1.

electricity production and consumption in Vietnam and the challenges in

electricity production in the context of climate change. What are the
solutions for efficient and sustainable electricity production
2. air pollution in Hanoi: the causes, current situation, consequences, and
solutions
3. carbon credit? Present the current situation of applying carbon credit in
Vietnam, the challenges in carbon credit market operation and the policy
implications
4. circular economy? current situation with some examples of circular
economy models in Vietnam. the opportunities and challenges of Vietnamese
enterprises in applying circular economy? What are the policy implications to
motivate the enterprises to adopt circular economy
5. economic growth in Vietnam. Discuss the role of natural resources in
Vietnam’s economic growth model? Is this model sustainable in terms of
environment and what are the policy implications
6. environmental protection fee on wastewater? Present the overview, the
achievements and the challenges when implementing environmental
protection fee on wastewater in Vietnam and solutions for better
environment protection
7. What is environmental protection tax? Present the overview, the
achievements and the challenges when implementing environmental
protection tax in Vietnam and solutions for better environment protection
8. Present the regulation of environmental protection deposit in mining and
scrap import in Vietnam. Analyze the achievements and the challenges when
implementing this policy in Vietnam and solutions for better environment
protection.
9. plastic waste pollution in Vietnam. Introduce the extended producer
responsibility policy (EPR) in Vietnam, international experiences in applying
EPR and lessons for Vietnam
10. ESG (Environmental, Social and Governance) adoption in Vietnamese
firms. What are the benefits for the firms when they publish ESG reports?
What should the government do to encourage the firms to disclose ESG
information and ESG reports?
11. Present and discuss the financial sources for green transformation in
Vietnam. What are the challenges in mobilizing financial resources for green
transformation and what are the solutions?

1. ELECTRICITY PRODUCTION AND CONSUMPTION.................................2

2. AIR POLLUTION.........................................................................................7

1
3.CARBON CREDIT......................................................................................12
5.VIETNAM’S ECONOMIC TRANSFORMATION.........................................19
6. FEE ON WASTER WASTE........................................................................24
7. ENVIROMENTAL PROTECTION TAX......................................................29
8.ENVIRONMENTAL PROTECTION DEPOSIT POLICY IN VIETNAM.........38
9. PLASTIC WASTE POLLUTION- EXTENDED PRODUCER
RESPONSIBILITY POLICY (EPR)..43
10. ESG..........................................................................................................50
11. FINANCIAL SOURCES FOR GREEN TRANSFORMATION IN VIETNAM
.......................................................................................................................58

1. ELECTRICITY PRODUCTION AND

CONSUMPTION
INTRODUCTION:
Electricity is essential for economic and social development, supporting
industries, daily life, and services. According to the International Energy
Agency (IEA), global electricity demand has increased by over 80% from
2000 to 2022. In developed nations, it drives technology, while in developing
countries like Vietnam, it modernizes the economy and improves living
standards.
Vietnam has made progress in electricity production, with total output
reaching 281 billion kWh in 2023, up 4.5% from 2022. However, consumption
grows by 8-10% annually, putting pressure on supply. The country still
depends on coal power (40% of total production), causing environmental
issues and high emissions.
Climate change worsens these challenges, as extreme weather raises
demand while droughts affect hydropower. Vietnam must balance growth,
energy security, and emission reductions. Finding efficient and sustainable
energy solutions is crucial for long-term development.
Thực trạng sản xuất điện :The current status of electricity production in
Vietnam in 2025 shows positive developments and significant challenges:
 Electricity Supply and Demand: Vietnam has maintained a stable
power supply in 2024, meeting the needs of economic growth,
production, and daily life. The total electricity output (including
production and imports) for 2024 was estimated at approximately
309.7 billion kWh, a 10.09% increase compared to 2023. Nuclear Power

2
 Development: Vietnam is accelerating its nuclear power projects,
aiming to have a nuclear power plant by 2030.
 EVN’s Restructuring and Growth Goals: Vietnam Electricity (EVN) is
undergoing restructuring to enhance efficiency and competitiveness.
The goal is to achieve a 7-10% annual revenue growth by 2025,
contributing over 23,000 billion VND to the state budget annually. EVN
is also focused on optimizing its organizational structure, improving
project management, and addressing inefficiencies in underperforming
projects.
Overall, Vietnam is proactively ensuring energy security through diversified
power sources, including renewable energy, thermal power, and nuclear
power, while aligning with its economic growth targets
 Thực trạng sử dụng điện
The current situation of electricity consumption
Electricity use in Vietnam has been going up a lot in recent years. People are
using more electricity for both daily life and work. This is mostly because the
economy is growing, cities are expanding, and more people are using
electronic devices and home appliances. As life gets better, we use more
electrical stuff, and businesses also need more power to keep running.
According to the EVN newspaper, electricity demand in Vietnam is rising fast,
especially as the economy recovers and the hot weather lasts longer. In the
first three months of 2024, total electricity consumption reached 62.52 billion
kWh, up 13.85% compared to the same period in 2023. Notably, some
sectors saw big growth, like industry and construction (10.73%), agriculture
(16.19%), trade, hotels, and restaurants (18.63%), and household use
(18.07%). In the South, household electricity use increased by 19.30%, with
Ho Chi Minh City alone going up by 15.18%.
Vietnam is one of the fastest-growing economies in Asia, with an average
GDP growth rate of 6.27% per year from 2000 to 2022. With this growth,
energy demand, including electricity use, has also increased quickly. It's
expected that Vietnam’s electricity demand will keep rising by 10% to 12%
every year until 2030, making it one of the fastest-growing electricity
consumers in Asia.
 Thách thức (Phương)
In the context of climate change, Vietnam faces several challenges in
electricity production. These challenges are linked to both environmental
impacts and the need to transition to a more sustainable energy system.1.
**Uneven Distribution of Electricity Load**: The South accounts for over 45%,
the North nearly 45%, and the Central region about 10%. This causes
challenges for the power system, especially in key economic regions in the

3
highlands with high short-circuit currents.2. **Uneven Distribution of Power
Sources**: New power sources are mainly concentrated in the North and
North Central regions, increasing transmission demand along the North-
South axis. EVN is deploying the 500kV line to address this issue.3. **Grid
Not Meeting N-1 Criteria**: The power transmission grid is not synchronized
and faces overloads after massive investments in solar power projects,
particularly in Ninh Thuan and Binh Thuan provinces.4. **Rising Share of
Renewable Energy**: Renewable energy accounts for about 15-20% of total
energy supply in 2030 and 25-30% by 2045. However, they are weather-
dependent and cause rapid changes in output capacity.5. **Lack of Energy
Storage Technology**: Energy storage technology is still expensive,
increasing the need for reserve capacity to handle fluctuations in renewable
energy output.6. **Need for Flexible Power Sources**: Vietnam's power
system requires investment in power sources capable of quickly adjusting
output, such as pumped-storage hydropower or combined-cycle gas turbine
plants, to accommodate renewable energy variability.
POLICIES
1. Policies Supporting Renewable Energy Development
 Feed-in Tariff (FIT) Mechanism: The Vietnamese government has
implemented the FIT mechanism to encourage investment in
renewable energy. For example, the FIT for solar power is 9.35 US
cents/kWh (according to Decision 13/2020/QD-TTg) and for wind power
is 8.5 US cents/kWh (according to Decision 39/2018/QD-TTg). This
mechanism has attracted numerous renewable energy projects,
increasing solar power capacity from 105 MW in 2018 to 16,500 MW in
2020.
 Tax and Land Incentives: Renewable energy projects enjoy
corporate income tax incentives (a 10% reduction for 15 years), import
tax exemptions for equipment, and land rental support.
2. Energy Efficiency Policies
 National Target Program on Energy Efficiency and Conservation
(VNEEP): This program, launched in 2006, aims to save 5-8% of the
country's total energy consumption. According to the Ministry of
Industry and Trade, the 2019-2020 period saved about 6.7% of total
energy consumption.
 Energy Efficiency Standards and Regulations: Vietnam has issued
energy efficiency standards for electrical appliances such as air
conditioners, refrigerators, and lighting to promote the use of energy-
efficient devices.
3. Smart Grid Development Policies

4
  Smart Grid Development Plan: The government approved the
Smart Grid Development Plan under Decision 1670/QD-TTg in 2012.
This plan aims to improve the efficiency of the power system, reduce
energy losses, and integrate renewable energy sources.
4. Policies for Diversifying Energy Sources
 Biomass and Biogas Energy Development: The government has
issued policies to support biomass and biogas energy development,
including preferential electricity purchase prices and technical support.
For example, the FIT for biomass power is 7.03 US cents/kWh
(according to Decision 08/2020/QD-TTg).
 Promoting Liquefied Natural Gas (LNG): The government is
promoting LNG projects to gradually replace coal-fired power, aiming
for LNG to account for 15-20% of total power capacity by 2030.
5. International Cooperation and Technology Transfer Policies
 International Cooperation: Vietnam has signed numerous
international energy cooperation agreements, such as the Vietnam-
Denmark Energy Partnership Program (DEPP) and the World Bank's
Energy Support Program. These programs support technology transfer
and financing for sustainable energy projects.
 Foreign Investment Attraction Policies: The government has
issued policies to attract foreign investment in the energy sector,
including tax incentives and streamlined administrative procedures.
6. Greenhouse Gas Emission Reduction Policies
 National Climate Change Strategy: Vietnam has issued the
National Climate Change Strategy with the goal of reducing
greenhouse gas emissions by 8-25% by 2030 compared to the
business-as-usual scenario.
 Clean Development Mechanism (CDM): Vietnam participates in the
Kyoto Protocol's Clean Development Mechanism (CDM), allowing
emission reduction projects to earn carbon credits and sell them on the
international market.
SOLUTIONS
1. Developing Renewable Energy
 Solar and Wind Energy: Vietnam has significant potential for solar
and wind energy, especially in the Central and Southern regions.
According to a World Bank report (2020), the technical potential for
onshore wind energy in Vietnam is about 24 GW, and for solar energy,
it is around 20 GW.
 Solution: Promote investment in renewable energy projects and
encourage private investors through tax incentives and feed-in tariffs

5
 (FIT). For example, the FIT policy for solar power helped increase
installed capacity from 105 MW in 2018 to 16,500 MW in 2020 (Ministry
of Industry and Trade report, 2021).
2. Improving Energy Efficiency
 Energy-saving Technologies: Apply advanced technologies in
electricity production and consumption, such as Energy Management
Systems (EMS) and energy-efficient devices.
 Solution: Implement national energy-saving programs, such as the
National Target Program on Energy Efficiency and Conservation
(VNEEP). According to the Ministry of Industry and Trade, this program
saved about 6.7% of total energy consumption during the 2019-2020
period.
3. Developing Smart Grids
 Smart Grids: Help manage and distribute electricity more efficiently,
reduce energy losses, and better integrate renewable energy sources.
 Solution: Invest in smart grid technologies, including smart metering
and Distribution Management Systems (DMS). According to the
International Energy Agency (IEA), smart grids can reduce energy
losses by 10-15%.
4. Diversifying Energy Sources
 Biomass and Biogas Energy: Vietnam has significant potential for
biomass energy from agricultural by-products and household waste.
 Solution: Encourage the development of biomass and biogas power
plants, especially in rural areas. According to the Ministry of Industry
and Trade, Vietnam's biomass energy potential is estimated at 150
MW, while biogas could contribute an additional 100 MW.
5. International Cooperation and Technology Transfer
 International Cooperation: Collaborate with international
organizations and developed countries for technology transfer and
financial support.
 Solution: Participate in international cooperation programs such as
the Vietnam-Denmark Energy Partnership Program (DEPP) and the
World Bank's Energy Support Program. These programs have helped
Vietnam access advanced technologies and receive financial support
amounting to hundreds of millions of USD.
6. Reducing Greenhouse Gas Emissions
 Carbon Capture and Storage (CCS): CCS technology can
significantly reduce emissions from coal-fired power plants.

