Vietnam: The Benefits of Cleaner Development2004 National Strategy Study Spells Out

the Opportunities and Challenges of the Clean Development Mechanism under the Kyoto
Protocol

HANOI, December 28, 2004 -- As one of 111 countries to have signed the Kyoto
Protocol, an international agreement aimed at minimizing the emission of harmful
greenhouse gases, and thereby fight global warming, Vietnam has recently completed a
study to guide its participation in the Clean Development Mechanism (CDM). Through
the CDM program, a country’s reductions of greenhouse gas emissions are certified by a
national and international approval process, after which the credits may be sold to
governments and private companies that have an obligation to reduce their emissions of
greenhouse gases.

Global warming is the progressive gradual rise of the Earth's average surface temperature
thought to be caused in part by an increase in greenhouse gases in the atmosphere. Global
warming is expected to raise sea levels, and change precipitation and other local climate
conditions. Changing climate could alter forests, crop yields, and water supplies and
could also affect human health, animals, and many types of ecosystems.

Mr. Nguyen Cong Thanh, Deputy Minister of Environment and Natural Resources said at
the launch ceremony: "As well as generating extra revenue through the sale of Certified
Emission Reductions (CERs), participation in the CDM could benefit Vietnam through
the transfer of environmentally friendly technology, and by supporting projects that aid
the country’s environment. Projects to improve energy efficiency and to switch to
cleaner-burning fuels can, for instance, reduce local air pollution. "

The study found that, if Vietnam is to compete in the global market to produce CERs, it
must act quickly. Based on the number of CERs traded in the first five months of 2004,
trade is expected to double from 2003 to 2004. A major shift in geographical distribution
has occurred in the past year, with Asia’s share of transactions rising from 21% in 2002/3
to 51% in 2003/4.

"The CDM strategy lays out a vision and action plan for Vietnam to participate in the
global market for greenhouse gas emission reductions, for example by capturing methane
gases from landfills" said Klaus Rohland, Director of the World Bank in Vietnam. "The
World Bank congratulates the Ministry of Environment and Natural Resources for
preparing this strategy, with critical assistance from the Government of Australia."

Setting a course for Vietnam to take advantage of these opportunities was the goal of
Vietnam’s National Strategy Study for CDM, performed under the guidance of the
Ministry of Natural Resources and Environment and funded by the World Bank and the
Australian Government. The study took two years to complete, with the final
recommendations published in Hanoi in December 2004.

The results will now aid experts and policymakers to develop Vietnam’s National CDM
Strategy. With the basic requirements for CDM to become operational in Vietnam already
in place, compared to many countries in the region, Vietnam is in a good position to join
the CDM market. Yet there is a pressing need to integrate CDM into Vietnam’s
institutional and legal framework and to inform Vietnam’s policymakers of this program’s
benefits. Vietnam has the opportunity to develop CDM projects in a number of sectors,
including energy, agriculture and forestry.

Notes to Editors:

_ The Clean Development Mechanism (CDM) under the Kyoto Protocol allow the
transfer of certified emissions reductions (CERs) from developing countries such as
Vietnam to certain developed countries.

_ The objective of the CDM is to contribute to the sustainable development of host

countries and to assist eligible developed countries to meet their emissions reduction
obligations under the Kyoto Protocol in a cost-effective manner.

_ The World Bank strongly supports Vietnam's efforts in attaining Vietnam's localized
Millennium Development Goals and targets.

_ The World Bank provides three type of services to Vietnam: (1) design and financing of
development projects; (2) analytical work, policy advice, and technical assistance; and
(3) donor dialogue facilitation. In addition, every year the Bank co-chairs the
Consultative Group (CG) meeting in which all donors gather to discuss the aid program
for Vietnam.

_ Since reengaging in Vietnam in 1993, the World Bank has supported 35 projects to help
fight poverty in Vietnam through finance for agriculture, infrastructure, health programs,
schools, and other essential needs.

_ Since 1993, US$5 billion has been committed to Vietnam, of which over $2.7 billion
has been disbursed. This makes Vietnam the largest IDA-only borrower in the world.

News Release No:2005/264/EAP

Media Contact:
In Washington:
Melissa Fossberg (202) 458-4145
E-mail: mfossberg@worldbank.org
In Vietnam: Hoang Thanh Ha
Tel. (84-4) 934 6600 ext 234
E-mail: Hha@worldbank.org