for making both public and private investment increasingly responsive, and for institutionalizing strong systems to coordinate the process. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase): Rating: Satisfactory 57. Overall, the Bank made a strong contribution to the climate change and green growth reform agenda in Vietnam through this DPF. The content and design of the DPF program benefitted from extensive consultations with government ministries and agencies, development partners working in Vietnam, and Bank staff from a number of different sectors, which helped to ensure its relevance, alignment with the government’s climate change agenda. Moreover, the government’s climate agenda itself was very much informed by the extensive analytical work and dialogue undertaken by the Bank, building on the lessons from the earlier Climate DPF series, which helped to shape the second phase of SP-RCC over 18 months of support in 2015-2016. Preparation work helped to shape not just the policy focus and content, but also the 31 implementation structures for the SP-RCC, with the Bank assisting MONRE with the develop of a Program Document for the SP-RCC that laid out the main principles and mechanisms for implementation, including M&E. This work was carried out in coordination with the work by other development partners in Vietnam, including JICA and AFD, as well as other DPs supporting climate activities outside of the SPRCC, and was well aligned with the Bank’s country strategy with Vietnam, and the Bank’s corporate strategy on climate change. 58. The Bank team did a strong job of identifying and mitigating risks based on the experience of the earlier DPF series and phase of SPRCC. The risk of the constraints on borrowing was not well anticipated, but there is little that could have been done within the context of the DPF even if it had been, and the choice of a series of operations was still beneficial, as it facilitated programmatic support to the multi-year SPRCC, and therefore ongoing engagement even in the absence of further lending. Legal hurdles to the delivery of certain policy options within the originally envisaged policy matrix could not have reasonably been foreseen as the new Planning Law was not passed until after DPF-1, and the requirement for a new umbrella decree under the Law on Environmental Protection relied on a new interpretation by MONRE lawyers. Furthermore, in the normal course of a three-operation series, adjustments to the policy matrix could have been readily made to manage these eventualities, as well as some of the issues that emerged with the results indicators. (b) Quality of Supervision (including M&E arrangements) Rating: Satisfactory 59. The Bank fulfilled its supervisory and monitoring role to review progress . A wealth of analytical products and tools were developed and collated to inform upstream government policy and financing. The engagement demonstrated the effectiveness of complementary and parallel instruments for supporting government actions, i.e. maintaining an overarching policy dialogue linked to high-level government commitments and oversight, with flexible provision of TA to support analyses and drafting of specific legislative instruments, and lending operations to assist implementation. Coordinated engagement has produced policy traction and progress on: increasing the profile and budget allocation for climate action; integrated coastal zone management and management of coastal forests; adoption of energy efficiency standards and labelling systems; enabling frameworks for renewable energy investment; and development of commitments and options for efficient irrigation. An area of relative weakness was on maintaining emphasis on monitoring and results-focus of the PCU following the withdrawal of assistance from JICA. Although the Bank did make available some local TA support to the PCU, more institutional support was needed to maintain and expand the quality of monitoring and report, including sufficient focus on policy content and impact. 60. A key strength of the Bank’s supervision was its continued active participation in supervision and monitoring of the policy program of the Government even in the absence of clarity on the prospects for additional policy after DPF-1. This is testament to the commitment of the Country Management Unit to the climate change and green growth policy agenda in Vietnam and was instrumental to the delivery of considerable results as envisaged under the original DPF series, after the processing of only a single operation. Having a co-task team leader assigned from the Vietnam office, combined with a very close coordination between the co-TTLs, support from the CMU and significant investment of time, also benefited the strength of the communication between the Bank, DPs and GoV, and the responsiveness of TA support to GoV. (c) Justification of Rating for Overall Bank Performance 32 Rating: Satisfactory 61. The Satisfactory rating is in line with the evaluation criteria and ratings of satisfactory for performance during project preparation and quality of entry, and satisfactory performance during the supervision phase. The Bank team crafted an engagement which was not only well-aligned with the priorities at the time of preparation, but also serves as a model for the type of engagement that the Bank is since emphasized in its new 2025 Climate Targets and Actions, i.e. the use of policy lending for climate, and systematic approaches to increasing the ambition on climate action through mainstreaming in general planning and budgeting processes, as well as working on critical areas of climate engagement, such as landscapes, energy and water. The results achieved and documented to date are considerable when considered against the fact that targets are being evaluated ahead of schedule and following the processing of only one operation of an expected series of three. The impact of borrowing constraints affected all DPFs (and substantial other parts) of the Bank’s portfolio in Vietnam, and the fact that further policy lending is still expected within the framework of the current SP-RCC is testament to the particular strength of engagement and interest from Government in the CC&GG DPF series. 5.2 Borrower Performance 62. The Borrower (The GoV) demonstrated strong ownership and leadership for the climate change and green growth DPF to achieve the policy actions of the series. The Prime Minister of Vietnam publicly affirmed that addressing climate change is a top priority of the government and supported the reforms. Overall, government was instrumental in setting in motion a collaborative process which contributed to the quality of the policy reforms, and to building ownership of the reforms among different sectors, as well as promoting cross-sectoral dialogue on climate change and green growth. The GoV demonstrated sustained commitment and ownership to achieving the policy actions of the series, even in the face of reduced policy lending, and uncertainty over processing of further operations beyond DPF-1. The GoV also showed strong leadership on the development of the reforms/policy actions through the organization and conduct of a series of consultations with both public and private stakeholders involved in the specific sectors relevant to the policy tracks of the DPF series, for example, consultation meetings and annual forum that invites DPs, ministries, provinces, civil society organizations, research institutions, academia, and the media. 63. The establishment and the maintenance of the PCU within MONRE was important, but its functions need to be better institutionalized. MONRE was the lead agency for SP-RCC and DPF-1 and held the overall responsibility for coordination and M&E of the program. The role played by the PCU in M&E was a significant driver of the strong implementation of the project, maintaining coordination and technical oversight over a very broad program of reforms under the SPRCC (of which only a select subset was reflected in the DPF policy matrix). The challenges of coordinating across more than half a dozen ministries and sectoral reform programs are considerable, however, and the PCU remained reliant on external support to provide high quality monitoring and reporting on the progress of the reform agenda. Without that, the focus of reporting narrowed to compliance monitoring on delivery of committed policy instruments, rather than on the content and purpose of the reform process. Monitoring capacity for climate-related outcomes across ministries and local government also remains a challenge. Some ministries responded slower than the others for information/data requests, especially for evaluation of the info /data against the target, and a systematic review of capacity to implement and monitor climate priorities across sector agencies is needed. 33 Justification of Rating for Overall Borrower Performance Rating: Satisfactory 64. The Government clearly demonstrated their commitment to the climate change policy agenda in developing and maintaining a complex reform process and continuing strong implementation even in the face of uncertainty over the processing of further operations after DPF-1. Although policy financing has been instrumental to supporting SP-RCC, the commitment to reform was clearly not conditioned on financing. Once adopted, there have been robust efforts to implement policies, and where expected policy actions weren’t delivered, it was for good reasons that should lead to stronger outcomes in due course. 