Vietnam’s Green Transition: From Commitment to Action

By Nga Dao

Last month, the annual Vietnam Business Forum (VBF) 2023 took place in Hanoi, bringing together top government and corporate leaders to discuss how the business community can partner with the Government of Vietnam in fostering green growth. The forum heard the Prime Minister’s pledge that Vietnam will “act like a developed country” and will “implement international commitments seriously and effectively”. The PM’s statement has, once again, strengthened his Glasgow commitment at COP26 for Vietnam to achieve net-zero emissions by 2050. In line with COP26, Vietnam also made a commitment to stop deforestation by 2030 and phase out coal-fueled power generation by 2040.

Vietnam’s efforts to realize its Net Zero 2050 ambitions are well supported by the international community. December 2022 marked a milestone in this journey when leaders of Vietnam and the International Partners Group, including the European Union, the United Kingdom, France, Germany, the United States, Italy, Canada, Japan, Norway and Denmark announced the Just Energy Transition Partnership (JETP). This initiative will help raise an initial US$15.5 billion of public and private finance over the next three to five years to support Vietnam’s green transition.

Policy developments

The past two years saw a number of key policy developments in Vietnam’s transition to a greener economy. Just before COP26, the Government already sent a strong signal about Vietnam’s determination to accomplish green growth and transition towards a carbon-neutral economy through the adoption of the national green growth strategy for 2021 – 2030, with a vision to 2050.  Soon after COP26, the Cabinet issued a series of important documents to realize the country’s ambitions. Notably:

Decision No.2157/QD-TTg of December 21, 2021, establishing a National Steering Committee for implementing Vietnam’s commitments at the COP26.

Decision 01/2022/QD-TTg of January 18, 2022, promulgating a list of sectors and facilities that are required to conduct greenhouse gas (GHS) inventory. Accordingly, 1,912 enterprises from six sectors (energy, transportation, construction, industrial processes, agriculture- forestry-land use, and waste) must determine their emissions and carry out an inventory of GHG.

Notice No. 30/TB-VPCP of January 30, 2022, requesting that government agencies focus on eight areas in implementing Vietnam’s COP26 commitments, including (i) transition from fossil fuel to green/clean energy sources; (ii) reduction of GHG emissions in various industries; (iii) reduction of methane emissions, especially in agricultural production and waste treatment; (iv) encouragement of R&D and use of electric vehicles; (v) management and sustainable use of existing forests, increase of afforestation for carbon absorption; (vi) promotion of R&D and use of building materials and urban development in accordance with sustainable and green development; (vii) organization of communication campaigns to enhance awareness and support among the public and business communities for the government’s implementation of the COP26 commitments; and (viii) acceleration of digital transformation in response to climate change.

Decision No. 450/QD-TTg of April 13, 2022, approving the national strategy for environmental protection by 2030, with a vision to 2050. The strategy is aimed to prevent environmental pollution and degradation, address urgent environmental issues, gradually improve the environmental quality, and mitigate the loss of biodiversity. It is also expected to ensure environmental security and develop circular, green and low-carbon economic models, thus helping Vietnam achieve sustainable development goals by 2030.

Decision 882/QD-TTg of July 22, 2022, approving the national plan of action on green growth for the 2021-2030 period. The Plan provides tasks for the government agencies to implement in order to achieve the objectives set in the national Green Growth Strategy.

Decision 888/QD-TTg of July 25, 2022, approving the scheme on major tasks and solutions to implement outcomes of the COP26. The scheme sets targets for the country by 2030 towards net-zero emissions by 2050. These include, for example, the decrease of GHG emissions by 32,6% in energy, 43% in agriculture and 70% in the forestry and land use sector; and an increase in the ratio of renewable energy sources, including hydroelectricity, wind power, solar power and biomass to at least 33% of the total electricity output. Under the scheme, the Government plans to develop new zero-emission energy projects and energy storage technologies; establish carbon credit exchange and offsetting mechanisms, and a domestic carbon credit market. The scheme also indicates the Government’s intention to join the International Renewable Energy Agency (IRENA) and the International Solar Alliance (ISA) to accelerate energy transition and mobilize funds for climate change response and energy transition activities.

Decision 896/QD-TTg of July 26, 2022, approving the national strategy on climate change for 2050. It is aimed for Vietnam to proactively and effectively adapt to climate change, reduce GHS emissions to net zero, and deal with vulnerabilities and risks caused by climate change.

More concrete actions and detailed regulations to come

This April the Government has announced the completion of a reporting system for facilities to upload their greenhouse gas (GHG) emissions data online and that system will soon be put into operation. It is also finalizing the Power Development Plan VIII and the National Marine Spatial Planning (for the 2021 – 2030 period, with a vision to 2045) to encourage renewable energy development and the development of marine resources, including offshore wind power. And, further concrete actions and guidelines are coming for the realization of Vietnam’s international commitments and initiatives.

Currently, the government agencies and ministries, particularly the Ministry of Natural Resources and Environment, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Industry and Trade, and the State Bank of Vietnam are planning to revise or formulate various regulations, particularly regarding: 

• Incentives for investments in climate change response and energy transition;
• Promotion of green procurement and green consumption;
• Issuance of green bonds and granting of green credits;
• Carbon taxation and development of a carbon market; and
• Promotion of environmental, social and governance (ESG) reporting and practice.

The next period will therefore definitely be exciting for both domestic and foreign companies, especially in the energy sector. It is suggested that businesses closely monitor regulatory developments and proactively engage with the Government so as to quickly respond to new changes and grab new opportunities.