6
  Solution: Apply CCS technology at large coal-fired power plants, such
as Vinh Tan and Duyen Hai. According to the IEA, CCS can reduce CO2
emissions by up to 90% from coal-fired power plants

TỔNG KẾT:
Summary & Key Solutions
Electricity plays a crucial role in daily life and economic growth, especially as
Vietnam accelerates industrialization. The demand for electricity is
increasing, but the energy sector faces many challenges, such as climate
change, dependence on coal power, droughts affecting hydropower,
overloaded power grids, and limited integration of renewable energy.
Key Solutions
1. Develop renewable energy– Expand solar, wind, and small hydropower to
reduce dependence on fossil fuels.
4. Diversify energy sources – Develop LNG, biomass, and biogas to support
the power system.
5. International cooperation & technology transfer – Attract foreign
investment and adopt advanced technologies.
Message:
💡 Sustainable Energy Transition – Ensuring a Green Future for Vietnam!
Vietnam must take strong actions to develop clean energy, optimize
electricity use, and enhance the sustainability of its power system. This is the
key to securing energy supply and reducing the impact of climate change.

2. AIR POLLUTION
I. Common terminologies
- PM: Particulate matter
- PM2.5: Particles that are 2.5 microns or less in diameter
- PM10: Particles that are 10 microns or less in diameter
- Smog: a mixture of smoke, gases, and chemicals, especially in cities,
that makes the atmosphere difficult to breathe and harmful for health
- AQI: The Air Quality Index (AQI) is a measurement of air pollutant
concentrations in ambient air pollution and their associated health risks.
II. Current situation
1. Air Pollution Situation in Hanoi (February 28, 2025)
According to current air quality data, Hanoi is experiencing severe air
pollution. As of 1:46 PM, the Air Quality Index (AQI) in Hanoi is 154,
categorized as "Unhealthy." This indicates that the air quality poses

7
potential health risks for the general population, especially for sensitive
groups such as children, the elderly, and individuals with pre-existing
respiratory or heart conditions.
Air Quality and Pollution Levels
The key indicators of air pollution in Hanoi at the moment are the
concentration levels of fine particulate matter (PM2.5) and coarse particulate
matter (PM10). These pollutants are a major concern for public health
because they can be inhaled deep into the lungs and, in some cases, enter
the bloodstream.
● PM2.5 (Fine Particulate Matter): 51 µg/m³
● PM10 (Coarse Particulate Matter): 76 µg/m³
These pollution levels exceed the recommended safety thresholds. The World
Health Organization (WHO) recommends that PM2.5 levels should not exceed
25 µg/m³ on a 24-hour average, while the US Environmental Protection
Agency (EPA) suggests a threshold of 35 µg/m³. The PM2.5 level in Hanoi is
almost double the WHO’s recommended limit, which signifies a high level of
particulate matter in the air. Additionally, PM10 levels are also above the safe
limit, which can aggravate respiratory conditions like asthma and bronchitis.
2. Weather Conditions and Pollution Accumulation
Weather conditions in Hanoi play a crucial role in the accumulation of
pollutants. On the day of reporting, Hanoi is experiencing cloudy skies
with a temperature of 22°C (72°F). The forecast for the day predicts
low clouds, with a high of 24°C (75°F) and a low of 20°C (68°F). Such
weather, particularly low cloud cover and mild temperatures, can lead to the
trapping of pollutants near the surface of the Earth. This can result in a
higher concentration of particulate matter in the air, making the situation
worse for those already vulnerable to air pollution.
Moreover, Hanoi is currently experiencing a typical winter weather
pattern, with cool temperatures and relatively low wind speeds.
These conditions often prevent the dispersion of air pollutants, leading to a
prolonged period of poor air quality. The city’s air pollution is especially high
during the winter months due to increased use of coal for heating and
industrial emissions, compounded by traffic-related pollution and
construction activities.

III. Causes
According to 2019 data, total PM 2.5 dust emissions from sources were more
than 30,000 tons, more than 50% of which came from on-site emissions.
(nguồn 1)

8
Hanoi has identified the main sources of air pollution as: Road transport
(including road dust), industry, residential areas, biomass burning and
agriculture. The largest source of emissions is traffic activities in the city.

1. Traffic and dust

Traffic and road dust are the main causes of 56% of total air pollution in
Hanoi. Currently, the city has about 1.1 million cars and more than 6.9
million motorbikes. These means of transport, especially motorbikes and
cars, emit many pollutants such as CO₂, PM₂.₅, and other toxic compounds
into the air.

What is worrying is that 70% of these vehicles are over 10 years old, and old
vehicles without emission control also contribute significantly to the increase
in air pollution. These old vehicles not only increase emissions but also
worsen the pollution situation due to lack of maintenance and periodic
inspection.

Research by the Institute of Environmental Science and Technology, Hanoi

University of Science and Technology shows that emissions from gasoline
and diesel in traffic contribute up to 46% of the total amount of ultra-fine
dust. Volatile organic compounds, mainly emitted from motorbikes, account
for more than 90% of total emissions in the transport sector. Motorbikes are
the largest source of pollution, followed by heavy vehicles such as trucks,
buses and light trucks.

2. Industry
Hanoi currently has 10 industrial parks and about 1,300 craft villages, not to
mention industrial production facilities in neighboring provinces, only 50 to
100 km from the city center. These provinces include Hai Duong and Quang
Ninh with thermal power plants, Hoa Binh, Ninh Binh and Ha Nam with
cement processing facilities, along with Thai Nguyen and Phu Tho with
fertilizer and chemical production.

Industries such as thermal power, metallurgy, chemicals and construction

materials all emit greenhouse gases such as CO₂ (carbon dioxide) and SO₂
(sulfur dioxide). Industrial dust from cement production, mining and
construction activities contains many small dust particles, which can
penetrate the respiratory tract and adversely affect human health.

3. Agriculture

9
Burning agricultural residues is the third largest source of air pollution in
Hanoi, accounting for about 13% of the total pollution. Notably, the most
severe air pollution often coincides with the main rice harvests, including
Summer-Autumn and Winter-Spring. In districts such as Quoc Oai, My Duc
and Chuong My, people still maintain the habit of burning rice straw right in
the fields after harvest, contributing to this pollution.

4. Fuel burning and livelihoods

Burning garbage, straw, burning honeycomb coal and other household
activities account for about 10% of air pollution in Hanoi. In addition, weather
also has a significant impact on the increase in air pollution.

Weather is not a direct cause of pollution, but it is a factor that increases the
level of pollution. From October of the previous year to April of the following
year, the climate in Hanoi has a large difference in temperature between day
and night, humidity, wind direction and speed, along with very strong
thermal radiation. These factors reduce the ability of pollutants to diffuse,
causing them to accumulate and increase the level of air pollution.

IV. Consequences
1. Health Impacts
● Respiratory diseases: Increased cases of bronchitis, sinusitis, allergic
rhinitis, asthma, and lung cancer.
● Cardiovascular diseases: Air pollution raises the risk of high blood
pressure, stroke, and heart failure.
● Effects on eyes and skin: Causes eye irritation, dry eyes,
conjunctivitis, and skin allergies.
● Reduced lung function: Especially dangerous for children and the
elderly.
Premature Mortality Rate Related to Air Pollution:
In 2019, Hanoi recorded 2,855 premature deaths due to exposure to PM2.5
fine dust, accounting for approximately 11% of premature deaths among
individuals over 25 years old, equivalent to 35.5 cases per 100,000 people.
Hospitalization Cases Due to Air Pollution
On average, Hanoi records approximately 1,100 additional hospitalizations
per year due to cardiovascular diseases and 3,000 hospitalizations due to
respiratory diseases, accounting for 1.2% and 2.4% of the total
hospitalizations for these two disease groups, respectively.

10
2. Negative Impacts on Quality of Life
● Reduced visibility and traffic issues: Pollution fog lowers road
visibility, increasing the risk of accidents.
● Restricted outdoor activities: People must limit outdoor exposure or
wear masks continuously.
● Decreased work productivity: Polluted air reduces concentration
and causes fatigue.
On January 7, 2025, Hanoi recorded an AQI of 272, ranking first among the
most polluted cities in the world, with air quality classified as "very
unhealthy."
3. Economic Impacts
● Increased healthcare costs: Residents spend more money on
treating pollution-related illnesses.
● Tourism losses: Hanoi is rated as a polluted city, affecting the tourism
industry.
● Higher living expenses: Increased demand for air purifiers, anti-
smog masks, and medications.
4. Psychological and Mental Health Effects
● Stress and depression: Prolonged pollution leads to frustration,
anxiety, and even mental health issues.co
● Reduced life expectancy: Studies show that long-term exposure to
fine dust (PM2.5) can shorten lifespan.
V. Solutions
1. Controlling Pollution from Transportation
As of 2024, Hanoi has approximately 6.9 million motorbikes and 1.1 million
cars, with 50% of motorbikes over 10 years old, significantly contributing to
emissions. Traffic emissions account for 70% of PM2.5 air pollution.
To address this issue, the city is implementing several key measures. From
2026, Hanoi will stop registering new motorbikes in inner-city districts and
gradually restrict motorbikes in central areas by 2030. Additionally, around
200,000 outdated motorbikes that fail emission standards will be removed by
2026.
Hanoi is also improving public transportation. The Nhổn – Hanoi Metro Line
(Phase 2) is set to operate in 2027, while electric buses are expected to
account for 30% of all buses in the city by 2025. Furthermore, from 2026, an
environmental pollution fee will be applied to private cars entering the city
center to reduce personal vehicle usage.
2. Controlling Pollution from Industry and Construction
With 1,350 industrial facilities and over 700 major construction projects,
Hanoi faces severe dust and toxic gas emissions.

11
To mitigate this pollution, 100% of major factories must install emission
treatment systems meeting Euro 5 standards by 2026. The city will also
develop green industrial zones, with at least 30% of industrial zones
adopting cleaner production technologies by 2025.
Additionally, fine dust sensors will be installed at major projects such as the
Ring Road 4 project and new urban areas. Hanoi will also strengthen
inspections and penalties, with non-compliant construction projects facing
fines of up to 500 million VND per violation.
3. Controlling Waste Burning and Waste Management
Hanoi generates approximately 7,000 tons of household waste per day, but
only 15% is recycled. Moreover, around 20% of household waste is still
burned illegally, causing severe air pollution.
To tackle this issue, the city will completely ban open-air waste burning by
2026, with fines of up to 10 million VND for violations. Additionally, three
waste-to-energy plants will be constructed:
● Sóc Sơn Waste-to-Energy Plant (capacity: 4,000 tons/day) has been
operational since 2023.
● Phù Đổng and Châu Can waste treatment plants are expected to be
completed by 2026.
4. Expanding Green Spaces to Reduce Pollution
Hanoi’s per capita green space is currently only 2m²/person, significantly
lower than the WHO-recommended 9m²/person.
To improve this situation, the city aims to plant 1 million trees by 2026,
focusing on major roads such as Nguyễn Trãi, Giải Phóng, and Phạm Văn
Đồng. Additionally, four large parks will be developed, including:
● Kim Quy Park (Đông Anh)
● Hòa Bình 2 Park
● Yên Sở Park expansion
● Chu Văn An Park
Hanoi also encourages rooftop and balcony greenery. By 2026, at least 50%
of new apartment buildings in the city will feature green roof designs.
5. Goals for 2030
Hanoi is committed to improving air quality with the following targets:
● Air Quality Index (VN_AQI): Currently, only 35% of days per year have
an AQI rated as "moderate" or better. By 2030, this figure is expected to
reach 75%.
● PM2.5 Concentration: The current average is 42 µg/m³, four times
higher than WHO recommendations. The goal is to reduce it to below 25
µg/m³ by 2030.

12
● Investment Budget: Hanoi will invest over 50 trillion VND in air
pollution reduction projects by 2030.

