Green economy: Vietnam’s goal

Indispensable trend

At the second Partnering for Green Growth and Global Goals 2030 (P4G) summit that took place in the Republic of Korea in May 2021, Prime Minister Pham Minh Chinh affirmed that promoting green growth is a major policy of the Communist Party of Vietnam and the Vietnamese State, and that Vietnam does not accept unsustainable growth at any cost. A green economy is indispensable for Vietnam to maintain its committed development goals.

Vietnam is promoting investment in green energy - photo: Trung Nam Group

According to the World Bank (WB), Vietnam suffers environmental damages equivalent to approximately five percent of the country’s GDP annually. It is also one of the world’s top five most vulnerable countries to climate change, with damages caused by natural disasters amounting to 1.8-2 percent of the nation’s GDP. If Vietnam does not take effective response measures, the damages may have increased to 10 percent of its GDP by 2050.

Heavily affected by climate change, Vietnam should pioneer in taking climate change prevention measures and shifting the economy to a green growth model.

Vietnam’s action

Assoc. Prof., Dr. Dinh Quoc Truong from the National Economics University said that Vietnam so far has set up 750 standards to promote a green economy and achieved satisfactory results in this field. Specifically, greenhouse gas emissions have decreased by 12.9 percent; the ratio of energy use to GDP has decreased by 1.8 percent in the 2014-2020 period; the percentage of industrial businesses with awareness of cleaner production has increased from 28 percent in 2010 to 46.9 percent in 2020. Measures to reduce greenhouse gas emissions have been taken in all fields. Vietnam has attached importance to green production and promoted investment in green energy resources such as wind and solar power, and waste-to-energy plants.

In 2022, Vietnam was one of the world’s top 10 countries in terms of renewable energy investment, with US$7.4 billion, surpassing even Germany and France. In terms of access to electricity, the WB ranked Vietnam 27th among 190 economies worldwide.

Green production has been promoted in Quang Ninh Province’s Dong Mai Industrial Park - photo: Minh Ky

The global management consulting firm McKinsey suggested that the Vietnamese Government set a stronger renewable energy use roadmap which can help it save 10 percent of overall power costs and reduce greenhouse gas emissions by 1.1 tonnes.

Vietnam’s investment in environmental protection has also increased considerably. According to the Ministry of Natural Resources and Environment, in 2021, the State budget’s expenditure on environmental protection increased by 55.8 percent compared with 2015, reaching VND21.2 trillion. The annual budget for environmental protection is always maintained at a level not below one percent of the total expenditure from the State budget.

The Government has promulgated many incentive policies to encourage investment in environmental protection, gradually forming a non-public environmental service network providing services such as collecting and transporting waste, including hazardous solid waste, building waste treatment facilities, and domestic wastewater treatment.

“Vietnam encounters numerous difficulties on the way to achieving green growth goals. Mobilizing financial resources is a major challenge. The limited State budget is used for various purposes. Most companies are small to medium in size and lack capital for changing production modes,” said Assoc. Prof., Dr. Dinh Quoc Truong. “Vietnam’s growth has for a long time depended on the exploitation of natural resources, and it’s not easy to change this model to a new one that depends on high-quality labor, technology and finance,” he added.

Vietnam is integrating more deeply into the world economy and bilateral and multilateral trade institutions. Environmental standards in major markets such as the US, Japan, and the EU are becoming increasingly stricter. In the near future, the EU’s Carbon Border Adjustment Mechanism (CBAM) is forecast to affect Vietnamese exporters to the EU, especially in sectors with high emissions, such as steel, aluminum, oil refinery, cement, paper, glass, fertilizer, and energy.