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Along with economic growth and improved living standards, waste from households, industries, and commercial or service establishments is expected to increase rapidly over the next years. Managing this waste is a hard challenge for the Government of Vietnam because of its substantial cost and lack of awareness and participation of people and businesses. Wastes can be classified according to: their form (wastewater, solid waste); their origin (industrial wastes, agricultural wastes, urban (municipal) wastes); and their hazardous nature (non-hazardous or hazardous).

The scope of the present study focuses on the assessment of opportunities to improve the effectiveness of the clean development mechanism (CDM) through the enhanced use of standardization. The study argues that the introduction of the concept of standardized baselines to the CDM can substantially change the way the CDM develops. The goal of the present study is to discuss what the options are for driving the idea of standardization further. The working hypothesis is that baseline standardization alone may not be sufficient in that regard but can be seen as a starting point for improving the CDM through the enhanced use of standardization at other levels of CDM procedures. The study examines how standardization can be used to simplify CDM procedures throughout the project cycle and to extend the scope of the CDM in a way that improves access of underrepresented sectors and regions. The paper is divided into three chapters. The first chapter sets the scene by analyzing in detail procedural imperfections of the CDM that can be addressed through extending standardization to project cycle procedures. The second chapter discusses new opportunities that standardization could provide to the CDM reform. The third chapter of the study analyzes if and how standardization can enable policy-driven actions to generate carbon credits under the CDM. The chapter also assesses the ways standardization can help overcome the remaining barriers to better incorporate the CDM in host countries low carbon development policies, and to inform the development of new market mechanisms.

Project-based mechanisms for emissions reductions credits, like the Clean Development Mechanism, pose important challenges for policy design because of several inherent characteristics. Participation is voluntary. Evaluating reductions requires assigning a baseline for a counterfactual that cannot be measured. Some investments have both economic and environmental benefits and might occur anyway. Uncertainty surrounds both emissions and investment returns. Parties to the project are likely to have more information than the certifying authority. The certifying agent is limited in its ability to design a contract that would reveal investment intentions. As a result, rules for baseline determination may be systematically biased to overallocate, and they also risk creating inefficient investment incentives. This paper evaluates, in a situation with asymmetric information, the efficacy of the main baseline rules currently under consideration: historical emissions, average industry emissions, and expected emissions.