3.CARBON CREDIT
What is a Carbon Credit?
A carbon credit is a certification granting the right to emit carbon dioxide
(CO2) or other greenhouse gases (GHGs) converted into CO2 equivalents.
The seller in a carbon credit transaction is an entity capable of reducing
emissions or increasing carbon absorption beyond a reference level. Each
carbon credit corresponds to one metric ton of CO2 or an equivalent amount
of other GHGs that have been prevented or removed. The unit used is
"CO2tđ" in Vietnamese and "CO2eq" in English.
It is important to note that the calculation of carbon credits requires a
reference level. This reference level represents the estimated emissions that
would occur if no emission reduction or carbon absorption activities were
undertaken—commonly referred to as the "business-as-usual" scenario.
For example, the reference level for a reforestation project might be the
amount of CO2 that would be released if the land were not reforested but
instead continued to be deforested or used for other purposes that generate
emissions. The amount of CO2 that newly planted trees can absorb
compared to this scenario is considered the increased carbon absorption
relative to the reference level. This increase, when quantified in metric tons,
determines the number of carbon credits issued.

Why Do Carbon Credits Exist?

Carbon credits originate from the Kyoto Protocol, an international agreement
established in 1997 to regulate and reduce global greenhouse gas emissions.
Under this framework, participating countries committed to reducing their
emissions and were allowed to trade carbon emission rights on international
markets through carbon credits.
As a result, a global carbon market was established, enabling companies or
nations that exceed their emission limits to purchase carbon credits from
organizations, projects, or countries with lower emissions or carbon
absorption capabilities. This mechanism serves as one of the strategies for
achieving emission reduction targets.
Moreover, in response to climate change, an increasing number of
companies are committing to achieving net-zero emissions. According to Net
Zero Tracker, a database compiled by academics and nonprofit organizations,

13
more than one-third of the world's 2,000 largest publicly traded companies
have announced their own net-zero targets.
These commitments typically include public pledges to reduce GHG
emissions through process modifications, product improvements, fuel
transitions, renewable energy adoption, and investments in carbon removal
projects. However, certain industries face inherent limitations in fully
eliminating emissions. In such cases, businesses must purchase carbon
credits to offset the portion of emissions they are unable to eliminate.

Types of Carbon Credits(2 types)

Compliance Carbon Market
The compliance carbon market is a regulated market in which organizations,
businesses, and nations are legally required to monitor and reduce their
greenhouse gas (GHG) emissions. Within this framework, entities are
permitted to participate in trading, exchanging, and transferring emission
allowances as well as carbon credits.
This regulatory framework is established under global agreements such as
the Kyoto Protocol and the Paris Agreement on Climate Change. Key
examples of compliance carbon markets include the European Union
Emissions Trading System (EU ETS), the Western Climate Initiative (WCI), and
the Regional Greenhouse Gas Initiative (RGGI). Under these agreements,
signatory countries must take concrete steps to reduce their emissions.
To achieve this, governments may impose carbon taxes or establish
mandatory carbon markets. The core instruments within these markets are
allowances or permits, commonly referred to as Certified Emission
Reductions (CERs), which entities must hold in order to legally emit
greenhouse gases.
Voluntary Carbon Market
In contrast, the voluntary carbon market
allows organizations to offset their unavoidable emissions by purchasing
carbon credits from emission reduction projects. This market operates
independently of legal mandates, enabling companies and individuals to
voluntarily contribute to reducing global greenhouse gas emissions.
Carbon credit projects within the voluntary market are developed and
registered under recognized voluntary carbon standards, such as the Verified
Carbon Standard (VCS) and the Gold Standard (GS). These standards ensure
the credibility and environmental integrity of emission reduction projects.

The Significance of Carbon Credits

14
The introduction of carbon credits serves to encourage businesses and
organizations to reduce their greenhouse gas emissions by investing in green
technologies and sustainability projects. This contributes to mitigating
climate change and preserving the environment.
The exchange and trading of carbon credits also create a new market,
fostering the development of green industries such as renewable energy,
reforestation, and energy-efficient projects. This not only reduces emissions
but also generates new economic opportunities.
In many countries, businesses are required to comply with regulations on
greenhouse gas emissions. Carbon credits enable these companies to meet
legal requirements, avoid penalties, and enhance their corporate image as
environmentally responsible entities.
Furthermore, carbon credits promote transparency in measuring and
reporting GHG emissions, providing governments and the public with a
clearer understanding of efforts to combat climate change.

Latest Status of Carbon Credit Implementation in

Vietnam
As of November 2022, Vietnam has registered a total of 276 Clean
Development Mechanism (CDM) projects, issuing approximately 29.4
million carbon credits from these projects.
(Source: thitruongtaichinhtiente.vn)
Additionally, Vietnam has implemented 32 projects under the Gold
Standard (GS) and 27 projects under the Verified Carbon Standard
(VCS), generating 5.7 million and 1.3 million carbon credits,
respectively.
(Source: petrotimes.vn)
Vietnam’s Participation in International Carbon Markets
● Vietnam is actively engaging in international carbon markets through
Article 6 of the Paris Agreement, which allows for cross-border carbon
credit trading.
● The country is also cooperating with organizations like Verra and
Gold Standard to certify its carbon credits for international trade.
● By 2030, Vietnam aims to sell up to 50 million carbon credits
annually to foreign markets.
(Source: Ministry of Natural Resources and Environment, Vietnam)
Carbon Tax and Emission Reduction Goals

15
● The government is considering implementing a carbon tax on high-
emission industries such as coal power, cement, and steel.
● Vietnam’s Nationally Determined Contribution (NDC) targets reducing
greenhouse gas emissions by 9% by 2030, with the potential to reach
27% with international support.
(Source: Vietnam’s Ministry of Industry and Trade)
Government Policies on Carbon Credit Implementation
Vietnam has made significant efforts in developing its carbon market. The
Law on Environmental Protection (2020) officially includes carbon
market development as a key measure to reduce greenhouse gas emissions.
According to Decree 06/2022/ND-CP issued on January 7, 2022, the
roadmap for Vietnam’s carbon market development consists of two phases:
● Phase 1 (2022–2027): Focuses on establishing regulations for carbon
credit management, trading emission quotas and carbon credits, formulating
operational rules for a carbon credit exchange, and piloting carbon credit
trading mechanisms in key sectors. A trial carbon exchange is expected to be
launched in 2025
● Phase 2 (2028 onward): The carbon credit exchange will be officially
launched and operated.
Notably, from June 2025 to the end of 2028, Vietnam will pilot its
domestic carbon credit exchange, while continuing to improve
infrastructure, legal frameworks, and stakeholder capacity
Private Sector Involvement and Investment Trends
● Companies Developing Carbon Credits (Suppliers):
○ T&T Group: Invests in renewable energy and forest protection projects.
○ Vietnam Forestry Corporation (Vinafor): Manages forests for CO₂
absorption and carbon credit generation.
○ Vietnam Carbon Credit JSC (VCX): Provides consulting and develops
carbon credit projects for enterprises.

● Companies Purchasing Carbon Credits (Consumers):

○ Petrovietnam: Invests in clean energy and purchases carbon credits for
emissions offset.
○ Hoa Phat Group: A steel industry player buying carbon credits to
comply with environmental standards.
○ Vinamilk: Committed to carbon neutrality through renewable energy
investments and carbon credit purchases.

16
● Carbon Credit Service Providers:
○ Deloitte Vietnam: Offers auditing of carbon credits and advises on
emission reduction strategies.
○ EY Vietnam: Supports businesses with MRV (Measurement, Reporting,
and Verification) services.
○ SGS Vietnam: Certifies carbon credits based on international
standards.
Challenges and Opportunities
● Challenges:
○ The absence of a domestic carbon credit exchange requires businesses
to sell credits through international intermediaries.
○ Certification procedures for carbon credits can be complex and costly.

● Opportunities:
○ Vietnam possesses significant potential for generating carbon credits
from its vast forest areas and renewable energy projects.
○ The establishment of a domestic carbon market will facilitate
transactions once the carbon credit exchange becomes operational.

here are additional figures related to Vietnam's carbon credit

market:
● Total Carbon Credits Issued: As of December 2022, approximately
40 million carbon credits had been issued in Vietnam.
vietnamnews.vn
● Global Carbon Council (GCC) Mechanism: As of December 2022,
approximately 50 projects in Vietnam were seeking issuance of carbon
credits under the GCC mechanism.
vietnamnews.vn
● Joint Crediting Mechanism (JCM) with Japan: Since 2013, Vietnam
has been producing 10 million tons of CO₂ credits per year for Japan
through 28 projects, ranking fourth among participating countries.
wtocenter.vn
● Carbon Credit Value: In the 2022–2023 period, the value of carbon
credits in Vietnam ranged from 100,000 to 200,000 VND per credit.
vrenergy.vn
● Renewable Energy Projects: As of May 2024, Vietnam had 71
renewable energy projects, with 31 projects (approximately 43.7%)

17
achieving certification for carbon credits.
greenup.asia

4. Policies, solutions and specific targets.

In recent years, Vietnam has implemented various policies, solutions, and
specific targets to promote the carbon credit market, aiming to reduce
greenhouse gas emissions and achieve sustainable development.
Policies and Solutions
● Law on Environmental Protection 2020: Establishes the legal
foundation for greenhouse gas emission reduction and the development of
the carbon market.
● Decree No. 06/2022/ND-CP: Issued on January 7, 2022, detailing
regulations on greenhouse gas emission reduction, ozone layer protection,
and the formation and development of the carbon credit market.
(vioit.org.vn)
● Proposal for the Establishment and Development of Vietnam’s
Carbon Market: According to this proposal, from June 2025 to the end of
2028, Vietnam will conduct a pilot operation of a domestic carbon
credit exchange. (dcc.monre.gov.vn)
Specific Targets
● Period 2025-2028: Implement a pilot carbon credit trading
exchange nationwide. (nhandan.vn)
● From 2029: Officially operate the carbon market nationwide,
expanding the types of carbon credits traded and the participants involved.
(nhandan.vn)
● Number of projects and carbon credits: As of November 2022,
Vietnam had 276 projects under the Clean Development Mechanism
(CDM), with nearly 29.4 million carbon credits issued. Among them, 204
projects are hydropower projects. The voluntary carbon market also
recorded 32 projects, with a total of 5.75 million carbon credits issued
under the Gold Standard certification. (moitruong.net.vn)

These policies, solutions, and specific targets demonstrate Vietnam’s

strong commitment to building and developing the carbon credit
market, contributing to greenhouse gas emission reduction and promoting
sustainable development.

The challenges in carbon credit market operation:

1. Challenges Related to the Legal Framework and Regulations

18
Incomplete and Inconsistent:
Although the Government has issued documents such as Decree No.
06/2022/ND-CP to establish a foundation for the carbon credit market, the
current legal framework still has many gaps and deficiencies. The lack of
specific regulations on emission quantification, the calculation methods for
credits, and the procedures for handling violations creates inconsistency
between regulatory agencies and businesses. This increases uncertainty for
market participants, leading to legal risks and potential issues in
transactions.
Distinction Between Mandatory and Voluntary Markets:
The overlapping and differences between regulations for the mandatory
carbon trading market and the voluntary market make the legal framework
complex. Businesses are unclear about when they fall under mandatory
participation and when they can engage in voluntary trading, thereby
causing difficulties in complying with and fulfilling emission reduction
commitments.
2. Challenges Related to the Measurement, Reporting, and
Verification (MRV) System
Lack of Tools and Measurement Standards:
The MRV system—the tool used to measure, report, and verify emission
levels—in Vietnam does not yet meet international standards. The absence
of modern tools, advanced software, and standardized procedures leads to
data inconsistencies, making it difficult to determine the actual value of the
carbon credits.
Risk of Fraud and Greenwashing:
When emission data is not accurately measured, businesses may misreport
in order to “greenwash” their operations. The lack of transparency in the
process of determining and certifying carbon credits is a major barrier,
reducing the overall reliability of the market system.
3. Challenges Related to Standards and Certification
Diversity and Fragmentation of Standards:
Currently, the carbon credit market features numerous standards and
certification systems (e.g., VCS, Gold Standard, ACR, etc.). This lack of
uniformity not only causes confusion for businesses but also increases
transaction costs and risks when credits certified by one standard are not
widely recognized in the international market.
Difficulties in Comparison and Valuation:
Differences in calculation methods, evaluation scopes, and technical
requirements among various standards make comparing the quality of
credits across projects complex. This leads to risks of “double counting” the

19
amount of emission reduction or mispricing credits, thereby reducing
transparency and market efficiency.
4. Challenges Related to Business Awareness and Capacity
Lack of Specialized Knowledge:
Most businesses, particularly small and medium-sized enterprises, do not
fully understand how the carbon credit market operates. The lack of in-depth
information and training results in hesitation to adopt emission reduction
measures and engage in credit trading, meaning that the economic potential
of this market is not fully exploited.
Limited Access to Technology and Resources:
To effectively participate in the carbon credit market, businesses need to
invest in emission reduction technologies and MRV reporting systems.
However, for many companies—especially in less developed areas—limited
financial resources and expertise are significant barriers, preventing them
from seizing opportunities in this market.
5. Challenges Related to Liquidity and International Competition
Low Initial Market Liquidity:
In the pilot phase and early operation of the trading platform, the trading
volume of carbon credits might not be high enough to generate substantial
liquidity. This makes buying and selling transactions difficult, especially when
businesses need to flexibly adjust their credit volumes according to
production needs.
Competition with International Markets:
For Vietnamese carbon credits to be recognized internationally, there must
be a legal framework and technical standards compatible with global norms.
Discrepancies in the system and pricing can cause Vietnamese businesses to
face difficulties when trading on international platforms, thus affecting their
competitiveness and the export potential of carbon credits.