6. Lessons Learned 65. Within a multi-sector climate program, it is critical to have strong engagement at both the sector and coordinating level. The experience under this operation has confirmed the lesson of the earlier climate DPF series that a broad and long-term program is needed to support meaningful climate action. This is particularly the case in the Vietnamese context, where the policy reform process typically takes effect through sequence of legislative instruments (i.e. law, then decree, then circular, etc.), and given the fact that climate goals remain a moving target as impacts are accelerating and the window for avoiding catastrophic impacts is increasingly narrow. An additional lesson from the current phase of engagement, however, is the importance of having a strong engagement at both the sector level and the coordinating level to facilitate increasing ambition in climate action. This is a point of comparative advantage for the Bank, which typically has strong working relationships with a number of sectors. Support to broad programs should be structured in a way that leverages existing complementary engagements. In Vietnam, the strength of the Bank’s existing lending and advisory programs in energy and transport, for example, meant that it was seen as a trusted partner to support analysis of climate mitigation options, and that analysis gained more ownership and traction than if it were implemented through a coordinating body such as MONRE DCC. At the same time, the SP-RCC structures provide a higher level of accountability and oversight for actions by these line ministries, as well as facilitating a degree of healthy competition between agencies. Going forward, strengthening the technical coordination between ministries will help to increase the level of climate action. For instance, ambitious climate mitigation targets in the transport sector will require collaboration with the energy sector over the supply of power for electric vehicles, and with municipalities over the design and management of urban transport systems, areas which lie outside the direct mandate of MOT. 66. A high level of engagement and accountability within the government is critical to a cross-sectoral program, but can be made more substantive. The current phase of climate engagement confirmed the lesson of the earlier climate DPF series that high-level engagement is critical. Annual endorsements of the SPRCC policy matrix by the Prime Minister were critical to elevating commitment to and deliver on the policy agenda. However, endorsement by the Prime Minister and oversight by the NCCC were based mostly on the lists of revised policy instruments proposed and delivered, rather than the key principles and outcomes of the needed climate reforms. Hence internal accountability was focused more on policy outputs than impact. Complementary technical assistance will be key to enhancing the substance of government’s oversight and accountability mechanisms, i.e.: (i) targeted and high-quality analytical work to identify and justify key reforms; (ii) an engagement strategy to move the dialogue beyond technical counterparts and reach high-level decision-makers with key messages; and (iii) support to monitoring and reporting systems at the sectoral and coordination levels. The current phase of climate engagement has provided support, particularly to (i) and (iii), but all three need to be strengthened under the NDC Implementation Program going forward. 34 67. Strong support from the Bank’s Vietnam Country Management Unit (CMU) was indispensable to achievement of program outcomes in the face of uncertainty over lending. Provision of ongoing resources to support policy engagement and related TA activities allowed much of the program’s impact to be achieved, even though only a third of the anticipated Bank financing has been disbursed to date. The emphasis that the CMU places on cross-sectoral collaboration has also been critical to the active contribution of different Global Practices (including energy, transport and water), and the leveraging of their sectoral engagements. Without this, the Bank would not have been able to effectively support the design and implementation of a multi-sectoral program. 68. A flexible mode of coordination between DPs proved efficient and effective, and provides a model for ongoing support to NDC implementation. The three DPs (WB, AfD & JICA) provided parallel financing, rather than co-financing, with each making separate disbursements on the basis of different selections of policy triggers. This meant that the DPs complemented each other in focusing on and providing technical assistance to different areas of the SPRCC policy matrix (albeit with some overlap), whilst still providing consolidated input and a coherent set of messages to the process as a whole through the organization of Joint Supervision Missions. This model of coordination with division of labor proved more efficient for government agencies as well as the DPs themselves, when dealing with a very wide-ranging policy agenda. Going forward, the design of an effective NDC implementation program will require coordination of a larger number of DPs engaged in climate support to government. The same principles of division of labor in detailed technical engagement, with coordinated review and messaging on overall progress, are likely to be needed, although with additional flexibility to work across a number of modes of support (i.e. not just policy lending as per SP-RCC). 69. Complementary technical assistance is often critical to support policy reform, but must be tailored to needs. Technical assistance was provided by the Bank across the policy tracks, but the nature of the support varied considerably in different areas, and aimed to support the government’s process with as light a touch as practicable. In some instances that was providing international experience through mobilizing expert inputs on very specific points, such as inclusion of attention to PM2.5 in AQM policies, or for a more substantial role in drafting technical documents, such as the development climate expenditure classification systems based on the methodology used by MDBs. In other cases, it leveraged expertise within Vietnam, such as provision of support to convene provinces to discuss models for management of coastal forests. In agriculture and energy, technologies and incentive mechanisms for more efficient use of water and energy were piloted under complementary Bank lending projects, before being institutionalized under the DPF’s policy reforms. In transport, an ASA linked to the DPF supported MOT to build a bottom- up inventory of GHG emissions and mitigation scenario analysis modeling tool in the sector. This strengthened monitoring capacity by allowing the impact of polices on emissions to be calculated from existing sectoral indicators, including enabling the measurement and reporting of NOx emissions reductions achieved under the policy track. Conversely, little support was needed to the establishment of water protection corridors (where roll-out at provincial level has exceeded targets) beyond the initial discussion of policy priorities and objectives, as capacity in that sector is already high. 35 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing Agencies: 70. Comments collated and provided by MONRE stated that the Bank is regarded as a valued Development Partner supporting the realization of reforms under SP-RCC. The Bank was seen to play a key role in the supporting the Government with the climate change and green growth policy reforms. The Bank engagement has helped deepen the dialogues with technical strengths and global experiences to inform the policy formation. While recognizing the importance of the finance from the operation, the Government considered the Bank’s leadership and convening role, and its expertise, to be critical to reinforce the reform. The knowledge and technical assistances from the Bank and other Development Partners have helped to improve the quality of the policies and raise public awareness through support for broader consultations on policy issues. The technical assistance also contributed to strengthening the capacity of Government staff who were involved in the policy development. MONRE emphasized the need for continued support to the implementation of the policies with capacity building or sharing of experiences of good practices from countries of similar development level to Vietnam. 71. MONRE shared the observation that the ICR is a solid evaluation on the implementation of the policies supported under DPF-1. The ICR highlights good practices and lessons learnt, that are important to inform the develop of the future programs. Line ministries appreciated the Bank’s engagement in policy dialogue closely linked with complementary technical assistance and investment lending. However, whilst recognizing that DPF is the right modality for multi-sectoral policy financing, some line ministries were concerned about the lack of direct linkage between engagement on policy dialogues and budget allocation by the Government. On this issue, the Bank provided support on mobilization of resources for climate change and green growth actions through Policy Track 1.2, and associated TA. Moving forward, the Bank continues to be committed to work with MONRE and other line ministries on tools to support the tracking of public investment in climate change and green growth priorities. (b) Cofinanciers: Not applicable. (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society): JICA and AFD reviewed the draft ICR, but only provided editorial comments. 36 ANNEXES Annex 1. