As the global economy accelerates its shift towards green practices, Vietnam, a rising economic power in Southeast Asia, is actively promoting its green economic transition. However, multiple challenges—including funding shortages, underdeveloped policies, and outdated technology—are hampering this progress. For Vietnam, this transition is not only about addressing climate change but also about maintaining its competitive edge in future international markets and ensuring sustainable economic growth.
Vietnam has been proactive on the international climate stage, especially at the 26th and 27th United Nations Climate Change Conferences (COP26 and COP27), where the government committed to achieving net-zero emissions by 2050. This pledge highlights Vietnam’s commitment to combating climate change but also signals the urgent need for the country to accelerate the formulation and execution of a comprehensive green transition strategy.
According to the Vietnam News Agency, the Private Economic Development Research Board of Vietnam has stressed that the green transition is becoming the new frontier of global competition. If Vietnam wants to secure a place, it must develop a national-level strategy for green transformation. This requires close cooperation between the government, businesses, and broader society. However, the current readiness of Vietnamese enterprises is far from ideal. Approximately 64% of businesses have yet to take any green transition measures, and only 5.5% have started implementing emission reduction projects, placing Vietnam under growing pressure in the international market.
The main obstacles to Vietnam's green transition are capital and technology. The World Bank estimates that from 2022 to 2040, Vietnam will need an additional $368 billion to reduce greenhouse gas emissions and enhance climate resilience, with half of this amount expected to come from the private sector. Yet, green loans currently account for only 4.5% of Vietnam’s total lending, and green bond issuance is far below that of other Southeast Asian countries. Vietnam's green finance market is far from mature, making it difficult for many businesses to secure the funding needed to support their transition.
A shortage of technology and skilled professionals is another significant challenge. Many companies lack the technical expertise to implement effective emission reduction measures. While some businesses have recognized the importance of green transition, technological limitations prevent them from achieving truly sustainable and efficient emission reductions. As global markets increasingly demand green products and sustainable development, these technological gaps are placing Vietnam at a disadvantage in international competition.
Despite its vast wind and solar resources, Vietnam has struggled to become a hot spot for renewable energy investment. In recent years, several Western energy companies have withdrawn from the Vietnamese market. Major international players like Italy’s Enel and Norway’s Equinor have halted their wind energy projects in Vietnam, and Denmark’s Orsted has suspended its operations in the country. These withdrawals underscore Vietnam’s shortcomings in policy and market mechanisms, particularly its complex project approval processes and lack of transparency, which have significantly undermined investor confidence.
While the Vietnamese government has set ambitious wind power development goals—aiming to achieve 6 gigawatts of offshore wind capacity by 2030 and 70 gigawatts by 2050—progress in wind energy projects has fallen far short of expectations. Complex approval procedures and an unclear pricing mechanism make these goals increasingly distant, threatening to derail Vietnam’s anticipated growth in the sector.
At the same time, Vietnam remains heavily reliant on fossil fuels. According to the International Energy Agency, between 2000 and 2021, Vietnam’s per capita electricity consumption grew by 741%, with fossil fuels accounting for over 80% of the country’s energy mix. To meet its rapidly growing power demand, Vietnam’s coal-fired power generation has continued to rise. In just the first four months of 2023, coal-fired electricity generation increased by more than 42.5% year-on-year, leading to a significant spike in greenhouse gas emissions.
This situation reflects Vietnam’s energy transition dilemma: on one hand, the country must continue relying on fossil fuels to meet soaring energy demand; on the other, it has pledged to achieve net-zero emissions by 2050. This contradiction makes it challenging for Vietnam to fully wean itself off fossil fuels in the short term, complicating its green transition.
Nevertheless, the Vietnamese government remains resolute in its green ambitions. A joint report by the Vietnam Electricity and Renewable Energy Authority and the Danish Energy Agency highlights that expanding solar and wind power is the best path for Vietnam to achieve sustainable development. If Vietnam can overcome financial, technological, and policy-related barriers, its green transition could provide a long-term competitive advantage for the economy.
Moreover, green transition is not only a means for Vietnam to address climate change but also a crucial factor in attracting foreign investment. Denmark's ambassador to Vietnam, Nicolai Prytz, noted that green energy development capacity has become a key consideration for many international businesses when investing in Vietnam. By accelerating its energy transition, Vietnam could not only meet its growing domestic energy needs but also position itself advantageously in the global supply chain.