5.VIETNAM’S ECONOMIC
TRANSFORMATION
I. Overview of Vietnam’s Economic Transformation
Vietnam has emerged as a remarkable development success story over the
last few decades. Since the launch of the Đổi Mới (Renovation) reforms in
1986, combined with favorable global trends, Vietnam has transformed from
one of the world’s poorest nations to a middle-income economy. The real
GDP per capita has soared from less than US$700 in 1986 to nearly

20
US$4,500 in 2023, marking a more than sixfold increase. The poverty rate,
defined as those living on less than US$3.65/day (adjusted for purchasing
power parity), dropped drastically from 14% in 2010 to under 4% in 2023.
The economy’s resilience during various global and local crises has been key,
and Vietnam is projected to maintain steady growth in the coming years,
with forecasts of 6.1% in 2024 and 6.5% in 2025. This is largely driven by an
increase in global demand and the recovery of domestic consumer
confidence. Vietnam aspires to become a high-income nation by 2045, which
requires an average annual growth of about 6% per capita for the next two
decades.
Key Drivers of Economic Growth
- Manufacturing: The manufacturing sector, including electronics, textiles,
and footwear, plays a crucial role in Vietnam's economic growth. Major
multinational corporations, such as Samsung, Apple, Intel, and Nvidia, are
heavily involved, contributing significantly to the country’s exports,
particularly in electronics, which accounted for 38% of export value in 2020.
- Agriculture: Vietnam remains one of the world’s leading agricultural
exporters, with rice, coffee, cashew nuts, wood, and seafood being key
export products. In 2021, agricultural exports exceeded $48 billion, even
amidst the challenges posed by the COVID-19 pandemic. Agriculture
continues to support a large proportion of the population, especially in rural
areas.
- Other Industries: Mining (including coal and minerals) also contributes to
the economy, but it is not the primary sector. Additionally, the services
sector has grown substantially, contributing 45-50% of GDP and playing a
leading role in the overall economic growth, especially in 2023.
II. The Role of Natural Resources in Vietnam’s Economic Growth
1. Agricultural Resources and Land
Vietnam possesses vast agricultural land, which provides favorable
conditions for farming and livestock production. The country’s rich
agricultural resources have helped maintain its position as one of the world’s
leading exporters of agricultural products.
- Agriculture’s Contribution to Economic Growth: Agriculture has
always been a pillar of Vietnam's economy, contributing significantly to GDP
and providing employment, especially in rural areas. Over the past three
decades, agriculture has maintained a steady growth rate of 2.5% to 3.5%.
While its contribution to GDP has decreased in recent years (around 14% in
2020), it remains crucial for national food security and export development.
- Agricultural Exports: In 2021, despite the challenges posed by the
COVID-19 pandemic, Vietnam achieved an agricultural export turnover of

21
over $48 billion. Major products such as rice, coffee, rubber, cashew nuts,
and tropical fruits are key export items. Vietnam is the world's leading
exporter of rice and has a diverse export market for its agricultural products.

2. Energy and Mineral Resources

Vietnam is endowed with abundant energy and mineral resources, including
oil, coal, and natural gas, which contribute significantly to key industries
such as mining, metallurgy, and chemicals.
- Oil and Natural Gas: Vietnam has offshore oil and gas reserves, which
provide raw materials for energy production and other industries like
petrochemicals and electricity generation. While oil production has been
decreasing, Vietnam remains a major exporter of oil and natural gas in
Southeast Asia.

- Coal: Coal is another vital resource for energy production and heavy
industries, particularly for power generation and steel production. Vietnam
has substantial coal reserves, especially in Quang Ninh, which supply
thermal power plants and industrial sectors.
However, the extraction of energy resources needs to be managed
sustainably to prevent depletion and minimize environmental impact. Issues
like pollution and over-extraction are significant concerns for sustainable
development policies.
3. Fisheries Resources
Vietnam’s long coastline and extensive river systems provide a rich variety
of fisheries resources, supporting the development of the fishing and seafood
processing industries.
- Growth of the Fisheries Sector: Vietnam’s fisheries industry, which
includes products like tra fish, shrimp, squid, and marine fish, is a significant
contributor to both domestic consumption and exports. The seafood sector
generates substantial export revenues, with $8.4 billion from seafood exports
in 2020. Major export markets include the U.S., EU, and Japan.
- Seafood Processing: Vietnam is one of the top exporters of processed
seafood. The processing industry creates value-added products and provides
employment for many people in coastal areas, contributing to economic
growth and improving living standards in the sector.
Fisheries resources also support the development of food processing
industries, which further contributes to the nation’s economic growth.
4. Forest Resources
Forests cover over 30% of Vietnam's land area, comprising both natural
forests and planted forests. Forests play a vital role in ecological balance and

22
environmental protection, in addition to supplying raw materials for
industries such as timber, paper, and pharmaceuticals.
- Timber Industry: Vietnam’s timber industry is robust, with the country
being one of the top exporters of wooden products such as furniture,
plywood, and paper products. The timber industry significantly contributes to
export revenues, particularly in markets like the U.S., EU, and Japan.
- Environmental Role: Forests also play a crucial role in maintaining water
resources, protecting biodiversity, and mitigating the impacts of natural
disasters such as floods and landslides. Sustainable forest management is an
essential part of Vietnam’s environmental protection and sustainable
development policies.
Current Situation Regarding Environment, Energy, and Climate
Change in Vietnam
In the context of rapid economic development, Vietnam is facing
increasingly significant challenges related to the environment,
energy, and climate change. These issues not only directly affect the
quality of life of the people but also have a far-reaching impact on
the country's sustainable development in the future.
1. Environmental Degradation
The environmental degradation situation in Vietnam is becoming
increasingly severe, and this is evident through several concerning
issues:
- Air pollution: In major cities such as Hanoi and Ho Chi Minh City, air
pollution from emissions from transportation, industrial activities, and
construction is at alarming levels. The use of coal, oil, and natural gas in
production activities also contributes to the rise in CO2 and other harmful
substances in the air, directly affecting public health.

- Deforestation and loss of biodiversity: Deforestation for timber

extraction, infrastructure development, and agricultural expansion is leading
to the loss of natural ecosystems. This not only affects biodiversity but also
reduces the environment's ability to absorb CO2, contributing to global
warming.

2. Sustainability of Energy
Currently, Vietnam primarily depends on fossil energy sources such
as coal, oil, and natural gas to meet its economic development
needs. Although the country has made some progress in developing
renewable energy, the share of renewable energy in the national

23
energy mix is still relatively low. This leads to several serious
problems:
- Depletion of resources: Fossil energy resources are gradually depleting,
and excessive extraction could have negative impacts on both the
environment and the economy in the long term.
- Energy transition needs: The Vietnamese government has recognized
the importance of transitioning to renewable energy. However, investments
in renewable energy infrastructure still face many challenges, ranging from
financial resources to policy mechanisms and delays in implementation.
3. Impacts of Climate Change
Climate change is a significant threat to Vietnam, and its impacts
have become more apparent in recent years:
- Rising temperatures and extreme weather events: Vietnam has
experienced prolonged heatwaves and rising temperatures. These
heatwaves not only affect public health but also impact agricultural
production and daily living.
- Rising sea levels: Coastal areas of Vietnam, particularly the Mekong
Delta, are facing the risk of flooding due to rising sea levels. This directly
affects the livelihoods of millions of people in these regions, reduces
agricultural productivity, and exacerbates saltwater intrusion.
- Loss of biodiversity: Climate change also contributes to the loss of
biodiversity as ecosystems are disrupted, and many animal and plant
species face the risk of extinction. This directly affects industries like eco-
tourism and agriculture.
The environmental degradation, instability in energy supply, and
increasingly serious impacts of climate change are significant
challenges for Vietnam. To ensure sustainable development,
Vietnam needs to strengthen policies and solutions for
environmental protection, reform the energy system, and build
strategies for climate change adaptation. This effort is not only
crucial for protecting natural resources but also for ensuring long-
term economic development and fairness for future generations.
IV. Proposed Policies for Sustainable Growth
1) Economic Diversification
- Key Sectors: Focus on high-tech industries, such as electronics,
technology, and renewable energy, with an emphasis on developing e-
commerce, fintech, and AI. Additionally, tourism, eco-tourism, and high-tech
agriculture are prioritized.
- Challenges: The country faces challenges like a shortage of skilled labor,
international competition, and infrastructure gaps.

24
 - Solutions: To address these challenges, the government aims to support
domestic enterprises, simplify administrative procedures, invest in
infrastructure, and develop a high-tech workforce.

2. Strengthening Environmental Regulations

- Objectives: Reduce pollution, protect natural resources, and promote
sustainable development.
- Key Regulations: Implement stringent emission and wastewater
standards, reduce plastic waste, promote clean energy, and adopt a green
tax policy to penalize polluting industries.
- Challenges: High compliance costs, inconsistent environmental
awareness, and limited pollution treatment technologies.
- Solutions: Support green production, encourage eco-friendly technologies,
and increase enforcement of environmental regulations.
3. Green Energy Transition
- Objectives: Move towards carbon neutrality by reducing CO₂ emissions,
developing renewable energy, and improving energy efficiency.
- Policies: Offer incentives for renewable energy investments, promote
clean energy technologies, and support electric vehicles and green
transportation.
- Challenges: High investment costs, reliance on foreign technology, and
insufficient infrastructure.
- Solutions: Provide financial support to clean energy enterprises, upgrade
the power grid to integrate renewable energy, and foster international
cooperation for green technology transfer.

4. Climate Change Adaptation

- Objectives: Mitigate the risks of natural disasters, increase ecosystem
resilience, and apply science and technology for effective adaptation.
- Key Policies: Develop sustainable urban planning, support climate-
resilient agriculture, enhance early warning systems, and manage water
resources effectively.
- Challenges: High investment costs, limited technology, and low public
awareness.
- Solutions: Encourage international collaboration, promote renewable
energy, and raise public awareness about climate change and its impacts.
5. Rural Development
- Objectives: Improve rural living standards, develop infrastructure, and
promote modern agriculture.

25
- Key Policies: Invest in rural infrastructure, support high-tech farming, and
protect land and water resources.
- Challenges: Inadequate infrastructure, migration of rural workers, and
climate change impacts on agriculture.
- Solutions: Increase investment in rural areas, provide vocational training,
and promote international cooperation for agricultural development.
Conclusion
Vietnam has made significant strides in economic development, largely
driven by its natural resources, industrialization, and agricultural exports.
However, rapid growth has led to environmental challenges, including air
pollution, deforestation, and energy sustainability issues. The reliance on
fossil fuels and the impacts of climate change, such as rising sea levels and
extreme weather, further threaten long-term growth.
To ensure sustainable development, Vietnam needs to diversify its economy
by investing in high-tech industries, renewable energy, and sustainable
agriculture. Strengthening environmental regulations, such as stricter
emission controls and promoting green energy, will help mitigate
environmental damage. Additionally, transitioning to clean energy and
adapting to climate change through resilient infrastructure and sustainable
practices will protect vulnerable areas, particularly coastal and rural regions.
By implementing these measures, Vietnam can ensure long-term prosperity
while balancing economic growth with environmental protection and equity
for future generations.