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Nam Title Unit Responsibility/ Specialty e Lending (from Task Team in Program Document) Christophe Crepin Practice Manager GENE Task Team Leader (At Approval) Stephen Ling Lead Environmental Specialist GENE Task Team Leader (Current) Thu Thi Le Nguyen Sr. Environmental Specialist GENE Co- Task Team Leader Cuong Hung Pham Sr. Water Resources Spec. GWADR Technical guidance and support Takafumi Kadono Sr Energy Specialist GEEDR Technical guidance and support Maurice Andres Rawlins Natural Resources Management GENE Technical guidance and support Timothy Bouley Environmental Specialist GCCPT Technical guidance and support Charlotte De Fontaubert Sr. Fisheries Specialist GENE Technical guidance and support Stephane Hallegatte Sr. Economist GCCPT Technical guidance and support Ulf Narloch Economist Technical guidance and support Ashraf El-Arini Environmental Specialist GENE Technical guidance and support Alexandrina Platonova-Oquab Sr. Carbon Finance Specialist GCCCF Technical guidance and support Taisei Matsuki Sr. Carbon Finance Specialist GCCCF Technical guidance and support Alexander Lotsch Sr. Carbon Finance Specialist GCCFL Technical guidance and support Van Anh Thi Tran Transport Specialist GGI Technical guidance and support Ngozi Blessing Obi Malife Program Analyst GENE Technical guidance and support Fnu Hanny Program Assistant GENE Technical guidance and support Hoa Thi Phuong Kieu Program Assistant EACVF Technical guidance and support Jostein Nygard Sr. Environmental Specialist GENE Technical guidance and support Sameer Akbar Sr. Environmental Specialist GCCPT Technical guidance and support Grzegorz Peszko Lead Economist GCCPT Technical guidance and support Robert Ragland Davis Sr. Forestry Specialist GENE Technical guidance and support Frank Van Woerden Lead Environmental Engineer GENE Technical guidance and support Thi Ba Chu Energy Specialist GEEDR Technical guidance and support Viet Tuan Dinh Sr. Economist GMFDR Technical guidance and support Lan Thi Thu Nguyen Sr. Environmental Economist GENE Technical guidance and support Ky Hong Tran Sr. Energy Specialist GEEDR Technical guidance and support 37 Neha Mukhi Climate Change Specialist GCCPT Technical guidance and support Sebastian Eckardt Sr. Economist GMFDR Technical guidance and support Cung Van Pham Sr. Financial Management Specialist GGE Technical guidance and support Fernando Loayza Sr. Environmental Economist Technical guidance and support David Annandale Consultant GENE Technical guidance and support Tuan Anh Le Social Development Specialist GGS Technical guidance and support Pam McElwee Consultant (Social Assessment) Technical guidance and support Ron. N. Hoffer Consultant (Water Resources &CC) GENE Technical guidance and support Giovanni Ruta Sr. Environmental Economist GENE Technical guidance and support Christophe de Gouvello Sr. Energy Specialist GEEDR Technical guidance and support Diji Chandrasekharan Behr Sr. Natural Resources Economist GENE Technical guidance and support Ernesto Sanchez-Triana Lead Environmental Specialist GENE Technical guidance and support (b) Staff Time and Cost (from SAP) (the system pulls data available for all fields) Staff Time and Cost (Bank Budget Only) Stage No. of Staff Weeks US$ (including travel and consultant Lending costs) 2016 56.45 250,920.01 2017 - - TOTAL: Supervision/ICR 2017 12 48,629.19 2019 2.45 17,214.03 TOTAL 70.90 316,763.23 38 Annex 2. Beneficiary Survey Results (if any) N/A Annex 3. Stakeholder Workshop Report and Results (if any) N/A Annex 4. Summary of Borrower’s ICR and/or Comments on Draft ICR N/A – nothing additional to that provided in Section 7. Annex 5. Comments of Co-financiers and Other Partners/Stakeholders N/A – nothing additional to that provided in Section 7. 39 Annex 6. List of Supporting Documents 1) Program Document (DPF 1), June 3, 2016 2) Decision Number 914/QĐ-TTg dated 27th May 2016, adopting the National Coastal Zone Action Plan setting priorities for the integrated management of coastal zones. 3) Decision Number 40/2015/QD-TTg dated September 14, 2015 governing the principles, criteria and norms for allocation of state budget funds for development investment between 2016 and 2020. 4) Socio-Economic Development Plan 2016-2020 to the National Assembly to establish climate change and green growth as a priority 5) Decree Number 43/2015/ND-CP dated May 06, 2015 regulating identification and management of water source protection corridors. 6) Ministerial Decision Number 1788/QD-BNN- TCTL dated May 19, 2015 adopting an action plan to develop advanced irrigation and water saving for upland crops in support of the restructuring of water resources sector. 7) Decree 119 governing the management, protection, restoration and development of coastal forests to address climate change. 8) Decision 120 on Coastal Forest Protection and Development Plan. 9) Ministerial Decision Number 5414/QD-BNN- TCLN dated December 25, 2015 approving the guidelines for Provincial REDD+ Action Plan (PRAP) preparation to govern the preparation of provincial forest carbon action plans. 10) Decision Number 985a/QD-TTg , June 1, 2016 adopting the National Air Quality Management Plan. 11) Circular Number 33/2015/TT- BGTVT dated July 24, 2015 promulgating the national technical regulation on Euro 4 standard for new assembled, manufactured, and imported vehicles, 12) Circular Number 22/2015/TT-BKHCN dated November 11, 2015 on the issuance and implementation of national, technical regulations on gasolines, diesel fuel oils, and biofuels. 13) Ministerial Decision Number 13550/QD-BCT dated December 10, 2015 announcing the minimum energy performance and labelling standards for non-ducted air conditioners. 14) Circular Number 29/2015/TT-BCT, August 31, 2015 governing contents, sequence and procedures for preparing, appraising and approving biomass energy development and utilization plans. 15) Circular Number 32/2015/TT- BCT dated October 08, 2015 governing project development and standard power purchase agreements for power generation projects using solid wastes. 16) Circular Number 44/2015/TT-BCT dated December 9, 2015 governing project development, setting an avoided cost tariff, and standardized power purchase agreements for biomass power projects. 17) The Paris Agreement adopted in October 2016 18) The SP-RCC program approved by the Prime Minister under Decision No. 2044/QD-TTg dated October 24, 2016 19) The Circular 49, Technical Guidance on preparation/adjustment of ICZM programs issued on November 30, 2017, and the Circular 74 on preparing master plans on sustainable exploitation and use of coastal resources issued in December 2017. 20) The Law on Master Planning (Law 21/2017/QH14) 40 21) The reports including Climate and Green Growth Public Expenditure and Investment Review in the Mekong Delta (CPEIR-Mekong), 2018, Climate and Green Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR- Central Highlands), 2018, and the Review of the National and International Financial Mechanisms to carry out the NDC's tasks in Vietnam to 2030. 22) Circular 74 on preparing master plans on sustainable exploitation and use of coastal resources was issued by MONRE in December 2017. 23) Correspondence No-733 /BC-BNN-TCLN, Report on review and revision of the Plan on Coastal Forest Protection and Development for the period 2015- 2020 for submission to the Prime Minister, issued by the Minister of MARD on 31/1/2019 41 Annex 7: CC-GG DPF Series in the Context of the Vietnam Bank Group Lending and Non-Lending DPF Pillar Bank Lending Bank Non-Lending 1. Improving inter-  IPF/GEF - Coastal Resources for  Bank Executed TA Scaling up Implementation sectoral coastal Sustainable Development of Vietnam’s Green Growth Priorities planning and public (P118979 and P124702) (TF0A0985) under Programmatic AAA on Climate investment finance  IPF - Managing Natural Hazards Resilience and Green Growth (P148188) programming across Project (P118783)  BE TA for Support for Climate Change/Green selected key sectors in  IPF - Ho Chi Minh City Flood Growth Resource Mobilization (P149247) under support of climate Risk Management Project Programmatic AAA on Climate Resilience and change and green (P149696) Green Growth (P148188) growth action  IPF - Mekong Delta Integrated  BE TA for Building Resilience in the Mekong Climate Resilience and Sustainable Delta P149017 under Programmatic AAA on Livelihoods (P153544) Climate Resilience and Green Growth (P148188)  IPF - Can Tho Urban Development and Resilience (P152851) 2. Developing and  IPF - Mekong Integrated Water  FCPF REDD+ Readiness (P124584) safeguarding selected Resources Management Project Phase  BE TA for Climate Change and Poverty natural resources II (P124942) (P152574) under Programmatic AAA on services  IPF - Irrigated Agriculture Climate Resilience and Green Growth Improvement Project (P130014) (P148188)  BE TA Scaling up Implementation of Vietnam’s Green Growth Priorities (TF0A0985) under Programmatic AAA on Climate Resilience and Green Growth (P148188) 3. Promoting selected  IPF/Carbon Finance - Renewable  Recipient Executed TA for cleaner production Energy Development Project Partnership for Market Readiness systems (P103238 and P110477) (PMR) (P152797)  IPF/Montreal Protocol - HCFC Phase-  BE TA for Policy Planning for GHG Out Project (Phase I and II) Mitigation Actions and Climate Change (P115762 and P152232) Negotiations (Supported by the Partnership  DPF - Power Sector Reform for Market Readiness Upstream Analytical Series (P157722) Policy Support and GCCPT)  IPF - Vietnam Industry Energy  GEF Clean Production & Energy Efficiency Financing (VIEEF) Efficiency (P116846) (P151086)  TA for Renewable Energy Resource  IPF - Ho Chi Minh City Green Mapping and Geospatial Planning (P145513) Transport Development  Programmatic AAA for Clean and (P126507) Sustainable Energy (P147685)  IPF - Hanoi Urban  TA for Energy Subsidy Reform Transport (P157852) Development Project  BE TA Scaling up Implementation of (P083581) Vietnam’s Green Growth Priorities (TF0A0985) under Programmatic AAA on Climate Resilience and Green Growth (P148188) Note: FCPF = Forest Carbon Partnership Facility; IPF = Investment Project Financing. 42 ANNEX 8. SUMMARY OF POLICY ACTIONS, PROGRAM OUTCOME INDICATORS, IMPLEMENTATION PROGRESS AND STATUS OF PILLARS AT THE ICR Baselines: January 2016; Targets: December 2019 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: Enabling Area-Based Adaptation and Resilience in Coastal Areas (DPF-1 Implementation Status) Result Indicator 1.1: Assessment: Even though no provinces have formally The NAP (National Action Plan) tasked MONRE with Number of coastal adopted provincial integrated coastal zone management the establishment of the National Coordination provinces that have programs as directed by the policy delivered under DPF- Committee (NCC) which includes the Vice-Chair of adopted their provincial 1, 24 out of 28 coastal provinces have issued and each coastal PPC and representatives from MARD, integrated coastal zone implemented strategies, plans, or projects related to MONRE, MPI, MOF, MOST, and MOC and provincial management programs and ICZM. 5 provinces have developed or in the process of equivalents that support the governance of the are under early developing their coastal inventories to inform the 24 development and implementation of provincial ICZM implementation development of their ICZM programs; 9 provinces have programs. In September 2017, the Minister of Natural developed local data management systems on ICZM Resources and Environment, as Chair of the National (Baseline: 0; Target: 5) linking with the national data management system. 