Green growth in Vietnam

The global pursuit of Green Growth has transformed into an essential agenda in a world grappling with escalating environmental degradation, climate change, and the depletion of finite resources. This concept strives to balance prosperity and ecological sustainability by decoupling economic growth from resource consumption and environmental harm. This article explores the definition and status of Green Growth and provides an understanding of Vietnam’s progress and role in the global green growth movement.

1. Defining Green Growth

Green Growth is a sustainable development strategy aiming to achieve economic growth while minimizing negative environmental impacts. It emphasizes the responsible and efficient use of resources, reducing pollution, and promoting eco-friendly technologies and practices. The central goal of green growth is to harmonize economic development with environmental conservation, creating a balance that benefits both the economy and the planet1

2. How is Green Growth measured?

Organizations such as the Organisation for Economic Co-operation and Development (OECD), the UN Environment Programme (UNEP), and others have proposed various indicators to measure green growth. These indicators cover four main areas:

  • The transition to a low-carbon, resource-efficient economy: This area measures the progress towards reducing greenhouse gas emissions, improving energy efficiency, and promoting renewable energy sources. Some examples of indicators are carbon dioxide emissions per capita, energy intensity of gross domestic product (GDP), and share of renewable energy in final energy consumption.
  • Maintaining the natural asset base: This area measures the progress towards preserving and restoring ecosystems, biodiversity, and natural capital. Some examples of indicators are forest area as a share of land area, number of protected areas per 1000 people, and value-added from ecosystem services.
  • Improving people’s environmental quality of life: This area measures the progress towards enhancing human health, well-being, and social equity through environmental policies and actions. Some examples of indicators are life expectancy at birth, air quality index, and income inequality.
  • Implementing policies for and realizing the economic opportunities associated with green growth: This area measures the progress towards creating a conducive environment for green innovation, investment, trade, and competitiveness. Some examples of indicators are patent applications related to green technologies per million inhabitants, foreign direct investment (FDI) in green sectors as a share of total FDI stock, and export revenues from green products or services as a share of total exports.

These indicators can help countries monitor their progress towards achieving Sustainable Development Goals (SDGs) related to Green Growth. They can also help identify gaps and challenges in implementing green policies and actions.2 However, these indicators need to be adapted to each country’s specific context and needs and complemented by other sources of information and data that capture the complexity and diversity of green growth.

There are some rankings of green growth achievement among countries. One of them is the Green Growth Index (GGI), which measures a country’s performance in achieving sustainability targets, including Sustainable Development Goals (SDGs), Paris Climate Agreement, and Aichi Biodiversity Targets. The GGI is constructed based on four main dimensions: efficient and sustainable resource use, natural capital protection, green economic opportunities and social inclusion.

In another effort, the Green Future Index 20232 ranks 76 economies on their readiness for a low-carbon future via five pillars: Carbon emissions, Energy transition, Green society, Clean innovation, and Climate policy.

3. Notable Global Trends on Green Growth

Notable global trends in green growth encompass a range of initiatives and developments aimed at achieving sustainable and environmentally friendly economic progress. Some of these trends include:

  • Renewable Energy Expansion: Increasing investments and installations of renewable energy sources like solar, wind, and hydroelectric power to reduce reliance on fossil fuels and decrease carbon emissions.
  • Circular Economy Initiatives: Promoting the efficient use of resources, reducing waste, and recycling to create a closed-loop system that minimizes environmental impact.
  • Green Finance and Investments: Growing emphasis on financing sustainable projects and businesses through mechanisms like green bonds and impact investments.
  • Technological Innovations: The increasing innovation and investment in green technologies, products, and services can create new sources of growth, competitiveness, and job creation. According to the OECD, patent applications related to green technologies per million inhabitants increased from 1.8 in 2009 to 2.6 in 2017. Moreover, FDI in green sectors as a share of total FDI stock rose from 1.5% in 2009 to 2.1% in 2017.3 Some examples of green technologies are electric vehicles, smart grids, biodegradable plastics, biofuels, energy-efficient solutions, sustainable agricultural practices, aimed at reducing environmental footprints.
  • Policy Integration and International Cooperation: Increased collaboration among countries to establish policies that prioritize sustainability, address climate change, and work towards common environmental goals. OECD countries and G20 economies have made progress since 1990 in reducing their environmental impact while fostering economic growth.4 Some examples of green policies are carbon pricing, subsidies for renewable energy, environmental taxes and regulations.

 

4. Green Growth journey in Vietnam

Vietnam, a rapidly developing country in Southeast Asia, plays an increasingly pivotal role in the global green growth discourse. Vietnam’s government acknowledges the necessity of balancing economic development with environmental sustainability and makes green growth a high-priority agenda. 