6. FEE ON WASTER WASTE

Group 6’s presentation
1. Overview:
● What is the environmental protection fee on wastewater?
The environmental protection fee on wastewater is a charge imposed on
entities that generate wastewater, aimed at covering the costs associated
with the treatment and management of that wastewater. This fee serves
several purposes:
1. Pollution Control: It incentivizes businesses and individuals to reduce
wastewater generation and improve treatment processes, thereby
minimizing environmental pollution.

2. Funding Treatment Facilities: The collected fees help finance

wastewater treatment plants and infrastructure, ensuring that

26
 adequate systems are in place to handle and treat wastewater
effectively.

3. Promoting Sustainable Practices: By imposing a financial responsibility,

the fee encourages more sustainable practices in industries and
households, pushing them to implement cleaner production
techniques.

4. Regulatory Compliance: The fee is part of environmental regulations

that require entities to adhere to specific standards for wastewater
discharge, contributing to overall environmental protection efforts.
In many countries, the fee structure is designed based on the volume and
quality of the wastewater produced, with higher fees for more polluted
discharges. This system aims to create a fair and effective approach to
managing wastewater and protecting the environment.
● Overview of the Environmental Protection Fee on Wastewater
in Vietnam
The environmental protection fee on wastewater in Vietnam is a financial
charge imposed on businesses and individuals who discharge wastewater
into the environment. This fee is an essential part of the country’s strategy
to manage water resources sustainably and reduce pollution. Established
under environmental laws, the fee aims to cover the costs associated with
wastewater treatment and to encourage better practices in wastewater
management.
As Vietnam undergoes rapid industrialization and urbanization, the
implementation of this fee has become increasingly important to address the
environmental challenges that accompany economic growth. By incentivizing
industries to reduce their wastewater output and improve treatment
processes, the fee plays a crucial role in promoting environmental protection
and sustainable development. It reflects the government’s commitment to
balancing economic growth with ecological conservation, ensuring that
natural resources are preserved for future generations.
Key Points of the Overview
1. Definition: The environmental protection fee on wastewater is a
charge for discharging wastewater into the environment.
2. Purpose: Aims to cover costs related to wastewater treatment and
promote better management practices.

27
 3. Context: Integral to Vietnam's strategy for sustainable water resource
management and pollution reduction.
4. Economic Growth Impact: Addresses environmental challenges
arising from rapid industrialization and urbanization.
5. Incentives: Encourages industries to reduce wastewater output and
improve treatment processes.
6. Government Commitment: Reflects the commitment to balance
economic growth with ecological conservation for future generations.
2. Achievements:
Increased Wastewater Treatment Capacity:
- This $524 million project, featuring advanced Moving Bed Biofilm
Reactor (MBBR) technology, aims to enhance the city’s wastewater
treatment capacity significantly. Once completed, the plant will treat up to
1.1 million cubic meters of wastewater daily, serving approximately 1.8
million residents across eight districts.
- The city also aims to shift from treating wastewater to exploring
productive uses and resource circularity within the urban system. It requires
monitoring systems, advanced technologies, and detailed protocols.

Focus on Polluter Pays Principle:

- A progressive policy in Denmark is the application of the “polluter
pays” principle, implemented through wastewater discharge taxes. Facilities
must pay taxes based on the quantity of discharged pollutants, including
organic matter (BOD), phosphorus, and nitrogen. This policy encourages
businesses to invest in modern treatment technologies and reduces
environmental pollution
International Cooperation:
- International development partners including World Bank (WB),
International Finance Corporation (IFC), Japan International Cooperation
Agency (JICA), Agence Francaise de Development (AFD), Asia Development
Bank (ADB), Netherlands Development Organisation (SNV), and United
Nations Development Program (UNDP) continue financial and technical
support to promote investment in the water sector in Vietnam. A few projects
are in preparation:
● Hue city Wastewater and Drainage Project;
● Project in Hue for flood early warning system in rivers;
● The Ho Chi Minh water environment improvement project (3rd phase)
in the southern Ho Chi Minh City;
● The 30,000 m3 wastewater treatment plant in the Cai Rang district of
Can Tho City;

28
● Ho Chi Minh City Climate Resilient Urban Services Projects: Tham
Luong – Ben Cat and West Saigon Drainage Catchments;
● 16 urban projects (Tay Ninh, Ha Tinh, Thai Nguyen, Vinh Phuc, Thanh
Hoa, Lao Cai, Hoa Binh, Hue etc.) in the pipeline focusing on road, river
flooding and storm water flooding, river embankment, etc.;
● Secondary Cities Environment Improvement Projects.
=> Once the country’s public investment process becomes more efficient,
the business opportunities for good technology and expertise in wastewater
treatment in Vietnam will be great, contributing steadily to Vietnam's
sustainable development.
Future goals and current efforts:
Hanoi's master plan prioritizes environmental protection and aims to treat
70% of domestic wastewater by 2030, up from just 30% today.
To achieve its goal of becoming a green city, Hanoi has identified
environmental and landscape protection, addressed the causes of pollution,
and restored rivers. It will also use modern, circular, and environmentally
friendly technologies in waste collection, transportation, and treatment.
Additionally, the city will focus on greening urban areas, reducing
greenhouse gas emissions, and contributing to the national goal of achieving
net-zero emissions by 2050.

The prime minister has ordered stricter control of sewage discharge into
water sources, along with the restoration of rivers such as the Ngu Huyen
Khe, Nhue, Day, Cau Bay, Tich, To Lich, Kim Nguu, Lu, and Set. The city will
also develop tourism corridors along the Red, Day, and To Lich rivers.
Lakes, ponds, canals, and water regulation channels are to be protected from
encroachment while new technologies will be applied to effectively treat
pollution and restore the rivers.
In addition to river restoration, the "green" concept is integrated throughout
Hanoi's development plans. For example, in economic development, the city
prioritizes digital, green, circular, and sharing economies, aiming to complete
industrialization and modernization by 2030. Urban development will follow a
green, smart, and modern approach, with the target of providing 10-12
square meters of green space per capita.
3. Challenges:
The challenges when implementing environmental protection fee on
wastewater in Vietnam
1. Complex Fee Calculation: Determining the volume of wastewater
and its pollution level to calculate appropriate fees is difficult. Many
enterprises underreport or inaccurately declare their wastewater data.

29
2. Lack of Infrastructure: Inadequate wastewater treatment facilities in
industrial zones and urban areas complicate monitoring and compliance.
- In 2015, only 5.3% of urban areas had wastewater treatment facilities
that met national standards.

3. Low Fee Rates: The fee rates are often too low to incentivize
businesses to invest in modern treatment technologies, reducing their
impact on pollution control efforts.
- Many industries prefer to pay lower fees rather than invest in costly
treatment equipment, which leads to continued environmental damage. For
example, a number of industrial parks in Vietnam still do not have adequate
wastewater treatment facilities in place because the cost of compliance (via
the low fees) is not compelling enough to encourage investment in proper
treatment.

4. Enforcement Issues: Weak enforcement and insufficient monitoring

allow enterprises to evade or bypass regulations without facing significant
penalties.
- According to the inspection results from the Ministry of Natural
Resources and Environment, many provinces and cities have not prioritized
environmental pollution prevention. Evidence of this includes 33% not
developing or delaying the approval of environmental protection plans, 17%
not establishing environmental monitoring networks, and 33% not
investigating the total amount of hazardous waste generated. Notably, 37%
of organizations and individuals inspected were found to be in violation, with
the majority failing to fulfill their environmental protection commitments
(68%), improperly managing solid waste and hazardous waste (12%), or
discharging wastewater beyond allowable standards (5%).
5. Community Awareness and Involvement: Limited public
participation in oversight and a lack of awareness about environmental
responsibilities hinder the policy's effectiveness
6. Financial and Technical Constraints: Many local governments lack
the resources and expertise needed to manage and improve wastewater
treatment systems effectively.
4. Solution:
- Enhancing Fee Structure and Incentives: To make the
environmental protection fee more effective, the government could revise
the fee structure to better reflect the environmental cost of wastewater

30
discharge. This would involve raising fees for higher levels of pollution and
incentivizing the use of cleaner technologies.
- Promoting Public Awareness: Public education campaigns can
increase awareness of the environmental protection fee system and
encourage local communities to demand better wastewater management
from industries. Community involvement can help ensure that companies are
held accountable for their wastewater discharges.
- Developing Wastewater Treatment Infrastructure: Expanding and
improving wastewater treatment infrastructure, particularly in rural and
industrial zones, will help ensure that wastewater can be treated before
being discharged. The government should invest in both public and private
sector solutions to build more efficient treatment plants.
- Supporting Small and Medium-Sized Enterprises (SMEs): The
government could provide subsidies, technical assistance, and training
programs for SMEs to help them comply with wastewater treatment
regulations. By making it easier for smaller businesses to implement
pollution-control measures, the government can ensure more widespread
adherence to environmental standards.
- Encouraging Private Sector Investment in Environmental
Technologies: Providing incentives for the private sector to invest in
advanced wastewater treatment technologies could improve the overall
efficiency of the system. Public-private partnerships could be explored to
bring in both funding and expertise to develop innovative solutions for
wastewater management.

7. ENVIROMENTAL PROTECTION TAX

1. Definition
According to Resolution No. 51/2001/QH10,
The National Assembly promulgates the Law on Environmental Protection
Tax.
Environmental protection tax is an indirect tax levied on products and goods
that, when used, have negative impacts on the environment.
A. Taxable Objects:
Gasoline, oil, and lubricants, including:
● Gasoline
● Jet fuel
● Diesel oil
● Kerosene
● Mazut oil

31
● Lubricating oil
Coal, including:
● Lignite
● Anthracite coal
● Fat coal
● Other types of coal
Other taxable items:
● Hydro-chloro-fluoro-carbon (HCFC) solutions
● Plastic bags
● Herbicides
● Termite pesticides
● Wood preservatives
● Disinfectants for storage facilities
B. Taxpayers:
Organizations, households, and individuals that produce or import taxable
goods must pay the environmental protection tax.
C. Tax Calculation Method & Tax Brackets:
The amount of environmental protection tax payable is calculated by
multiplying the quantity of taxable goods by the absolute tax rate specified
per unit of goods.
The absolute tax rate is determined according to the following tax bracket

II. BENEFITS
1. Creating revenue for the state budget to carry out the country’s socio-
economic spending tasks:
+ Solving environmental problems
+ Helping to reduce the financial burden
The proportion of environmental protection tax revenue increased, from less
than 2% in the early period when environmental protection tax was
first implemented (2012-2014) to over 4% in the period 2019-2021.
2. An effective tool of fiscal policy to implement solutions to stabilize the
petroleum market, contributing to stabilizing the macroeconomy
The National Assembly Standing Committee applied measures to adjust the
environmental protection tax rate on gasoline
3. Supporting those who suffer losses due to the impact of force
inevitable events, contributing to limiting losses from factors affecting
the sustainable development process.
Example, during the COVID-19 pandemic, the aviation industry has suffered
heavy losses. In that context, reducing the environmental protection tax on