19 ICZM Coordination Committee signed the Operational provinces establish or are in the process of setting up Regulations of the Coordination Committee and the the coastal setback line. Municipal Office, as located at the Vietnam General Department of Sea and Islands. However, the NCC has Data Source: Reports from Provinces and Vietnam Sea not formally met. It also established a transparency and Island Institute mechanism for the implementation of the ICZM agenda, with requirements for MONRE to report on Additional Details: Coastal provinces are in the process the implementation of the Plan including of preparing their programs and continue to implement 24 Under the DPF2 QER PD, early implementation was defined as: “While each provincial ICRM program may vary to reflect differences in local particularities, the extent to which provinces will have initiated implementation of their programs will be measured by verifying the existence of some key components of early implementation including, but not limited to, the appointment of a provincial ICRM coordinator together with the designation of a provincial ICRM committee, and the adoption of a consultative process through which the risk assessments, concerns and priorities of local stakeholders can be incorporated and priority new investments addressing adaptation and resilience can be decided.” 43 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target implementation of the regulation on the development their ICZM plans. Formal adoption of ICZM program is of provincial ICZM programs (DPF-2) and coastal delayed due to the need for prior development and functional zoning. The NAP confirmed VASI’s role in adoption of the Master Plan on Sustainable Exploitation the development of the relevant circulars. and Use of Marine Resources, with which provinces will have to ensure that their provincial programs are (DPF-2 Implementation Status) consistent with it. The Master Plan was expected to be The government has developed and adopted technical adopted earlier but was delayed due to the new guidance on preparation/adjustment of ICZM requirements under the Law on Planning which was programs (Circular 21 ) While no provinces have promulgated in 2017 and came into effect in 2018. The adopted their ICZM programs yet due to the delay in Master Plan is now expected to be finalized by 2021. the issuance of the Master Plan on Sustainable Exploitation and Use of Marine Resources (see third Despite this delay, provinces are advancing in the column for details), MONRE has provided instructions preparation of their programs. Multiple provinces have to provinces and cities to focus on the implementation developed plans and are implementing ICZM activities. of key actions, including (but not limited to) the The following details how these plans have been following: (i) development and institutionalization of implemented thus far: multi-sector coordination mechanism for ICZM  Ninh Thuan25, Khanh Hoa, Quang Nam26, Thua implementation; (ii) preparation and implementation Thien-Hue27, and Quang Binh28 have all either of communication schemes to raise awareness on prepared or are preparing their coastal ICZM; (iii) strengthening local ICZM human resource inventories to inform the development of their capacity; (iv) development and implementation of ICZM programs; local models on co- management of coastal resources; (v) development and implementation of a sustainable financing mechanism to support ICZM at local level; 21 The Circular 49, Technical Guidance on preparation/adjustment of ICZM programs was issued by MONRE on November 30, 2017. 25 http://baoninhthuan.com.vn/diendan/49145p24c43/dieu-tra-thuc-trang-nhu-cau-su-dungtai-nguyen-va-bao-ve-moi-truong-vung-bo.htm 26 http://www.vasi.gov.vn/712/quan-ly-tong-hop-doi-bo-tinh-quang-nam-som-thuc-hien-dong-bo-cac-giai-phap/t708/c249/i229 27 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 28 Decision 2167/KH-UBND, Plan on ICZM Strategy implementation, issued by Quang Binh PPC in December 2016. 44 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target and (vi) establishment of corridors for local coastal  Quang Binh29, Thua Thien-Hue30 and Quang protection Ngai31 have all either established or are in the process of establishing a multi-sector Because the implementation of ICZM programs needs coordination mechanism for ICZM close vertical and horizontal coordination, VASI will implementation; draft a Regulation on Coordination in ICZM in 2019.  Quang Nam32, Thua Thien-Hue33, and Quang So far, one province has issued a provincial regulation Binh34 are all implementing communication on inter- agency coordination in ICZM (Quang Binh)22 schemes to raise awareness on ICZM;  Quang Nam35, Thua Thien-Hue36, Quang Binh37, (DPF-3 Implementation Progress) and Nghe An38 are all preparing local data A separate decision on coastal functional zoning is no management systems on ICZM that would be longer planned and is expected to be part of the linked with the national data management master plan. This was specified in the MONRE system; Circular on preparing master plans on sustainable 22 Decision 19/2018/QĐ-UBND, issued by Quang Binh PPC on 23/7/2018, Regulation on inter- agency coordination in ICZM. 29 Decision 19/2018/QĐ-UBND, issued by Quang Binh PPC on 23/7/2018, Regulation on inter- agency coordination in ICZM. 30 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 31 Decision 65/2017/QĐ-UBND, Regulation on inter- agency coordination in ICZM, issued by Quang Ngai PPC, 26/9/2017. 32 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 33 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 34 Decision 2167/KH-UBND, Plan on ICZM Strategy implementation, issued by Quang Binh PPC in December 2016. 35 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 36 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 37 Decision 2167/KH-UBND, Plan on ICZM Strategy implementation, issued by Quang Binh PPC in December 2016. 38 http://nghean.gov.vn:10040/wps/portal/mainportal/tinchitietcqbd/!ut/p/c4/04d 45 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target exploitation and use of coastal resources (Circular23).  Quang Nam39, Thua Thien-Hue40, and Nghe An41 The Master Plan is expected to be approved by 2021. are all strengthening local ICZM human resource capacity;  Quang Nam42 and Thua Thien-Hue43 are developing local models on co-management of coastal resources;  Quang Nam44, Thua Thien-Hue45 and Nghe An46 are all preparing coastal monitoring programs; and  Quang Nam47, Thua Thien-Hue48 and Quang Binh49 are preparing sustainable financing mechanisms to support ICZM at the local level. For some provinces, the delay in developing content of ICZM programs is also linked to a lack of technical capacity at the provincial government on ICZM planning processes and a lack of financial resources for the 23 Circular 74 on preparing master plans on sustainable exploitation and use of coastal resources was issued by MONRE in December 2017. 39 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 40 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 41 http://nghean.gov.vn:10040/wps/portal/mainportal/tinchitietcqbd/!ut/p/c4/04d 42 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 43 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 44 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 45 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 46 http://nghean.gov.vn:10040/wps/portal/mainportal/tinchitietcqbd/!ut/p/c4/04 47 Decision 494/QĐ-UBND, Plan on ICZM implementation, issued by Quang Nam PPC in February 2017. 48 Decision 04/KH-UBND, Plan on ICZM implementation, issued by Thua Thien-Hue PPC in January 2017. 49 Decision 2167/KH-UBND, Plan on ICZM Strategy implementation, issued by Quang Binh PPC in December 2016. 46 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target preparation of the programs. Policy Track 1.2: Improving Mobilization of Resources for Climate Change and Green Growth (DPF-1 Implementation Status) Result Indicator 1.2: Assessment: As of April 2019, MPI has identified Investment programs related to climate change and Number of priority sectors climate change and green growth investment programs green growth have been budgeted for and provinces for which in 18 provinces (13 in the Mekong Delta and 5 in the implementation for the 2016-2020 period, following climate change and green Central Highlands). the Medium-Term Public Investment Plan (MTPIP) for growth programs are 2016-2020 - the first such plan in Vietnam. identified, reported to, Data Source: MPI Reports on Climate Change and The National Assembly, in Resolution No.26/2016, and information used by Green Growth Budgets in the Mekong Delta and Central directed the allocation of the medium-term the NCCC to review Highlands Provinces51. investment budget with climate change response as progress in implementing one of the priorities. priorities and to develop recommendations. Additional Details: MPI is also in the process of Climate change and green growth-relevant target (Baseline:0 sectors; 0 identifying climate change and green growth public programs (TPs) have been included in the provinces; investment programs in 4 provinces in the Central government’s public investment budget for 2016- Target: 3 sectors; 8 Coastal region. These reviews have helped in (i) raising 2020 to direct public financing towards priority provinces). the awareness to government officials and leaders of actions: the needs and the ways to monitor the expenditures for  VND 15,866 billion (US$ 705million) for the CC&GG projects/programs to implement NDC actions TP for climate change and green growth; and fulfill the targets agreed in the Paris Agreement  VND 529,935 billion (US$23.5 billion) for the 2015; (ii) building capacity in monitoring CC-GG TP on Agriculture Restructuring, expenditures to prepare for the NDC2 (the review and  VND 59,599 billion (US$2.6 billion) for the TP update currently being undertaken with the planned on Sustainable Forestry Development, submission for the first half of 2020); and (iii) to inform including development of coastal forests; recommendations on CC& GG investment for 51 This includes the following MPI reports: Climate and Green Growth Public Expenditure and Investment Review in the Mekong Delta (CPEIR-Mekong), 2018, Climate and Green Growth Public Expenditure and Investment Review in the Central Highlands (CPEIR- Central Highlands), 2018, and the Review of the National and International Financial Mechanisms to carry out the NDC's tasks in Vietnam to 2030. 