Finance ministry opts for collecting emission fees

The Ministry of Finance (MoF) plans to introduce emission fees as a measure to combat pollution, according to a draft Environmental Protection Decree for which the ministry actively seeks input from various ministries, local authorities and businesses.

Traffic congestion in Hanoi. Photo: Cong Hung/The Hanoi Times

According to the MoF, air quality in Vietnam's major cities of Hanoi, Ho Chi Minh City, Danang, Cantho and Haiphong, industrial zones, and artisan villages is deteriorating, posing a significant threat to public health, the environment, and economic well-being as the economy continues to expand.

Contributing to this predicament are emissions from facilities and vehicles. Currently, there are approximately 5.1 million cars and a substantial number of motorcycles on the road in Vietnam. There are also numerous complexes housing bauxite production, iron and steel manufacturing, refining and petrochemical operations, and power generation centers.

Moreover, there are nearly 120,000 industrial production facilities, 138 of which are major polluters, and about 110,000 construction companies. Together, these facilities generate significant amounts of industrial emissions and particulate matter that adversely affect the environment.

The MoF emphasizes that a significant number of organizations and individuals responsible for emitting pollutants that contribute to air pollution appear to lack a comprehensive understanding of their obligations. As a result, there is an urgent need to enact a regulation on emissions-based environmental protection fees.

Since this is a new policy, it is essential to determine the amount of pollutants as a basis for calculating the fees and identifying the sources of payment.

In the immediate term, the ministry has recommended that the Government only regulate specific sectors such as iron and steel production, metallurgy, coke production, basic inorganic chemicals, inorganic fertilizers, nitrogen compounds, petrochemical refining, and thermal power generation to pay these fees.

Based on assessments conducted in cooperation with local governments, the MoF has concluded that in order to facilitate efficiency and avoid additional expenditures, the proposed level of emission fees and the framework for their collection should be aligned with those currently established for industrial wastewater, as outlined in Decree No. 53.

Under this framework, the fee structure is divided into two segments: a fixed fee applicable to all emission-releasing facilities, which ensures coverage of the treatment of substances other than the four specified substances (total dust, NOx, SOx, CO). In addition, a variable fee will be imposed on facilities required to monitor emissions (applicable to the four substances: total dust, NOx, SOx, and CO).

The fixed fee is proposed to be VND3 million (US$125) per year, subject to annual adjustments and the option of quarterly payments. As for the variable fee, it's recommended to be approximately VND500-800 (US$0.02-0.03) per ton of emissions, based on the proposal of the Ministry of Natural Resources and Environment.

In terms of budgetary impact, the MoF estimates that this new revenue stream, once implemented, could increase annual revenues by about VND1.2 trillion ($50 million). This revenue would play a role in addressing air pollution in the respective areas where the waste sources are located.