Vietnam net zero 2050 pledge: what it means for companies

Vietnam net zero 2050 is a promise that the Prime Minister made at the COP26 climate summit in Glasgow in 2021. Vietnam says it will balance the greenhouse gases it puts out with the amounts it removes by the year 2050. A pledge is not a law, and it does not tell a single company what to do today. But rules that support it are already being written, and some of them will reach business.

This article explains the pledge, the plans behind it and the steps a company can take now.

Sources: UN Climate Change Conference (COP26), Glasgow, 2021.

What the pledge says

"Net zero" means that emissions and removals cancel out. Removals can come from forests and other natural sinks, or from technology. The pledge sets the end date, which is 2050. It does not list yearly limits for each industry.

That is why the pledge matters less on its own than the plans that follow it. Governments turn a headline goal into targets, reporting duties and prices on carbon. Companies feel the pledge through those steps, not through the speech.

Sources: Statement of Vietnam at COP26, Glasgow, 2021.

The target Vietnam already had for this decade

Before the pledge, Vietnam sent an updated climate plan to the United Nations in July 2020. This plan is called the Nationally Determined Contribution, or NDC. It uses 2014 as the base year, because that is the latest year with a full national inventory of emissions. The 2014 inventory shows 284.0 million tonnes of carbon dioxide equivalent.

The NDC sets two goals for the end of this decade, compared with a "business as usual" path:

• With its own resources, Vietnam will cut emissions by 9 percent, which is about 83.9 million tonnes.
• With help from other countries, through aid, loans and technology, the cut can reach 27 percent, which is about 250.8 million tonnes.

The plan also builds a system to measure, report and check the cuts. It says the national emissions inventory will be updated every two years. Good data is the base for any rule that follows.

Sources: Socialist Republic of Viet Nam, Updated Nationally Determined Contribution (NDC), Ha Noi, July 2020, submitted to the UNFCCC.

The law that may reach companies first

The strongest tool is the Law on Environmental Protection, which was revised in 2020. In 2020, Vietnam legalised carbon pricing through an emissions trading scheme, or carbon market, and the details were expected in a government decree. A carbon market puts a price on emissions, so a company that cuts its own output can gain, and one that does not may pay.

Rules like this usually reach the biggest emitters first. Smaller firms may not face direct duties yet, but their large customers may ask them for data.

Keep one point in mind. The exact lists, thresholds and dates can change, and some guidance is still to come. Read each new document when it is released.

Sources: National Assembly of Vietnam, Law on Environmental Protection, revised 2020.

Five steps a company can take now

1. Check your status. Ask your legal adviser whether your sites fall under the emissions inventory rules.
2. Measure first. Track your electricity, fuel and gas use by site. These numbers are the base of any inventory.
3. Look for easy savings. Better motors, lighting, boiler care and less waste often pay for themselves.
4. Ask your suppliers. Buyers abroad are asking for emissions data. Know what you can share.
5. Name an owner. Give one senior person the job of following the rules and reporting to the board.

Start small and keep records. A simple sheet that lists each site, its energy bills and its main fuels is enough for a first year. It also gives your team a clear base to compare against later, and it makes any future request from a customer or a regulator much easier to answer.

None of these steps needs a big budget, and all of them help whether the rules arrive early or late.

Sources: Updated NDC of Viet Nam, July 2020, on inventory and reporting; Law on Environmental Protection, revised 2020.

The bottom line

The pledge sets a date, and the NDC and the environmental law fill in the path. The pledge is real, but the detail for each industry is still being built. Companies that start measuring now will be ready when the detail arrives.

This is general information only. Read the original documents for the exact net zero commitments, and ask a climate policy adviser before you rely on them.

Sources: As listed above.

Sources

• Socialist Republic of Viet Nam, Updated Nationally Determined Contribution, July 2020 (UNFCCC).
• Law on Environmental Protection, revised 2020.
• COP26, Glasgow, 2021.