47 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target  VND 49,248 billion (US$2.2 billion) for the TP sustainable development of Mekong Delta (in response on Sustainable Aquaculture Development; to Resolution 120 on Mekong Delta’s Sustainable and Development, issued by the Government in 2018).  VND 4,658 billion (US$206 million) for the TP on Treatment of Key Pollution Points, This was originally envisaged to also include reviews of including treatment for water resources key sector ministries, but MPI decided to focus first at protection. the provincial level given that recent reviews, including The share of these climate change and green growth- the CPEIR covering 2010-2013 budgets and a relevant TPs accounts for 33% of the total subsequent review for 2014-2016 budgets of 5 key government investment budget planned for 2016- 2020 ministries had been conducted at the central level. MPI does aim to scale this and institutionalize this across (DPF-2 Implementation Status) Result Indicator 1.3: key line ministries and all provinces and cities. The government has established a CC and GG Percentage increase in the -- investment projects and program identification and number of projects and Based on the review of the 13 Mekong Delta Provinces tracking framework50. programs meeting climate carried out by MPI, the number of climate change and change and green growth green growth public investment projects increased As a first step, MPI piloted the framework in Mekong policy objectives in from 928 in 2015 to 1402 in 2016 but reduced to 825 in Delta provinces (completed) with a review of the selected sectors and 2017 (an overall decrease of 11% from 2015-2017). 2015-2017 budgets, Central Highlands provinces provinces. Despite that, the total budget allocated to climate (completed) with a review of the 2016-2017 budgets, (Baseline: 0; Target: 15% change and green growth investment projects and Central Coastal provinces (ongoing). Increase. increased from VND 8,210 billion in 2015 to VND 9,807 billion in 2017 (equivalent to a 19.5% increase from MPI has provided training to provinces on the use of the CC and GG investment projects and program 2015-2017). identification and tracking framework. Participation included officials from DPI, DARD, DONRE, DOIT, DOT, Based on the review of the 5 Central Highland Provinces DOC, PPC Office. As a next step for provinces and line carried out by MPI, the number of climate change and 50 MPI Minister Decision 1085/QD-BKHDT dated July 16, 2018. 48 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target ministries to report on climate change and green green growth public investment projects increased growth investments, MPI is discussing within the from 290 in 2016 to 313 in 2017 (an increase of about ministry inclusion of a reporting template in the next 8%). The total budget allocated to climate change and cycle of budget call. green growth investment projects decreased slightly from VND 3,030 billion in 2016 to VND 2,994 billion in (DPF-3 Implementation Status) 2017 (a decrease of about 1.2%). MPI has completed the assessment on of the design of climate change and green growth projects against the adaptation and resilience objectives. The review come up with a number of key recommendations, which will be reported to the NCCC/ Gov as part of MPI submission for development of the next five-year SEDP. Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1. Improving Water Protection and Use Efficiency (DPF-1 Implementation Status) Result Indicator 2.1.a: Assessment: Twenty provinces have established water Provinces are well advanced in issuing lists of water Number of provinces with protection corridors, including geographic coordinates protection corridors, as required by Decree 43. water source protection or detailed descriptions of the boundary. corridors delineated on (DPF-2 Implementation Status) maps and with an action Data Source: Provincial Decisions to establish list of The originally planned DPF-2 trigger on guidelines for plan to address threats to water source protection corridors. protecting the quality and function of water sources, the integrity of these including drinking water intakes has been partially protection corridors (in Additional Details: About 20 more provinces are in the delivered: while the regulation on the identification conformance with Decree process of establishing these corridors. The provincial of sanitary protection zones for sources of water 43 and the DPF 2 Circulars). decision establishing the protection corridors clarifies supply was adopted as MONRE Circular on (Baseline: 0; Target: 6 the protection purposes of each corridor, for example to September 9, 2016 52, the planned Circular regulating provinces). protect the resources from pollution as they are used for the protection of beds, banks, and alluvial grounds of domestic water supply, or to protect the river 52 MONRE Circular Number 24/TT-BTNMT dated September 9, 2016. 49 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target rivers has been upgraded into a Decree and is embankments from erosion or land encroachment as currently in the final stages of approval within the they are channels for water running out. The decision Government, expected this year. also includes actions and assignment of responsibility to different provincial departments for implementation. (DPF-3 Implementation Status) Provincial establishment of water source protection corridors was report to MONRE which will consolidate the information for MONRE reporting to the Prime Minister. (DPF-1 Implementation Status) Result Indicator 2.1.b: Assessment: By the end of 2018, 320,000ha of farms are Number of hectares of utilizing more advanced and efficient irrigation practices Positive developments include: (i) MARD’s notification farms utilizing more (or about 80% achievement of target). MARD has to all provincial DARDs on the substantive and advanced and efficient indicated that the target of 400,000 ha by 2020 can be procedural requirements of Decision 1788; (ii) MARD irrigation practices for achieved. holding dissemination workshops to discuss selected crops. implementation and needed regulations/guidance; Data Source: MARD’s report at the national review of and (iii) implementation of tasks specified in Decision (Baseline: 50,000 ha; the implemenation of the irrigation efficiency action 1788 being carried out by MARD and provinces, of Target: 400,000 ha). plan in May 2018. which some have been completed, including the review of policies related to incentives for applying Additional Details: The increased uptake of advanced, commercial loan for water saving equipment. water- saving irrigation has been especially high in regions that are facing increasing water shortage, such MARD has also issued Decision 738, dated March 14, as the Central Highlands. 2017, which specifies general criteria for the identification of clean, high-tech agriculture projects, including those projects that apply water use efficiency in agriculture. This was subsequently followed by the SBV Decision (No. 813, dated April 24, 2017) that directed commercial banks to lend with a concessional interest rate (0.5%-1.5% compared to 50 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target normal interest rate) to these projects, consistent with MARD Decision. Together, these two policies respond to the government Resolution (dated March 7, 2017) which requires MARD and SBV to coordinate and provide criteria and credit to advance clean and high- tech agriculture production, while more detailed guidance is planned by MARD to support the lending for water use efficiency in agriculture. MARD has also monitored the progress of the use of advanced, water- saving irrigation methods for highland crops based on administrative reports, sent by provincial DARDs. The key users of advanced, water- saving irrigation methods are big private enterprises, mostly for sugarcane, rubber and vegetable plantations. As a result of the implementation of the action plan, the national government and many local government authorities have increased awareness of the potential contribution of using advanced, water- saving irrigation to protect natural resource and environment, increase the investment efficiency, income improvement and the needs for transforming the irrigation system to advanced, water- saving irrigation. According to MARD, using advanced, water- saving irrigation has led to increase of crop productivity by 10%- 50%, especially by 80%- 120% for sugarcane, reduction of fertilizer’s use by 5-30% and 51 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target increase of rural income by 20- 40%.53 23 provinces have issued their own local policies to encourage advanced, water- saving irrigation. The Master Plan on Irrigation to 2020 has also been revised to 2030 with the use of advanced, water- saving irrigation as one of the solutions for implementing the agriculture restructuring plan. (DPF-2 Implementation Status) To promote efficient water- use in irrigation, the Government has issued a decree 54 in May 2018 to regulate the provision of support to investment for water storage infrastructure, on-farm irrigation and the application of water saving advanced irrigation. Provinces are required to provide detailed policies support for these activities based on provincial resources and capacity. According to the decree, eligible farmers or businesses will get a grant of up to 50% of the costs for advanced, water- saving irrigation equipment installment (not more than VND 40 million), and up to 50% of the costs for leveling the field for using advanced, water- saving irrigation (not more than VND 10 million). 53 "Review of the first stage of implementation of the Action Plan on advanced, water- saving irrigation development for highland crops", the report at the Conference on 25/5/2018, MARD. 54 77/2018/NDCCP dated May 16, 2018. 