The country’s green growth strategy is outlined in the National Green Growth Strategy 20125 updated in 20216 and the National Action Plan for Green Growth 20147 and updated in 2021.8 In the international context, Vietnam recently committed to achieve Net Zero emissions in 2050 in COP26 – which is a very ambitious target.9   

Over the last decade, Vietnam has made significant progress in implementing its green growth strategy, leading to notable achievements:

Environmental Benefits: The pursuit of green growth has resulted in positive environmental outcomes. Regarding greenhouse gas (GHG) emissions, Vietnam’s figures have increased significantly over the last two decades as the country has undergone rapid economic development, industrialization, and urbanization. However, the rate of increase in emissions over the years has declined, and GHG emission per capita remains low compared to other countries in the region, as shown in the following chart. Vietnam increased its forest cover from 38.7% in 2008 to 42% in 2020.10 The country’s air quality improved during 2018-2022, with annual average PM2.5 concentration decreased from 32.9 to 27.2 (μg/m³).11

Economic Opportunities: Investments in renewable energy projects, including wind and solar farms, sustainable agriculture, and eco-tourism, have created economic opportunities and green jobs, driving development and environmental protection.

Green economic activities in Vietnam generated 6.7 billion USD in 2020 (2% of total GDP) with solid growth momentum (10-13% per year during 2018-2020). Of these, 41% are from the energy sector, 28% are from agricultural and forestry activities, 14% are from industrial activities, and 17% are from transport and communications, waste treatment, and construction sectors. According to estimates in 2020, the green economy contributed to the creation of more than 400 thousand jobs, with more than half coming from green agriculture, forestry and high technology activities (33%) and industrial activities (28%) – mainly in producing equipment, machinery and spare parts serving renewable and clean energy production. However, the number of jobs created from Vietnam’s green economic activities is still relatively modest (1.1% of total national jobs12) compared to leading countries (3.3% in France in 2020 and 6.7% in China in 202213).

International Reputation: Vietnam’s commitment to green growth enhances its international standing, attracting foreign investments and partnerships. During 2017 -2021, about 9 billion USD of FDI was mobilized into green sectors in Vietnam, focusing on renewable energy and producing equipment and machinery for projects in green growth fields.14 Regarding international ranking, according to the 2023 edition of the Green Growth Index, Vietnam ranked 73th out of 245 countries and 16th out of 50 countries in Asia, with an index score of 56.44. Vietnam performed well in the dimensions of natural capital protection, and social inclusion but faced challenges in resource efficiency dimension and green economic opportunities. According to the 2023 edition of the Green Future Index, Vietnam ranked 53th out of 76 economies and 9th out of 16 economies in Asia, scoring 4.13. Vietnam ranks in the middle in the categories of energy transition but low in the categories of carbon emissions and climate policy.

Challenges: Despite these achievements, Vietnam faces several challenges on its green growth journey and require further actions to advance green growth as shown in following table:

#

Issues

Challenge

Recommendation

1

Policy Coordination

The lack of coordination and integration among different government sectors and levels results in overlapping and inconsistent policies and plans.15 This hinders the effective implementation and monitoring of green growth actions and targets.

Enhance inter-agency coordination to ensure consistency and synergy in green growth policies, thereby reducing conflicts and streamlining efforts, also at the center level and provincial level. 

2

Financing

The green finance system is still young, making it difficult for green projects to mobilize financial resources, including mobilizing capital or accessing preferential credit. This comes from an incomplete green finance legal framework (e.g. in the case of the green bond market) and new green finance mobilization tools that have not yet been deployed (e.g. carbon market).16

Develop innovative financing mechanisms, such as green bonds, investment incentives, and partnerships with international organizations, to attract private sector investments in green projects. Increase public and private investment in green infrastructure projects, such as solar power plants, wind farms, waste management systems, and urban greening initiatives.

Seek international cooperation and support for green growth initiatives, such as access to climate finance, technology transfer, knowledge sharing, and the exchange of best practices.

3

Enforcement

The enforcement of environmental regulations is sometimes lax and cumbersome, leading to non-compliance by businesses.

Strengthen regulatory mechanisms and monitoring systems to ensure compliance with green growth policies and hold non-compliant entities accountable.

To develop a synchronous and coherent legal basis system for green growth, especially a complete green taxonomy system, consistent with international standards as a foundation , and accordingly supporting policy mechanisms, such as green investment incentives, or green pilot programs.17

4

Public Awareness

The level of public awareness and participation in green growth and sustainability issues is still not high. This limits the potential for behavioral change and social innovation that can support green growth and low-carbon development.

Increase efforts to raise public awareness about environmental issues and sustainable practices through educational campaigns (e.g clean energy, waste reduction) and community engagement (e.g community-based adaptation to climate change).

5

Technological Gaps

Adapting and adopting green technologies may be hindered by the country’s technological and infrastructure limitations.

Facilitate the transfer of green technologies and provide training and capacity-building programs to bridge technological gaps, fostering innovation and sustainable development.

 

 

 

 

5. Conclusion

Vietnam’s commitment to green growth stands as a testament to the country’s recognition of the need to balance economic development with environmental preservation. It has made significant strides in this direction, achieving positive environmental outcomes while creating economic opportunities. While challenges persist, Vietnam’s green growth journey offers valuable lessons for other nations seeking to harmonize prosperity and ecological well-being, reaffirming the global importance of sustainable and environmentally friendly development.

References

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