32
aviation fuel has reduced the burden, supported and restored the aviation
industry
=> contributing to avoiding losses and affecting the sustainable
development of the economy
III. ACHIEVEMENTS
• 2014–2018: Macroeconomic Reform/Green Growth Program,
authorized by the Federal Ministry for Economic Cooperation and
Development of Germany.
• Revenue from environmental protection tax has continuously
increased over the years. Specifically, its proportion in total state budget
revenue rose from 1.7% in 2012 to 2.7% in 2015, reaching 4% in 2020
(averaging 3.7% of total state budget revenue during 2016–2020) and
accounting for about 0.34%–0.98% of GDP annually.
• Currently, there are three major indirect taxes in Vietnam: value-
added tax (VAT), special consumption tax, and environmental protection tax,
which together account for over 35% of total state budget revenue. This has
helped stabilize domestic tax revenue during periods of budget difficulty,
especially due to reductions in import tariffs as committed in international
agreements.
● CURRENT ISSUES IN VIETNAM'S ENVIRONMENTAL TAX POLICY
It can be affirmed that the current regulations on environmental taxes and
fees in Vietnam’s tax system have generated additional revenue for the state
budget. At the same time, they have influenced the awareness and behavior
of organizations and individuals in environmental protection. However, the
actual impact of tax policies on environmental protection goals in Vietnam
remains limited, and the role of taxation in environmental protection is still
unclear. The major shortcomings that still exist are as follows:
● CHALLENGES
1. Limitations in Taxable Environmental Protection Objects
The Environmental Protection Tax Law currently applies to 8 product groups
such as fuel, lubricants, coal, plastic bags, pesticides, etc. However, many
other polluting products (industrial emissions, tobacco, radioactive waste,
hazardous chemicals, electronic devices, rubber, polymers, etc.) are not yet
subject to taxation.
Tax collection has not covered all pollution sources due to prioritizing easily
managed groups and state budget pressures, leading to unfairness and
inefficiency in environmental protection
.2. Environmental Protection Tax Rates Do Not Correspond to
Pollution Levels

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According to statistics published by the International Energy Agency (IEA),
CO₂ emissions from coal increased by 1.6%, and from fuel by 2.5% in 2022.
Global energy sector CO₂ emissions also rose by 0.9% in 2022, reaching 36.8
billion tons, the highest level ever recorded.

In Vietnam, total CO₂ emissions from all fuel combustion activities show that
coal accounts for 60%, fuel for 28%, and natural gas for 12%—making coal
the dominant source of pollution in the country.

However, statistics indicate that in 2021, total Environmental Protection Tax

revenue was 58.592 trillion VND (3.5% of total state budget revenue).
Revenue from fuel and lubricants in previous years was:
● 2019: 61.570 trillion VND
● 2020: 59.234 trillion VND
● 2021: 56.954 trillion VND
This accounts for nearly 97.9% of total environmental tax revenue,
while coal contributed only about 2%. This creates tax inequity, as
fuel accounts for only 28% of emissions but contributes 97.9% of
environmental tax revenue.
Additionally, based on the tax rates effective from January 1, 2019,
fuel tax rates are significantly higher than coal. When converted by
CO₂ emissions:
● Gasoline: 74.9 USD per ton of CO₂
● Diesel: 32.7 USD per ton of CO₂
● Coal: 0.5 USD per ton of CO₂

=> This means gasoline is taxed 156 times higher than coal, despite
coal being the primary source of emissions. This imbalance needs to
be adjusted to reflect actual pollution levels.

3. Environmental Protection Tax Policy Effectiveness Misaligned with

Environmental Goals
Since the implementation of the Environmental Protection Tax (EPT) in 2012,
total tax revenue has increased 5.3 times, from 11 trillion VND (2012) to
58.592 trillion VND (2021), with fuel contributing over 90%.
However, total state budget spending on environmental protection from
2013 to 2021 was only 72.422 trillion VND, far lower than the tax
revenue collected. After 11 years of implementation, environmental quality
continues to deteriorate, indicating that the tax policy has failed to

34
effectively reduce pollution, encourage eco-friendly products, and
influence polluters’ behavior.
4. Inappropriate Environmental Protection Tax Rates
The EPT Law applies absolute tax rates to ensure transparency and
budget stability, but the wide gap between minimum and maximum
rates creates inconsistencies in implementation across different regions.
For example, Circular 152/2011/TT-BTC provides guidance on taxing
plastic bags but does not clarify whether it applies to single-layer or
single-material (PE) bags. As a result, tax is often imposed based on the
presence of "PE" rather than actual composition, increasing selling prices
and making Vietnamese businesses less competitive compared to
foreign companies.
Additionally, Article 8, Clause 1 of the EPT Law sets a tax range of 30,000
- 50,000 VND per kg, but tax officials often lack expertise in the
plastics industry, leading to arbitrary or even biased tax
assessments.

IV. Solutions
A. Market-Based Approach
1. Introduction
Why market-based approaches to ecosystem service provision?
Market-based instruments for environmental management are policy
interventions that comprise legal and ethical tools such as liability laws,
property rights; institutional innovations; command-and-control approaches
such as product, input, or technology standards; and economic incentive
approaches, such as subsidies or tax reductions. These economic
instruments can be more cost-effective and flexible than traditional
regulations on environmental protection. They are also dynamic and create
incentives to innovate and achieve the least cost for reducing pollution.
This explainer is based on an Asian Development Bank study, Greening
Markets: Market-Based Approaches for Environmental Management in Asia. It
provides an overview and assesses the suitability of using different market-
based instruments to address air quality, water, and waste management in
the region. It also provides recommendations on how a market-based
approach can be used for more efficient and effective environmental
management.
2. Methods
Pollution taxes, fees, and charges. Placing a per-unit monetary charge
on emissions or waste can reduce the quantity generated and make polluters

35
shoulder the cost of such activities. This serves as an incentive to reduce
emissions and discharges from production and unsustainable consumption.
Examples include emissions taxes, wastewater discharge fees, and solid
waste disposal fees.
Environmental subsidies. Governments provide financial support for
environment-friendly activities, such as pollution abatement and
development and adoption of green technologies. Subsidies can also
decrease consumer prices or support trade-exposed sectors by lowering
costs for firms or households.
Removal of harmful subsidies. Taking away harmful subsidies, such as for
fossil fuels, is considered a standalone policy instrument that seeks to
promote environment-friendly actions or technologies.
Payments for ecosystem services. This scheme captures the economic
value of ecosystem services (e.g., food and water supply, carbon
sequestration) and creates incentives for producers and consumers to pay
for environmental conservation.
Information provision, labels, and voluntary agreements. These are
mechanisms to disclose information to consumers about the environmental
performance, hazards, or risks of firms or products. Information is necessary
for market-based instruments to function successfully and can mitigate
transaction costs related to developing environmental markets. Examples
include public disclosures, such as sustainability reporting, eco-labels, and
green rating or certification programs.
3. Implementation
Pricing Strategies & Pollution Reduction – Setting environmental taxes
and charges at effective levels is crucial for incentivizing behavioral change
among polluters. In Asia, air pollution control measures have generally been
more successful than water pollution efforts, primarily because fuel
consumption taxes are set at higher rates compared to taxes aimed at
improving water quality. This discrepancy highlights the importance of
appropriate pricing strategies to drive meaningful environmental
improvements.
Political & Governance Challenges – The effectiveness of environmental
regulations is heavily influenced by political systems and governance
structures. Corruption, lack of coordination between national and local
regulatory agencies, and weak institutional frameworks often lead to lax
enforcement. For market-based instruments to function effectively, strong
institutions and well-defined enforcement procedures are necessary to
ensure compliance and achieve environmental goals.

36
Role of Economic Structure & SMEs – The success of market-based
environmental policies depends on the structure of the local economy and
the nature of pollution sources. Informal economic sectors, particularly SMEs,
collectively contribute significant industrial pollution and energy
consumption but are often not subject to strict environmental regulations.
Engaging these businesses in environmental compliance efforts presents
both a challenge and an opportunity for improving environmental
performance.
Link
4. What's Different About the Market Systems Approach?
- Market Systems Approach vs. Traditional Aid: Unlike direct aid or
short-term interventions, the market systems approach focuses on
sustainable, long-term economic development. It aims to fix underlying
market failures rather than just providing temporary solutions.
● Focus on Systemic Change
➢ The approach looks at the entire market system (businesses,
consumers, regulators, etc.) rather than isolated projects.
➢ It works to change the rules, relationships, and behaviors within a
market to drive lasting improvements.
● Facilitation Over Direct Intervention
➢ Instead of directly providing goods or services, the approach supports
local actors (businesses, government, etc.) to create solutions themselves.
➢ This ensures scalability and sustainability, as the changes continue
even after external funding stops.
● Emphasizing Private Sector Involvement
➢ Encourages business incentives and investments to drive growth.
➢ Works with existing market players to improve efficiency, rather than
creating parallel systems.
=> Conclusion: The market systems approach is a sustainable, business-
driven way to improve economic conditions by fixing root causes rather than
applying temporary fixes. It enables local markets to thrive independently,
creating lasting benefits for communities.

5. Status quo in Viet Nam

Vietnam has integrated market-based instruments to tackle environmental
issues, focusing on environmental protection taxes and participation in
international partnerships:
● Environmental Protection Tax (EPT): Implemented in 2012, the EPT
targets goods that are hazardous to the environment, including fossil fuels,
coal, and certain chemicals. The EPT aims to generate revenue to fund

37
environmental protection activities and incentivize businesses and
consumers to adopt environmentally friendly practices.

● Just Energy Transition Partnership (JETP): In late 2022, Vietnam secured

a $15.5 billion pledge under the JETP to peak greenhouse gas emissions from
its power sector by 2030 and limit coal plant capacity to 30.13 GigaWat. This
partnership underscores Vietnam's commitment to transitioning to cleaner
energy sources with international support.
Graph Analysis:
● Upward Trend: The graph shows a consistent increase in CO₂ emissions
from 1970 to 2023. Notably, emissions have more than doubled since 2010,
indicating a significant rise in carbon output over the past decade.
● Per Capita Emissions: In 2023, CO₂ emissions per capita reached 3.69
tons, up from 1.77 tons in 2010. This increase suggests that, on average,
each individual in Vietnam is contributing more to carbon emissions than in
previous years.
Implications:
Despite implementing market-based approaches such as the Environmental
Protection Tax (EPT) and participating in international initiatives like the Just
Energy Transition Partnership (JETP), Vietnam's CO₂ emissions have
continued to rise. This trend suggests that current policies may not be
sufficient to decouple economic growth from environmental impact.
Recommendations:
● Policy Enhancement: Strengthen existing market-based instruments
by increasing tax rates on high-emission activities and providing greater
incentives for renewable energy adoption.
● Technological Investment: Invest in cleaner technologies and
infrastructure to reduce reliance on fossil fuels, particularly in high-emission
sectors such as transportation and industry.
● Public Engagement: Raise awareness and encourage behavioral
changes among citizens and businesses to promote energy efficiency and
sustainable practices.
Addressing these areas could help Vietnam achieve a more sustainable
balance between economic development and environmental preservation.
B. SWOT Analysis
1. Strengths
Cost-Effectiveness
Market-based instruments (MBIs) provide a flexible and cost-efficient

38
alternative to traditional regulations. Instead of imposing fixed rules, MBIs
allow firms and individuals to choose the most economical way to reduce
pollution. For example, a company may either invest in cleaner production
technology or purchase carbon credits, depending on which option is more
affordable.
Innovation
Since businesses are financially incentivized to reduce pollution, MBIs drive
innovation in green technologies. For instance, carbon pricing has pushed
firms to invest in renewable energy, electric vehicles, and energy-efficient
production methods. Countries with emissions trading schemes (e.g., the
European Union Emissions Trading System) have seen increased investment
in low-carbon solutions.
Efficiency in Resource Use
By incorporating environmental costs into prices, MBIs encourage
responsible resource consumption. Water pricing, for example, discourages
excessive use and ensures that scarce water resources are allocated
efficiently. Similarly, waste disposal fees encourage recycling by making it
more expensive to dispose of waste irresponsibly.
Flexibility for Businesses and Consumers
Market-based instruments provide flexibility in meeting environmental
goals. Instead of rigid one-size-fits-all regulations, firms can adopt different
strategies to comply with environmental policies. For example, in a cap-and-
trade system, companies with lower emissions can sell excess permits,
allowing more polluting companies to buy them and gradually transition to
greener practices.
2. Weaknesses
Implementation Challenges and High Administrative Costs
Successful implementation of MBIs requires a strong institutional
framework, clear policies, and effective monitoring systems. Many
developing countries lack the necessary infrastructure to track emissions or
properly set pollution fees. Corruption, weak governance, and lack of
expertise can hinder effectiveness.
Regressive Effects on Low-Income Groups
Market-based policies, such as carbon taxes or higher water tariffs, can
disproportionately impact lower-income households. Without compensation
mechanisms, such policies could increase economic inequality. Governments
may need to implement backup subsidies to offset these effects.
Slow Behavioral and Industry Change
Unlike direct regulations that impose strict limits, market-based instruments
rely on price signals and incentives, which can take time to influence