52 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target (DPF-3 Implementation Status) MARD has developed and adopted a number of guidelines for encouraging efficient irrigation for selected priority upland crops, including coffee, pepper, orange, tea, dragon fruit. Policy Track 2.2. Enabling the Development of Forest Resources Services. (DPF-1 Implementation Status) Result Indicator 2.2.a: Assessment: By the end of 2018, an additional 14,100 ha To support implementation of the DPF-1 prior action Percentage increase of of coastal forests were planted (as compared to the (Government Decree 119 issued in 2017 governing coastal forest area. baseline of 310,695ha. This is an increase of 4.5%. the management, protection, restoration and (Baseline: 0%; Target: 10% development of coastal forests to address climate increase). Data Source: MARD submission note No-733 /BC-BNN- change), the Target Program on Sustainable Forestry TCLN, Report on review and revision of the Plan on Development was approved with VND 59,599 billion, Coastal Forest Protection and Development for the of which VND 9,460 billion is from the National period 2015- 2020 for submission to the Prime Minister, Investment State Budget, VND 5,115 billion for issued by the Minister of MARD on 31/1/2019. National State Budget for recurrent expenditures, VND 6,800 billion from ODA and VND 38,224 billion Additional Details: By 2020, a total increase of 21,600 ha from other sources. of coastal forest is expected as compared to the baseline57. The expected level by 2020 is 9,400 ha lower (DPF-2 Implementation Status) than the target originally set in the Program 120 on The originally planned DPF-2 indicative trigger on Coastal forest Development and Protection (2015). The technical guidelines including cost norms for the target has been revised downward as MARD has development of coastal forests was adopted by MARD indicated that (i) the original target was too ambitious as in April 2016 for calculation of planting cost. The DPF- they had overestimated the land available for coastal 2 operation was therefore planned to be adjusted with forest planting; and (ii) planned plantation ground are 57 MARD submission note No-733 /BC-BNN-TCLN, Report on review and revision of the Plan on Coastal Forest Protection and Development for the period 2015- 2020 for submission to the Prime Minister, issued by the Minister of MARD on 31/1/2019. 53 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target a new policy identified and adopted by MARD: becoming more difficult for planting and survival of newly technical guidance for the development of coastal plannted seedling due to increasing erosion or high tides. forests in coastal provinces guiding integrated For some areas, it takes two to to three years to prepare production of forestry, aquaculture, and agriculture for sufficient mud siltation grounds before the planting inside coastal forest land areas.55 The Decision aims to can start. provide the regulatory basis for generating income from sustainable activities in coastal forest areas that are classified for protection functions. The regulation builds on lessons and experiences from the implementation of integrated production systems in various parts of Vietnam including the Mekong Delta, Ca Mau, Thua Thien-Hue, Thai Binh, and Nam Dinh provinces (DPF-3 Implementation Status) The originally planned DPF-3 indicative trigger, a MARD Decision for review and adjustment of provincial forest masterplan including coastal forest system, was not adopted as planned due to new requirements on provincial planning under the Law on Planning. However, details on the classification of coastal forests were integrated into Decree 156 issued in November 201856 55 MARD Decision 608 dated February 13, 2018. 56 Government Decree 156/2018/ND-CP dated November 16, 2018, Article 7. 54 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target (DPF-1 and 2 Implementation Status) Result Indicator 2.2.b: Assessment: The next measurement for verification of The MARD Decision on the Guidelines for Provincial Percentage reduction of sequestration is expected to only take place in 2021, REDD+ Action Plan preparation (DPF-1) provided the annual rate of net therefore there is no verified data that can be used to instructions and a framework for provinces to develop emissions (accounting for measure the percent emission reductions as compared actionable plans to protect and develop forests in a reduction in emissions and to baseline. manner that sustains incomes and contributes to the increase in sequestration as a result of changes in Data source: Forest Carbon Partnership Facility. reduction of greenhouse gas emissions. The guidelines forest cover and forest for PRAP preparation are being implemented and so quality) in selected priority Additional Details: Significant progress has been made far, have been used to develop PRAPs for fourteen provinces (measured in in setting up the policy framework at both the national provinces, six of which are under the emission tons of CO2e/year). and provincial levels to enable the preparation of REDD+ reduction program: Thanh Hoa, Nghe An, Ha Tinh, programming in Vietnam. A broadly consulted benefit Quang Binh, Hue and Quang Tri (Others since the (Baseline: 0; Target: 7 sharing plan has been developed for a first jurisdictional issuance of the guidelines are: Ca Mau, Lao Cai, Bac percent relative to forest Emission Reduction Payment Agreement (ERPA) (6 Kan, Binh Thuan, Dak Nong, Thua Thien – Hue, and Phu reference level of 2000- provinces of Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Tho). On February 27, 2017, MARD submitted Note 2012 reference period). Quang Tri, and Thua Thien-Hue). Proceeds from the No. 1671/BC-BNN-TCLN reporting to the Prime agreement would contribute to the implementation of Minister on PPC Decisions approving PRAPs to date. the PRAPs. Forest plantation and enrichment is under progress in three selected north central region provinces under the target program for sustainable forest. (DPF-3 Implementation Status) The original DPF-3 trigger, the National REDD+ Action Programme, was adopted by the Prime Minister in April 2017. Moving forward, it will be important for MARD, in collaboration with other relevant ministries, to establish necessary conditions and frameworks for obtaining REDD+ result-based payments toward and beyond 2020. Key policies/guidelines are underway regarding benefit sharing and transfer/ownership of emission titles 55 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target In February 2018, the Carbon Funds approved the Resolution CFM/17/2018/2 to include the Program on Emission Mitigation in the Central region of Vietnam (FCPF) in the Funding List and authorized WB to negotiate with Vietnam, following results-based payment approach. Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: Engaging in AQM with an Initial Focus on Planning, Inventory, Industrial permitting, and Cleaner Transport (DPF-1 Implementation Status) Assessment: Five provinces have adopted a plan for Following the launch of the NAP-AQM in September improvement of air quality. These provinces are Hai 2016, MONRE Pollution Control Department (PCD) has Result Indicator 3.1.a: Phong, Can Tho, Nam Ha, Hoa Binh and Yen Bai. The been leading the development of a number of parallel Number of cities AQM plans includes actions for sound AQM planning although policy reforms that were prioritized in the NAP, plans adopted. (Baseline: strong measures requires evidenced-based source including the drafting and finalization of the two 0; Target: 3) apportionment. planned DPF-2 regulations on cities’ AQM planning Data Source: Provincial Decisions to issue air quality and industrial emission inventories and registration. management plan. (DPF-2 and 3 Implementation Status) Additional Details: These provincial AQM Plans include Unfortunately, once these were submitted for no regret actions to improve the ambient air quality, approval, there was concern that the current Law on including reviewing AQM policies for revision, setting up Environmental Protection and its Implementation air monitoring station, increasing communication on air Decrees do not provide the proper legal basis for pollution, disclosure of air pollution data, setting up regulations on air quality management. As a result, automated continuous air monitoring system, assessing this policy gap is now being addressed in the revised air pollution bearing capacity for industrial zones. The umbrella Decree under the Law (which would revise plans require industries to invest and install equipment several unforeseen issues under the Law and its to ensure no emission of air pollutants to the 56 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target associated Decrees). However, given the breadth of environment. These plans also require DONRE to the umbrella Decree, its preparation process has taken inventory PM10 and PM2.5 and industries to invest and a considerable amount of time and has thus delayed upgrade technology to mitigate pollution. These are key any further regulations on air quality management, elements constituting a sound AQM plan, showing including the planned DPF-3 triggers positive efforts of provincial authority to take actions to improve air quality. With further guidance from the central Government following the issuance of Decree 40, and capacity building, provinces are expected to develop AQM plans with improved assessment of the causes of ambience air pollution, including emission source apportionment, inventory and modelling of transboundary pollution contributions. Air pollutant sources apportionment and inventory are planned to be taken by Hanoi and its metropolitan areas (Bac Ninh and Hung Yen provinces) in the 2nd quarter of 2019. These studies will contribute to inform the development of Hanoi and its metropolitan areas AQM Plans. Assessment: Given the delay in policy issuance, there is Result Indicator 3.1.b: currently no emission registry and therefore no Percentage of enterprises sectors/industries have reported to one. in 6 sectors/industries that are part of and report to Additional Details: Preparation of the circular to guide the emission registry (in industries to carry out emission inventory was advanced conformance with the at the time of DPF-1 preparation. However, issuance of reporting criteria defined this guidance was delayed due to delays in amending an in the Circular on umbrella legal framework, which was finally adopted as emissions