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TRANSCRIPT
Vu Xuan Nguyet Hong
Fossil fuel subsidy in VN –some figures Green growth strategy and Fossil fuels
subsidy reforms Recommendations for a Comprehensive
fossil fuels fiscal reform agenda
Source: UNDP’s project on “Green Growth and Fossil Fuel Fiscal Policy in Vietam: Recommendations for a road map for policy reform” –May 2014
Source: http://www.iea.org /subsidy/index.html
CountryAverage
subsidisation rate (%)
Subsidy per capita
($/person)Total subsidy as share of GDP (%)
China 2.2 13 0.2Indonesia 31.4 110 3.1Thailand 4.2 31 0.6Russia 19.6 277 2.1India 16.8 30 1.9Korea 0.2 4 0.0Mexico 5.2 42 0.4Vietnam 4.0 11 0.5
Fossil fuel subsidy in 2014
Source: http://www.iea.org /subsidy/index.html
(billion USD) 2010 2011 2012 2013 2014
Oil 1.1 1.2 0.3 ‐ ‐Electricity 3.2 3.0 2.9 1.1 0.7Gas 0.2 0.2 0.2 0.5 0.3Coal ‐ ‐ ‐ ‐ ‐Total 4.5 4.3 3.5 1.6 1.0
As a share of GDP 2.83 3.4 2.5 0.9 0.5
Decreasing Trend of FFS in Vietnam 2010-14
Increasing in nominal term, but decreasing in real term
GG is a global policy trend in the context of climate change ◦ 5 policy pillars of GG - ◦GG is a direction towards a low-carbon
economy Vietnam introduced Green Growth
Strategy (GGS -2012) to ensure the low-emission development parth in the coming years
GREEN GOWTH
Green businesses and green markets
Green Infrastructure Development
Application of EEIs
Fossil Fuel Fiscal reform
and Green Taxes
Sustainable consumption
and production
Source: “GG in South East Asia ”, UNESCAP, 2008
Vietnam has made several steps towards GG: ◦ There are several energy related strategies (SD
strategy, Strategy on CCR, GGS, …); all of them reaffirmed the policy direction on SD, gradual liberalization of energy market ◦ GGS focuses on 3 key pillars: i) Reduction of GHG
emission intensity; ii) Greening production; and iii) greening lifestyle and sustainable consumption.
GGS: Energy sector and FFS reforms are important components of GG policy framework in Vietnam.
Introduction of market instruments to adjust the energy sources consumption structure
Improving efficiency/productivity in energy use Formulate and implement a roadmap for fossil fuel subsidies removal
Stimulating and supporting renewable energy development...
GGS includes
some measures related to fossil fuel
fiscal reforms Gradual opening energy market; establishment of a
competition environment in energy market;
Stimulate effective and economically energy use
Gradual liberalization of fossil fuel prices
Application of taxes to improve the structure of fossil fuels use and consumption
Policies to compensate and mitigate negative impacts to vulnerable groups as a results of fossil fuel fiscal reforms
Energy sector policy reforms measures and fossil fuel fiscal reforms
SOEs are dominant in both production and distribution of FFuels; Majority of FFSubsidies are indirect, diverse and difficult to measure separately (incl. those indirectly provided to SOEs) – not easy to remove;
Some economic instruments were introduced (i.e. environmental protection taxes) to internalize env-t and social costs in energy price, but yet limited;
Existing energy/electricity price levels and the structure of power sector provides little incentives for investors to invest in green energy
Lack of concensus on fossil fuel subsidy reform acceleration by stakeholders ( SOEs, households, etc.) –limit the reform’s speed and success
A comprehensive fossil fuel fiscal reform, which include three components:
• Comprehensive energy sector reform
• Manage the impact of reform
• Build and maintain support for reform
Comprehensive electricity sector reform: ◦ Improving EVN (SOE) functional efficiency (incl. its
corporate govenance, operation and strategy) ◦ Enhancing electricity market competition ◦ Strengthening electricity market regulation ◦ Introducing cost reflective, transparent and
predictable electricity pricing ◦ Toward carbon pricing ◦ Develop renewable power regulation to attract
green energy developers
Manage the impact of reform ◦ Subsided electricity for small farmers; ◦ Cash transfer for household businesses ◦ Supporting SMEs and other selected enterprises ◦ Managing inflation impact ◦ Facilitating labour market adjustment ◦ Enhancing energy efficiency
Build and maintain support for reform ◦ Communication, information and consultation
Thank you for your attention!