39
behavior. Some businesses may continue polluting if paying a tax is still
cheaper than switching to cleaner technologies. Similarly, consumers may
not immediately change habits just because eco-friendly products are
slightly cheaper.
Difficulty in Measuring and Valuing Environmental Goods
Certain ecosystem services, such as biodiversity preservation and clean air,
are difficult to quantify in monetary terms. Assigning an economic value to
such benefits is challenging, which can weaken the effectiveness of
payments for ecosystem services (PES) programs.
3. Opportunities
Growth of the Green Economy and Sustainable Markets
As global awareness of climate change and sustainability increases, market-
based approaches can support the transition to green industries. This
includes renewable energy, sustainable agriculture, and circular economy
initiatives. Governments can use MBIs to encourage companies to invest in
cleaner production, creating jobs in emerging green sectors.
International Collaboration and Carbon Markets
Countries and regions can link their emissions trading systems to create
larger, more efficient markets. For example, the European Union Emissions
Trading System (EU ETS) has expanded by partnering with other nations.
Carbon markets allow firms to trade credits across borders, making it easier
to meet global climate commitments under agreements like the Paris
Agreement.
Technology Development and Adoption
MBIs provide incentives for businesses to invest in clean technology.
Subsidies, tax credits, and emissions pricing encourage companies to adopt
green technologies like solar panels, energy-efficient appliances, and electric
vehicles. As these technologies become more widely used, production costs
decrease, making them more accessible to consumers.
Public Awareness and Consumer Engagement
Information-based MBIs, such as eco-labels and sustainability disclosures,
help consumers make environmentally conscious choices. When companies
are required to disclose their carbon footprint or use green certifications,
consumers can choose sustainable products, putting market pressure on
businesses to adopt eco-friendly practices.
4. Threats
Political and Industry Resistance
Industries benefiting from existing subsidies (e.g., fossil fuels) or lax
environmental regulations often oppose market-based reforms. Powerful
lobbying groups can delay implementation efforts. Policymakers may face

40
resistance from businesses concerned about increased costs and
competitiveness.
Risk of Greenwashing and Loopholes
Without strong enforcement, companies may exploit market-based policies
to appear environmentally responsible without making real changes. For
example, firms may claim sustainability benefits through carbon offset
programs while continuing to pollute at high levels.
Carbon Leakage and Relocation of Polluting Industries
Companies facing high environmental costs in one country may move their
operations to regions with weaker regulations, leading to "carbon leakage."
This can undermine global efforts to reduce emissions, as pollution simply
shifts rather than decreases.
Public Pushback and Social Acceptance Issues
Market-based policies, especially those involving new taxes or higher
prices, can face resistance from the public. If people perceive environmental
taxes as unfair or excessive, they may reject them, leading to policy
rollbacks.
5. Conclusion
Market-based instruments offer a promising approach to environmental
management by leveraging economic incentives to drive sustainability. They
provide cost-effective, flexible, and innovation-friendly solutions, but they
also come with challenges such as implementation complexity, potential
regressive impacts, and market uncertainties.
To maximize their effectiveness, MBIs should be:
Well-designed – with accurate pricing, strong regulatory oversight, and
transparent implementation.
Fair and inclusive – considering socioeconomic impacts and providing
compensation where needed.
Complemented by other policies – combining MBIs with regulations,
subsidies, and education campaigns.
By addressing these challenges and opportunities, governments and
businesses can harness market forces to achieve long-term environmental
sustainability.

8.ENVIRONMENTAL PROTECTION
DEPOSIT POLICY IN VIETNAM
Part 1: General Introduction to the Environmental Protection
Deposit Policy

41
The environmental protection deposit policy is a regulation that requires
organizations and individuals engaging in mineral exploitation or scrap
importation to deposit a certain amount of money before starting operations.
This fund is intended to cover the costs of environmental restoration and
pollution treatment in the event of environmental damage. If the enterprise
fulfills its environmental commitments, the deposit is refunded; if not, the
government uses the fund to remedy the environmental consequences.
Legal Basis:
● Law on Environmental Protection 2020 (effective from January 1,
2022), especially regarding environmental restoration in mining and scrap
management.
● Decree No. 08/2022/NĐ-CP dated January 10, 2022, detailing several
articles of the Law on Environmental Protection, including deposit provisions.
● Circular No. 02/2022/TT-BTNMT dated January 10, 2022, providing
technical guidelines on environmental protection deposits for mining and
scrap importation.
● Other related legislation such as the 2010 Mineral Law.
History and Objectives of the Policy:
● History: Vietnam began implementing the environmental deposit
policy in 2005–2006, initially in mineral exploitation, then extending to scrap
imports. Environmental incidents and excessive scrap importation prompted
improvements to the policy.
● Objectives:
○ Ensure funding for environmental restoration if enterprises default
○ Strengthen enterprise accountability in environmental protection.
○ Minimize pollution risks from mining and scrap import.
○ Promote sustainable development following the “polluter pays”
principle.

Part 2: Operational Mechanism of the Environmental Protection

Deposit Policy
1. Overview of the Mechanism:
○ Enterprises must deposit funds into a secured account before
conducting activities that could cause environmental harm.
○ Focus areas:
■ Mineral exploitation
■ Scrap importation for manufacturing
○ The deposit acts as both a financial guarantee and a preventive
environmental measure.

42
 2. Detailed Procedure:

Step 1: Registration and Deposit Submission

○ Enterprises submit environmental restoration plans to competent
authorities.
○ Before receiving operational licenses, they must deposit funds into the
Environmental Protection Fund.
3. Step 2: Monitoring and Implementation
○ Enterprises must follow environmental protection commitments.
○ Authorities inspect for compliance with environmental laws.
4. Step 3: Evaluation and Refund
○ Upon project or import completion, enterprises submit restoration
reports.
○ If approved, deposits are refunded partially or in full.
○ If commitments are unmet, the deposit is used for restoration.
5. Deposit Amount Calculation:

○ Based on:
■ Scale and duration of operations
■ Type and volume of resources
■ Level of environmental risk
○ Calculations are governed by Decree No. 08/2022/NĐ-CP.
6. Legal Framework:
○ Law on Environmental Protection 2020
○ Decree No. 08/2022/NĐ-CP
○ Circulars from the Ministry of Natural Resources and Environment
(MONRE)
7. Importance of the Mechanism:
○ Encourages proactive environmental responsibility.
○ Ensures funding is available for environmental recovery.
○ Deters violations and poor environmental practices.
Part 3: Case Studies
Case 1: Nui Beo Coal Joint Stock Company (Quang Ninh)
● Activity: Large-scale underground coal mining
● Implementation: Deposited billions of VND into provincial treasury
● Outcome: Completed land restoration (levelling, tree planting, pollution
treatment)

43
● Result: Approved by DoNRE, deposit refunded
● Lesson: Effective implementation and oversight ensure policy success.
Case 2: Hung Nghiep Formosa Plastics Co., Ltd. (Dong Nai)
● Activity: Imported plastic scrap for recycling
● Issue: In 2022, a shipment was found non-compliant
● Problem: Delays in accessing deposited funds to resolve the issue
● Consequence: Increased costs, disrupted production
● Lesson: Fund disbursement processes need simplification to avoid
penalizing responsible businesses.
Case 3: DAP-Vinachem One Member Co., Ltd. (Hai Phong)
● Activity: Fertilizer production with large gypsum landfill
● Incident: Landfill collapse in 2019 caused environmental pollution
● Issue: Deposit not effectively used; no emergency plan
● Consequence: Government intervention, financial penalties,
reputational damage
● Lesson: Weak post-deposit management leads to failure in crisis
response.
Part 4: Achievements and Limitations of the Policy
Achievements:
a. Increased Environmental Accountability
● Businesses are compelled to allocate funds for post-operation
environmental restoration.
● Example: Apatit Vietnam Joint Stock Company in Lao Cai successfully
restored mining areas.
b. Established Financial Reserve for Pollution Control
● If businesses fail their responsibilities, the government can use the
deposit for recovery efforts, reducing the burden on the national budget.
● (Law on Environmental Protection 2020, Article 43)
c. Boosted Administrative Reform
● Encouraged transparency in fund management and refund processes
within state agencies.
Limitations and Challenges:
a. Complex Administrative Procedures
● Especially burdensome for small and medium enterprises due to
extensive documentation.
● (Source: VCCI Policy Review Report, 2022)
b. Insufficient Deposit Levels
● Deposit amounts may not match the actual cost of restoration,
reducing the deterrent effect.
c. Weak Monitoring Mechanisms

44
● Inconsistent inspection across provinces. Some businesses received
refunds without fulfilling obligations.
● (MONRE 2023: Only 65% of provinces had effective monitoring
systems)
d. Lack of Coordination and Data Sharing
● Poor inter-agency communication undermines effective oversight.
General Remarks: The environmental deposit policy is a vital tool for
shifting from reactive to preventive environmental management. However,
institutional, technical, and monitoring issues must be resolved to enhance
its effectiveness.
Part 5: Proposed Solutions and Conclusion
1. Proposed Solutions for Improvement
● Simplify Administrative Procedures:
○ Implement online registration and confirmation via the Environmental
Protection Fund or customs agencies.
○ Introduce a “single-window” model to consolidate paperwork.
● Enhance Transparency:
○ Publicize the entire deposit process on the Fund’s website (amounts,
refunds, audits).
○ Establish a feedback mechanism and promote NGO/community
oversight.
● Increase Penalties and Enforcement:
○ Harsher penalties for violations, including higher fines and license
revocation for repeat offenders.
○ Example: Fine violators 2–3 times the shipment’s value.
● Promote Green Technology and Circular Economy:
○ Use a portion of the deposit fund to subsidize eco-friendly recycling or
restoration technologies.
○ Offer tax incentives or reduced deposits for sustainable practices.
● Strengthen Management Capacity:
○ Train DoNRE staff and improve coordination among customs,
environmental, and financial agencies.

2. Conclusion: Role and Future Development

● Role:
○ The deposit policy is an effective economic tool for environmental
accountability in mining and scrap import.

45
○ It guarantees funds for restoration and aligns with Vietnam’s
sustainable development goals.
○ It raises awareness among businesses and aligns with global green
initiatives.

● Future Directions:
○ Continue refining the legal framework for coherence and clarity.
○ Modernize management using digital technologies.
○ Expand international cooperation and align with global environmental
standards.
○ Support Vietnam’s aspiration to become a sustainable and
environmentally responsible nation, as declared at the 5th National
Environmental Conference (2022).

9. Plastic waste pollution in Vietnam.

Introduce the Extended Producer
Responsibility policy (EPR) in Vietnam,
international experiences in applying EFR and
lessons for Vietnam.
I. Definition of plastic waste pollution
- Scientific Perspective: Plastic waste pollution refers to the accumulation
of synthetic polymer compounds (such as PE, PP, PET…) in the natural
environment (land, water, air) at levels that exceed nature’s ability to
degrade or absorb them.
- Scientific properties of plastic: Plastics have highly stable molecular
structures and are non-biodegradable, persisting for hundreds of years.
Under sunlight and physical stress, plastics break down into microplastics,
which can infiltrate living cells and ecosystems.

46
- Everyday Life Perspective: Plastic waste pollution is the situation where
single-use plastic items (bags, bottles, foam containers…) are improperly
disposed of, negatively affecting daily living conditions and public health.
- Real-life manifestations: Plastic litter in rivers, canals, and streets.
Causes clogged drainage systems and urban flooding. Burning plastic waste
releases toxic gases, polluting the air.