inventories) Decree 40 in May 2019. Following the recently issued (Baseline: 0 percent; Decree 40, the emission permit is required to constitute 57 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target Target: 60 percent) a part of the certificate confirming the completion of environmental protection facilities of industrial infrastructure before putting into operation (DPF-1 Implementation Status) Assessment: NOx emission reductions reached 7.49% in The vehicle emission standards for new road vehicles 2018. was put in place and went into effect on January 1, Result Indicator 3.1.c: 2017. As of that date, all new imported or Percentage of NOx manufactured road vehicles must meet the Euro 4 emission reductions in Data Source: Vu Anh Tuan (2019) – consultant report standard in Vietnam. light-duty road transport based on MOT data. in target year as compared to a business-as-usual (DPF-2 Implementation Status) (BAU) case. Additional Details: Note the data available is for 1 year in The planned DPF-2 trigger on regulating emissions Baseline: Projected trend advance of the original target year. The NOx calculation from in-use motorcycles and mopeds was also held up under BAU case in target method based on the annual inventory data of the as MOJ/OOG had indicated to MOT that the current year; Target: 6.85% Ministry of Transport (MOT). NOx reduction rate for 2017 Law on Road Transport does not provide a legal basis reduction was 6.79%, the corresponding decrease in the following for the inspection of in-use motorbikes. As a result, year 2018 is 7.49%, the relative reduction in average of this is being addressed in the revision of the Law, this period is 7.2% in comparison to the BAU. which is expected to be submitted to the National Assembly for consideration in 2021. (DPF-3 Implementation Status) The planned DPF-3 indicative trigger on emissions regulations of in-use cars (and imports of secondary vehicles) was recently adopted in March 2019. The policy includes a lag to provide car owners time to meet new standard (Jan 1, 2020 for cars produced after 2008 and Jan 1, 2021 for cars produced between 1999 and 2008). The requirement on imported cars is 58 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target effective as of May 2019. Policy Track 3.2: Engaging in Low GHG Emissions Energy Production (DPF-1 Implementation Status) Result Indicator 3.2.a: Assessment: Energy saving is progressing with industries The minimum energy performance standards and Percentage energy saved take measures to cut the energy use. MOIT plans for a labeling scheme for room air conditioners went into in selected end-use sectors survey to collect data to measure energy consumption in effect on January 1, 2017. As of that date, all new as compared with BAU industries in 2020. household air conditioners needed to meet the new case minimum energy performance standards and must be Additional Details: MOIT’s and DOITs’ conduct labeled based on their energy performance. MOIT (Baseline: Projected trend awareness raising, training and capacity building of of annual energy use of provincial authorities and industrial enterprises to randomly select air conditioners on the market to test selected end-use sectors ensure that they are able to meet the new standards. for compliance. to 2019, under BAU Investigations conducted by MOIT and DONREs to scenario energy intensive users help them paying more attention With the AC market size growing to about 3 million in Target: 3.2 percent energy to the requirement to use the resource efficiently. 2017 with high year-on-year growth, a recent market saved for selected Energy savings measures are applied by industries assessment conducted by CLASP58 (of 584 ACs on the industrial segments, especially those listed as energy intensive users. The market) indicates that (1) all models in their survey cumulated to the target measures range from the improvement of lighting had Vietnamese energy labels; (2) of the models with year) system to the installment of inverter, improvement of labels, 99.8% bore certified labels; and (3) 62.8% of production processing and technology, reduction of models on the market bear ratings of 4-5 stars. The machine running time without production, application of last point suggests that another revision of the ISO 50001, etc. A number of factories apply this energy standard (as anticipated in 2020) is needed, as is management standards and initial result shows planned under the Roadmap for EE Labeling for encouraging result.. As part of the new national energy Appliances in Vietnam. efficiency program (approved by the Prime Minister in 58 CLASP, 2019 (forthcoming). Vietnam Room Air Conditioner Market Assessment and Policy Options Analysis. 59 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target March 201959), it is expected that MOIT will be able to (DPF-2 and 3 Implementation Status) mobilize additional resources and technical assistance as The MEPS for domestic refrigerators also went into well as further strengthen the monitoring and effect on July 1, 2018. While no detailed report on compliance regime to facilitate implementation of implementation has been prepared, similarly to the energy efficiency measures in the highly energy MEPS for air conditioning, all new domestic intensive industrial sector. refrigerators nee to meet the new minimum energy performance standards and must be labeled based on their energy performance. MOIT randomly select refrigerators on the market to test for compliance. The EE benchmarks in the steel, beverage, pulp, and plastic industrial sectors were all adopted in late 2016 through 2017. While data management on energy consumption for the industrial sector needs significant improvement, MOIT has prioritized awareness raising, training and capacity building of provincial authorities and industrial enterprises to ensure that they are able to meet the new standards. (DPF-1 Implementation Status) Result Indicator 3.2.b: Assessment: As a result of the policies from the DPF The biomass avoided cost tariff (DPF-1) has led to Percentage increase in series, the total new installed capacity of grid-connected investment in the sector. The avoided cost tariff for Installed capacity of grid- non-hydro renewable energy is 2714.8 MW, mostly biomass power was set in 2016. Thus far, 4 new PPAs connected non-hydro coming from solar. The percentage increase (over the totaling 190 MW of installed capacity have been renewable energy baseline) is 905%, exceeding the target by 262% . Details commissioned60. (Baseline: 0 (270 MW); by each RE technology are included in the first column. 59 Prime Minister Decision 280/2019/QD-TTg. 60 https://baodautu.vn/dua--tong-cong-suat-dien-gio-len-800-mw-vao-nam-2020-d60982.html and Master Plan on Biomass Power Development to 2025, vision to 60 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target Target: 250% (960 MW)) Implementation progress for waste-to-energy has Data Source: Electricity Vietnam (EVN) and B News, been slow, given that thus far it is difficult for investors Vietnam62 to have sufficient access to a steady flow of solid waste. Thus far, 2 new PPAs totaling 9.43 MW of Additional Details: For solar, it is expected that an installed capacity have been commissioned. additional 41 PPAs will be signed with 2,500 MW of installed capacity by the end of June (when the FIT (DPF-2 and 3 Implementation Status) sunsets). The planned solar feed in-tariff (FIT) and standard power purchase agreement (PPA) (part of DPF-2 indicative trigger) were adopted in 2017 and have led to significant level of domestic investment. While the policy will sunset at the end of June 2019, a new version (with different rates across regions in Result Indicator 3.2.c: Assessment: Cumulative GHG emission reductions Vietnam) is planned to be approved by the end of June Expected GHG emissions associated with the 2,714.8 MW of increased installed 2019 and which will include a plan for a solar auction reduction associated with capacity of grid-connected non-hydro renewable energy mechanism post 2020. As of the end of May 2019, the electricity generation and is estimated to be 24.9 million tons of CO2equivalent by solar FIT and standard PPA have led to 50 PPAs signed consumption to 2030 as 2030. Data availability did not permit a full dispatch with 2,481 MW of installed capacity. It is expected that compared to the baseline analysis over the modeling period to 2030. The analysis an additional 41 PPAs will be signed with 2,500 MW of emissions pathway in assumes that each plant becomes fully operational on the installed capacity by the end of June. 61 Vietnam's (intended) date of commissioning shown for each plant and that Nationally Determined there are no off take limitations due to, for example, A revised FIT for wind (part of DPF-3 indicative trigger) Contribution insufficient substation and grid connection capacity or was also recently approved in November 2018 which Baseline: 0 Target: To be due to existing off-take commitments with operating is expected to address some of the shortcomings of finalized by end of 2016 plants. Most of the considered solar RE capacity is 2035, National Institute for Energy, MOIT, http://socongthuong.binhduong.gov.vn/private/plugins/ckeditor_w_kcfinder/kcfinder/upload/files/QH%20dien%20SK%20Quoc%20gia.pdf 61 PPA and installed capacity data from Electricity Vietnam (EVN). 62 https://bnews.vn/se-van-hanh-hon-30-nha-may-dien-mat-troi-trong-thang-6/124626.html 61 Implementation Progress of Prior Actions and Program Results Indicators Progress against Indicator Indicative Triggers and Target the original FIT approved in 2014. Thus far, one PPA location agnostic. has been signed with installed capacity of 34 MW. Given the lack of data related to energy savings in the The master plans for waste-to-energy and wind (part industrial sectors, the indicator only includes the of DPF-2 and DPF-3 indicative triggers, respectively) emission reductions from the renewable energy are no longer being developed due to new investment. requirements under the Law on Planning. Data Sources: World Bank estimate using capacity factor data for wind, biomass, and solid waste to energy from “Analysis of future capacity scenarios for Vietnam report” (Green Innovation and Development Centre, October 2017) and for solar from “National assessment of development potential of grid- connected solar photovoltaic (PV) projects in Viet Nam until 2020 with a vision to 2030” in Hanoi on January 24, 2018. Emissions factor data for wind and biomass from “World Bank Tool for GHG Accounting for Generation and Energy Efficiency Operations”. Emissions factor data for waste-to-energy from IPCC 2006 Guidelines for National Emission Inventories Volume 2, Chapter 2, Table 2.2. Additional Details: If the additional solar investments do materialize by the end of June 2019 (see indicator above), the emission reductions will increase to 46.6 million tons of CO2 equivalent. 