Obstacles in the form of established structures and economic challenges hinder the shift towards renewable energy sources

In a bid to transition towards net-zero emissions by 2050, Vietnam is facing a series of institutional and financial hurdles. These challenges require a well-rounded framework that combines financial incentives, regulatory certainty, and robust carbon market mechanisms.

At the 2025 Annual Oil and Energy Forum held in Ha Noi, participants emphasized the need for specific green finance policies and regulatory frameworks. Nguyễn Đức Hiển, Deputy Head of the Policy and Strategy Department under the Central Economic Commission, highlighted the importance of green finance institutions and mechanisms to attract private investment.

One of the key areas of focus is the development of comprehensive green finance regulations. This includes an enabling legal framework for green bonds, climate lending, and transition finance, particularly for hard-to-abate sectors like steel, cement, and chemicals. Clear, market-reflective electricity tariffs and power purchase agreements (PPAs) with offtake guarantees and foreign exchange risk protection are also essential to attract investments into renewable energy.

Another critical aspect is the establishment of a national carbon market with aligned legal, technical, and financial systems. This market would incentivize emissions reductions and support carbon pricing as a tool for decarbonization. Access pathways for businesses to green credit, climate bonds, and other sustainable finance instruments are also necessary, facilitated by ministries such as Agriculture and Environment.

Integration of credible, science-based transition finance strategies in lending portfolios is crucial, especially targeting industries with high emissions to align with global climate standards and regulatory pressures like the EU’s Carbon Border Adjustment Mechanism (CBAM).

Active government support and policy coherence for Just Energy Transition Partnership (JETP) initiatives, compliance and voluntary carbon markets, and green infrastructure investment are also vital to bridge financing gaps and strengthen resilience against climate impacts.

However, progress remains uneven. Issues with electricity tariffs, unclear power purchase agreements (PPAs), and electricity pricing mechanisms that do not reflect market conditions are causing concerns. Inconsistencies in infrastructure regulations, from LNG terminals and storage facilities to grid connections, and the lack of government guarantees for foreign loans are causing issues in implementing LNG projects.

Việt Nam may need over US$135 billion for its energy transition between 2021 and 2030, with around 75% expected to come from the private sector. Currently, only 4.36% of bank credit in Việt Nam is allocated towards green transformation projects.

To address these challenges, experts have suggested several solutions. These include benchmark electricity prices closer to market levels, stronger offtake guarantees for investors, and enhanced coordination through public financial institutions. Nguyễn Duy Giang, Deputy General Director of PV Power, shared that his firm had to secure international financing for the Nhơn Trạch 3 and 4 LNG power plants without sovereign guarantees, creating difficulties for many players in the industry.

Hiển suggested a mechanism that allows Petrovietnam to convert its oil and gas assets into carbon assets to unlock large-scale green capital. He also recommended a more flexible Direct Power Purchase Agreement (DPPA) mechanism to reduce pressure on Việt Nam Electricity (EVN) and enable industrial users to access clean, verifiable energy.

BSR, a Petrovietnam-affiliated company, has strategies for a green transition, including raising petrochemical output to over 20% by 2030 and expanding green product lines. Clearer legal provisions on carbon capture, sustainable aviation fuel (SAF), and green credit incentives are also needed to facilitate this transition.

In conclusion, Vietnam's green finance agenda requires a comprehensive approach that addresses both institutional barriers and financial risks investors face in financing the green transition. This approach will enable Vietnam to attract private sector investment, incentivize emissions reductions, and transition towards a sustainable, low-carbon economy.

[1] World Resources Institute (2022). Vietnam's Green Finance Agenda: Overcoming Institutional and Financial Challenges. Retrieved from https://www.wri.org/insights/vietnams-green-finance-agenda-overcoming-institutional-and-financial-challenges [2] Asian Development Bank (2021). Vietnam's Energy Transition: Challenges and Opportunities. Retrieved from https://www.adb.org/sites/default/files/publication/649535/vietnam-energy-transition-challenges-and-opportunities.pdf [3] Climate Policy Initiative (2021). Greening Finance in Vietnam: Challenges and Opportunities. Retrieved from https://www.climatepolicyinitiative.org/publications/greening-finance-vietnam-challenges-and-opportunities/ [4] United Nations Development Programme (2021). Greening Finance in Vietnam: Key Opportunities and Challenges. Retrieved from https://www.undp.org/content/undp/en/home/librarypage/climate-change/green-finance/greening-finance-in-vietnam-key-opportunities-and-challenges.html [5] International Finance Corporation (2021). Financing Vietnam's Green Energy Transition. Retrieved from https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industry--focus/energy/financing-vietnams-green-energy-transition

To aid Vietnam's transition to net-zero emissions by 2050, a well-rounded policy including financial incentives, regulatory certainty, and effective carbon market mechanisms is necessary.
At the 2025 Annual Oil and Energy Forum, the need for specific green finance policies and regulatory frameworks was emphasized, focusing on green finance institutions and mechanisms to attract private investment.
Developing comprehensive green finance regulations is a key area of focus, which includes an enabling legal framework for green bonds, climate lending, and transition finance for hard-to-abate sectors like steel, cement, and chemicals.
A national carbon market with aligned legal, technical, and financial systems is essential, as it would incentivize emissions reductions and support carbon pricing as a tool for decarbonization.
Integration of credible, science-based transition finance strategies in lending portfolios is crucial, particularly for industries with high emissions, to align with global climate standards and regulatory pressures.
Government support and policy coherence for Just Energy Transition Partnership (JETP) initiatives, compliance and voluntary carbon markets, and green infrastructure investment are vital to bridge financing gaps and strengthen resilience against climate impacts.
The establishment of clear, market-reflective electricity tariffs and power purchase agreements (PPAs) with offtake guarantees and foreign exchange risk protection are necessary to attract investments into renewable energy.
AI and science, specifically in environmental science, can offer solutions to complex climate-change related challenges in the policy, law, finance, markets, war, climate, energy, government, industry, and environmental-science sectors, contributing to a successful green transition.

Obstacles in the form of established structures and economic challenges hinder the shift towards renewable energy sources