02/03/2021
The Law on Environmental Protection (LEP) 2020 has many new points on the use of economic instruments for environmental management to meet the Party's major guidelines, especially the “perfecting socialist-oriented market economy institution” by using more and more realistic economic instruments for environmental management, gradually moving to applying the basic principles of the market in environmental management, of which two basic principles are: Polluter-pays; Beneficiary-pays.
In fact, the above principles have been applied in the past, but the LEP 2020 has new, additional and more complete points to meet the operational requirements of the market economy institution, provided that the behavior of the subject polluting the environment shall pay to remedy that pollution, the business activities that benefit from the environment must be responsible for the environment, that is to pay to compensate the environmental service providers.
New points about economic instruments in the amended LEP:
Firstly, right from the title of Chapter XI, the phrase “economic instruments” is used and there is a section on "economic instruments for environmental protection" to reflect the provisions in the chapter with economic instruments to be used.
Secondly, about environmental protection taxes and fees. Environmental protection taxes, which have been included in the LEP 2020 as the basic principles, but still respect not to change the laws on taxation and environmental protection that have been implemented. New points on the environmental protection taxes stipulate that instead of the current provisions in the Law on Environmental Protection Taxes, the tax is "indirect", only collected by product, now the amendment does not use the phrase "indirect", clearly stating that taxes on products causing negative impacts on the environment or environmental pollutants aiming at applying to behavior of production and business activities causing damages to the environment.
The LEP 2020 has a provision on the environmental protection deposit with the “waste landfill” activity
For environmental protection fees, a new point compared to the LEP 2014 is that it clearly stipulates and expands the subject of fees, but still ensures the principles and provisions of the Law on Fees and Charges issued.
The LEP 2020 also clearly defines the role of the Ministry of Natural Resources and Environment, as “taking the lead in assessing the level of environmental pollution, the greenhouse effect of wastes or products, goods when used, causing negative impacts on the environment to propose a specific list of payers of environmental protection taxes and fees”. This will ensure the suitability of the environmental management agency in regulating the polluting behavior of organizations and individuals through the Tax Fee instruments.
Thirdly, about the environmental protection deposit, it is added to the LEP 2020 as a separate article, along with the provisions on environmental protection deposit in the previous “mining” content, adding two types of environmental protection deposit, these are “waste landfill” and “scrap import from abroad for use as raw materials for production”. The addition of this instrument will have the effect of attaching responsibility for landfill and scrap import from abroad which will be financially bound or equivalent to being accountable from beginning for environmental protection.
Fourthly, about payments for natural ecosystem services. This is a new provision based on the BPP principles and practice for a fairly successful application of payments for forest ecosystem services. The LEP 2020, in addition to the provisions on payment for forest ecosystem services under the provisions of the Law on Forestry, adds three additional types of natural ecosystem services that have to pay for environmental services: Wet land ecosystem services; Marine ecosystem services; Rocky mountain, cave and geopark ecosystem services. In which, it is specified that only businesses of tourism, entertainment, aquaculture and carbon absorbtion must pay for environmental services. With the contents specified in this Article, organizations and individuals must pay for ecosystem services when conducting business.
Fifthly, about organization and development of the carbon market. This is an economic instrument based on the principle of "win-win solution" when participating in the carbon market between the buyer and the seller. Currently in the world, this type of market has been formed and developed, in Việt Nam we have participated in a commitment to reducing carbon with global efforts to reduce greenhouse gases, but it is not presented by law, so this is a new provision presented in the LEP 2020.
Sixthly, about liability insurance for compensation for damages caused by environmental incidents. Although the LEP 2014 has a provision on “Liability insurance for environmental damages”, the LEP 2020 amended this in detail and more clearly as “damages caused by environmental incidents”. These risks are not foreseen and business enterprises are encouraged to buy insurance so that when risks occur, insurance can reduce the level of damages to businesses, on the other hand, the awareness of environmental protection of businesses is also raised when participating in buying insurance.
The LEP 2020 has been supplemented, amended and improved with economic instruments for environmental protection to meet practical needs to apply to behavior of organizations and individuals that cause environmental damages and benefit from the environment based on market principles. Besides, other financial mechanisms have been completed and added in the LEP 2020 such as environmental protection fund, green procurement, green credit, and green bonds to create a complete mechanism towards all business activities in the market and people are aware and responsible for environmental protection through economic instruments and financial mechanisms.
Assoc. Prof. Dr. Nguyễn Thế Chinh - Former Director General
Institute of Strategy and Policy on Natural Resources and Environment