62 Annex 9: Status of Indicative Triggers for DPF-2 and DPF-3 DPF-2 Indicative Triggers Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: Enabling The government has Delivered (as MONRE Minister Area-Based Adaptation and developed and adopted Circular 74/2017/TT-BTNMT Resilience in Coastal Areas specific guidance directing dated December 29, 2017) provinces in the development of provincial integrated coastal zone management programs Evidence: MONRE Decision X on provincial integrated coastal zone management guidelines (MONRE) Policy Track 1.2: Improving The government has Delivered (as MPI Minister Mobilization of Resources for established a CC and GG Decision 1085/QD-BKHDT Climate Change and Green investment projects and dated July 16, 2018) Growth program identification and tracking framework Evidence: MPI Minister Decision X on CC-GG projects and program typology and tracking protocols (MPI) Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1: Improving The government has Partially Delivered (MONRE Water Protection and Use developed and adopted Circular Number 24/TT- Efficiency guidelines for protecting the BTNMT dated September 9, quality and function of water 2016 regulating the sources, including drinking identification of sanitary water intakes protection zones for sources of water supply. MONRE Evidence: MONRE minister Circular on river bank circular regulating the protection was upgraded into identification of sanitary a Decree and is currently in protection zones for sources the final stages of approval of water supply and MONRE within the Government, circular guiding the protection expected this year) of river banks, river beds, and alluvial (shallow) ground protection (MONRE) 63 The government has Delivered, in the form of developed and adopted a Government Decree policy on incentive to 77/2018/NDCCP dated May encourage the development 16, 2018 of small irrigation systems, infield irrigation systems, and more advanced and efficient irrigation systems Evidence: Prime Minister Decision on water efficient irrigation Policy Track 2.2: Enabling the The government has Delivered (as MARD Decision Development of Forest developed and adopted 608 dated February 13, 2018 Resources Services technical guidance for the guiding integrated production development of coastal of forestry, aquaculture, and forests in coastal provinces agriculture inside coastal forest land areas) (Note: the Evidence: MARD Circular XX original action on cost norms on Technical Guidelines for planting a number of including Cost Norms for the mangrove species was development of coastal delivered in April 2016 and forests to address climate was considered not strong change enough for being supported for DPF-2) The government, working Delivered closely with provinces, has reported on the development and adoption by at least three provinces of forest carbon action plans Evidence: MARD submission Note No. 1671/BC-BNN-TCLN dated February 27, 2017 reporting to the Prime Minister on PPC Decisions approving PRAPs Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: Engaging in The government has Not delivered (due need for AQM with an Initial Focus on developed and adopted revision of umbrella Decree Planning, Inventory, Industrial guidance on complete AQM under the Env Protection Law, permitting, and Cleaner planning and on emission which has just been issued as Transport inventories for Government Decree No. implementation of the NAP at 40/2019/ND-CP dated May provincial/ city level 13, 2019) 64 Evidence: MONRE Minister Circular X on provincial/city AQM planning and MONRE Minister Circular Y on emission inventory including related registry (MONRE) The government has Not delivered (there is no developed and adopted the legal basis for inspection of in road map for the regulation of use motorbikes and this now exhaust gas emissions from requires a revision of the road in-used motorcycles, mopeds transport law, which is in cities and provinces underway) Evidence: Prime Minister Decision X on the road map on motorcycles (MOT) Policy Track 3.2: Engaging in The government has Delivered (MOIT Decision Low GHG Emissions Energy developed and adopted new 1133/QD-BCT dated March Production energy efficiency labeling 31, 2017) standards for household refrigerators Evidence: MOIT Decision X on new minimum energy performance standards and labeling for household refrigerators (MOIT) The government has Delivered (MOIT Circular developed and adopted 20/2016/TT-BCT dated energy savings and efficiency September 20, 2016 and benchmarks in the steel and MOIT Circular 19/2016/TT- beverage sectors BCT dated September 14, 2016, respectively) Evidence: MOIT Minister Circulars X and Y (MOIT) The government has Partially delivered (Prime developed and adopted a Minister Decision support mechanism (including 11/2017/QD-TTg dated April FIT) and a standard PPA for 11, 2017, MOIT Minister solar energy, and a master Circular 16/2017/TT-BCT plan for the development of dated September 12, 2017 for waste-to-energy solar FIT and standard PPA, (MOIT) respectively; master plan for Evidence: Prime Minister waste to energy development Decision X, MOIT Minister is not being issued due to new 65 Circular Y, and Prime Minister requirements under the new Decision Z Law on Planning) (MOIT) DPF-3 Indicative Triggers Pillar 1: Improving Inter-Sectoral Coastal Planning and Public Investment Finance Programming across Selected Key Sectors in Support of Climate Change and Green Growth Action Policy Track 1.1: Enabling The government has Not delivered (a separate Area-Based Adaptation and developed and adopted the decision on CFZ is no longer Resilience in Coastal Areas coastal functional zoning to planned, but to include it guide provinces in the under the Coastal Resources development of functional Master Plan; zoning under provincial integrated coastal zone management programs Evidence: MONRE Minister Decision X on the Coastal Functional Zoning (MONRE) Policy Track 1.2: Improving The government has Not delivered (the submission Mobilization of Resources for completed the review of the was delayed. The assessment Climate Change and Green design of a selected number is an input to MPI’s SEDP Growth of major CC and GG projects assessment to be submitted and programs against to the Government at later adaptation and resilience stage) objectives Evidence: MPI Minister submission X to the prime minister and the NCCC on the assessment review (MPI) Pillar 2: Developing and Safeguarding Selected Natural Resources Services Policy Track 2.1: Improving The government, working Delivered Water Protection and Use closely with provinces, has Efficiency established and reported on the list of all priority water source protection corridors identified and adopted at provincial level Evidence: MONRE submission to the prime minister of the list of provincial decisions on water source corridors issued (MONRE) The government, working Delivered (MARD has issued a closely with provinces, has number of decisions to guide 66 developed and adopted the application of water guidelines for encouraging saving for a number of priority efficient irrigation for selected crops, including coffee.) priority crops Evidence: MARD Minister Circular X on efficient irrigation for selected crops (MARD) Policy Track 2.2: Enabling the The government has Delivered (Government Development of Forest developed and adopted Decree 156/2018/ND-CP Resources Services guidelines for review forest dated November 16, 2018, types in coastal provinces Article 7, provides details on including appropriate system the classification of coastal serving the monitoring and forest. reporting on coastal forests Evidence: MARD Minister Decision for review and adjustment of provincial forest masterplan including coastal forest system (MARD) The government has Delivered (Prime Minister developed and adopted the Decision 419/QD-TTg dated updated National forest April 5, 2017) carbon action plan Evidence: Prime Minister Decision X on National REDD+ Action Plan (MARD) Pillar 3: Promoting Selected Cleaner Production Systems Policy Track 3.1: Engaging in The government has Delivered (Government AQM with an Initial Focus on developed and adopted an Decree No. 40/2019/ND-CP Planning, Inventory, Industrial emission permitting system dated May 13, 2019) permitting, and Cleaner for implementation of the Transport NAP at industrial sector level Evidence: MONRE Minister Circular X on permit on emissions for 6 major emitting industrial sectors (MONRE) The government has Delivered (Prime Minister developed and adopted the Decision No. 16/2019/QD-TTg road map for the regulation of dated March 28, 2019 setting the road map updating Prime 67 exhaust gas emissions from Minister Decision 249/2005 (cars, trucks, bus) on automobiles) Evidence: Prime Minister Decision X on the road map updating Prime Minister Decision 249/2005 on automobiles (MOT) Policy Track 3.2: Engaging in The government has Delivered (MOIT Circular Low GHG Emissions Energy developed and adopted 38/2016/TT-BCT dated Production energy savings and efficiency December 28, 2016 and MOIT benchmarks in plastics and Circular 24/2017/TT-BCT pulp and paper sectors dated November 23, 2017, respectively) Evidence: MOIT Minister Circulars X, Y, and Z The government has Partially delivered (, Prime developed and adopted a Minister Decision support mechanism (including 39/2018/QD-TTg dated FIT) for grid-connected wind September 10, 2018 on wind power and a master plan for FIT; master plan for wind the development of wind power no longer being issued power. due to new requirements under the new Law on Evidence: Prime Minister Planning Decisions X and Y 68 69