II. The current status of plastic waste pollution

1. In term of global status
- According to Plastic Waste Production and Management (Global)
● Plastic Production in 2024:
+ 460 million tons of plastic produced.
+ Over 400 million tons become waste.
+ Projected by 2050: Plastic waste could exceed 1,100 million tons/year
without effective action.
● Current Recycling Rate:
+ Only 9% of global plastic waste is recycled.
+ 91% is landfilled, incinerated, or leaked into the environment.
● Plastic Overshoot Day – 2024:
+ On September 5, global plastic waste exceeded management capacity.
66% of the world’s population lives in areas lacking proper waste treatment
infrastructure.
2. In Vietnam
- Vietnam is the 8th biggest country in the world for plastic waste going
into the ocean in 2023. Now, Vietnam is working on the first legal agreement
to fight plastic pollution. The goal, suggested by the United Nations
Environment Programme, is to cut down plastic use and stop plastic pollution
by 2040.
- Every year, over 30 billion plastic bags are used in Vietnam, and more
than 80% of them are thrown away after just one use.
- The problem is made worse by the limited ability to treat and recycle
plastic waste. About 90% of plastic waste is either buried or burned, while
only 10% is actually recycled.
- Vietnam is facing serious risks from plastic pollution. The amount of
plastic waste is rising fast: around 1.8 million tons in 2014, 2.0 million tons in
2016, and about 3.27 million tons per year today. Each year, about 0.28 to
0.73 million tons of plastic waste ends up in the ocean, making up nearly 6%
of the world’s total ocean plastic waste. (Laodong.vn, 2024).

47
- On average, each household in Vietnam uses around 1 kg of plastic
bags per month. In Hanoi and Ho Chi Minh City alone, about 80 tons of
plastic waste and plastic bags are dumped into the environment every day.
Ran Country Annual Ocean Plastic Waste
k (tons)

1 Philippines 356,371

2 India 126,513

3 Malaysia 73,098

4 China 70,707

5 Indonesia 56,333

6 Myanmar 40,000

7 Brazil 37,799

8 Vietnam 28,221

9 Bangladesh 24,640

10 Thailand 22,806

Other 176,012
countries

Total 1,012,500

III. Impact of plastic waste pollution

Plastic waste pollution has extensive and long-term consequences across
multiple sectors in Vietnam:
1. Human Health:
● Microplastics in food and water: Studies have found microplastics
in tap water, seafood, and table salt in Vietnam.
● Toxic exposure: Burning plastic emits dioxins and furans—
carcinogenic compounds that can cause respiratory diseases, immune
dysfunction, and cancer.
● Hormonal and reproductive disorders: Plastic additives such as
phthalates and bisphenol-A (BPA) are known endocrine disruptors.

48
 2. Environment:
● Marine pollution: Plastic debris found in Halong Bay and other
coastal areas harms coral reefs, fish, turtles, and seabirds.
● Land contamination: Plastic buried in landfills leaches chemicals into
soil and groundwater.
● Clogged urban drainage: In major cities like Hanoi and Ho Chi Minh
City, plastic waste clogs sewers, increasing flooding during rainy seasons.
3. Economy:
● Tourism loss: Dirty beaches and polluted water bodies reduce the
appeal of destinations like Ha Long and Da Nang .
● Fishery impacts: Plastic affects aquatic biodiversity, threatening
livelihoods of over 4.5 million people working in Vietnam’s fishing industry.
● High treatment costs: According to the Ministry of Natural Resources
and Environment (2023), Vietnam spends hundreds of billions of VND
annually on waste collection and landfill management, with plastics being a
major burden.
● The inefficient use of plastic waste leads to significant economic
losses. It is estimated that Vietnam loses around 2.9 billion USD each year
due to the loss of 75% of the material value of plastic, mainly because of
improper collection and recycling practices (Tạp chí Tài chính, 2024).

IV. Solutions

1. Individual solutions
● Changing consumption habits
+ Bring reusable cloth bags and personal containers when shopping or
buying food.
+ Avoid purchasing products with unnecessary plastic packaging.
● Reusing and sorting waste at the source
+ Reuse plastic bottles and glass jars for household storage.
+ Separate plastic, organic, and non-recyclable waste for easier
recycling.
● Participating in environmental campaigns
+ Volunteer in local or coastal clean-up activities.
+ Join movements such as “Plastic-Free Day” or”Earth Hour”.
● Influencing businesses through consumer behavior
+ Prioritize buying from environmentally responsible companies.
+ Provide feedback or advocate for businesses to adopt eco-friendly
packaging and reduce plastic use.

49
2. Government solutions
● Implementing Extended Producer Responsibility (EPR)
+ Require manufactures and importers to collect, recycle, or treat post-
consumer products such as plastic packaging, electronics, batteries, and
tires.
+ Launch a national EPR portal to monitor and ensure transparency in
producer responsibilities.
● Issuing regulations to restrict single-use plastics
+ Ban or limit the use of lightweight plastic bags and plastic straws in
supermarkets and commercial centers.
+ Encourage the use of eco-friendly alternatives like paper bags and
sugarcane-based containers.
● Investing in waste collection and recycling infrastructure
+ Develop waste sorting centers and modern recycling plants.
+ Strengthen waste collection, especially in rural and coastal areas that
are often neglected.
● Promoting public awareness and environmental education
+ Integrate environmental protection and plastic reduction into school
curricula.
+ Collaborate with the media to spread the message of “saying no to
single-use plastics”.

V. Introduce EPR

1. Why do we need EPR?

- Vietnam generates approximately 1.8 million tons of plastic waste each
year (Lao Dong).
- Only about 33% is properly collected and recycled.
- The burden of waste management currently falls mainly on the
government and society.

⇒ EPR shifts the responsibility for post-consumer waste management to

- The existing model is unsustainable as consumption continues to rise.

producers.
2. What is EPR? (Definition and legal basis)
● Definition: EPR is policy that requires producers to take responsibility
for the waste generated from their products after consumption
● Scope of Responsibility:
+ Collection.
+ Recycling.
+ Waste treatment.

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+ Financial contribution.
● Legal Framework
+ Environment Protection Law 2020 - Articles 54 and 55.
+ Decree No. 08/2022/NĐ-CP - Detailed implementation guidelines.
● Implementation Timeline
+ 2020: Law passed.
+ 2022: Decree issued.
+ 2024-2027: Gradual rollout by product category.
3. What does EPR cover and why does it matter?
- Applied to 7 product groups: Plastic packaging, Electronic devices,
Batteries, Tiers, Lubricants, Vehicles, Household electrical appliances.

- Benefits of EPR: +, Reduces environmental burden

+, Encourages environmentally friendly product
design
+, Promotes a circular economy
+, Aligns with global environmental trends

VI. International experiences in applying EPR

Germany – The Green Dot System
Overview: Implemented in 1991, Germany's Green Dot system requires
producers to pay fees based on packaging weight and material type.
Outcomes:
+ Recycling rates for packaging materials increased by 70% between
2003 and 2017.
+ Enhanced waste sorting and collection infrastructure
+ Key Principle: Fees are modulated based on recyclability, incentivizing eco-
friendly packaging designs.
Taiwan – The 4-in-1 Recycling Program
Overview: Launched in 1997, Taiwan's program integrates community,
recycling industries, local governments, and a recycling fund.
Outcomes:
+ Recycling rates increased from 5.87% in 1997 to over 60% by 2011.
+ Daily household waste generation decreased from 1.14 kg to 0.43 kg.
Key Principle: A comprehensive approach combining public participation and
producer responsibility.
France – EPR in the TEXTILE INDUSTRY
Overview: France extended EPR to textiles in 2007, requiring producers to
finance the collection and recycling of clothing and footwear.
Outcomes:

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+ Significant increase in textile waste collection and recycling rates.
+ Development of new markets for recycled textile materials.
Key Principle: EPR fees fund recycling programs and are adjusted based on
the environmental impact of products.
Sweden – EPR for ELECTRONIC WASTE
Overview: Sweden's EPR scheme covers electronic waste, with producers
financing collection and recycling systems.
Outcomes:
+ Achieved an 84.8% recycling rate for PET bottles
+ Reduction in electronic waste through improved product design and
recycling.
Key Principle: Financial responsibility encourages producers to design
products that are easier to recycle.
South Korea – EPR for PACKAGING MATERIALS
Overview: South Korea's EPR system, initiated in 2003, targets packaging
materials, electronics, and batteries
Outcomes:
+ Recycling rates for packaging materials increased by 70% between
2003 and 2017.
+ Enhanced waste sorting and collection infrastructure.
Key Principle: Producers are responsible for collection and recycling,
promoting sustainable product design.

VII. Lessons for Vietnam

Short-Term Actions Long-Term Actions

Governme - Launch online EPR - Build recycling centers

nt system (PPP model)
- Run media campaigns on - Provide tax incentives
waste sorting for eco-packaging
- Issue simple EPR - Include EPR in school
guidelines for business education

52
Business - Join/Create recycling - Redesign packaging
alliances (recyclable/Biodegradable)
- Start - Use QR codes to track
take-back/Recycling programs packaging lifecycle
- Promote green Initiatives - Invest in green supply
through branding chains and partner with eco-
startups

Public - Sort waste at home - Support eco-friendly

(Consumer (Recyclables/Organic/General) brands and products
s) - Join recycling/Clean-up - Live by 3Rs: reduce,
programs reuse, recycle
- Use reusable bags, - Educate and inspire
bottles, containers community action

10. ESG
Current State of ESG Adoption: As of the information presented, only
30% of listed companies disclose ESG data in Vietnam. Awareness
among local businesses is steadily increasing. The drivers for adoption
include demand from foreign investors and export needs. Vietnam has set
a commitment to achieve net-zero emissions by 2050.
Key Sectors Leading ESG Adoption: Several sectors are leading the way
in ESG adoption. These include:
 Manufacturing, driven by compliance demands from global brands
like Nike and Adidas.
 Renewable Energy, with rapid growth in solar and wind projects.
 Banking & Tech, prioritising green lending and ethical AI.
 Agriculture, with examples like Vinamilk leading in sustainable dairy
farming practices.
Challenges to Implementation: Implementing ESG faces several
challenges in Vietnam. These include:
 Reporting Issues: There are no standard ESG frameworks yet.
 Expertise Gap: There is limited skills available in ESG data analysis.
 Cost Barrier: 60% of companies cite high costs, particularly
impacting Small and Medium-sized Enterprises (SMEs).

53
  Cultural Perception: ESG is sometimes seen as a Western
concept, which can hinder its adoption.
Benefits of ESG Reporting: Adopting ESG reporting brings several benefits
for Vietnamese businesses. These include:
 Access to Capital: It provides improved entry to global financial
markets.
 Brand Loyalty: It enhances reputation, attracting customers and
talent.
 Operational Gains: It leads to efficiency boosts and cost savings.
 Risk Management: It results in better resilience against disruptions.
Financially, ESG funds outperformed in 2023. ESG adoption can
also lead to a reduced cost of capital due to lower perceived risk,
access to green bonds and funds, and potentially reduced
insurance premiums for sustainable firms.
Government's Role and Policy Recommendations: The government
plays an essential role in accelerating nationwide ESG adoption. Actions
mentioned include developing a national framework with clear standards
and policies, providing financial incentives like tax breaks and subsidies,
building capacity through training and education programmes, and
integrating ESG into public procurement.
Policy recommendations for the government include requiring mandatory
disclosure of ESG reports from all listed firms, establishing a national ESG
Rating System, and fostering collaborations among government,
businesses, and NGOs. There is also a call to support SMEs with technical
assistance and tax incentives.
Success Stories: The sources highlight a few success stories of ESG
integration by Vietnamese companies:
 TH Group: Integrated sustainable agriculture practices.
 Unilever Vietnam: Focused on carbon footprint reduction in its supply
chain.
 Vietcombank: Issued green bonds for clean energy projects.
 Masan Group: Implemented ethical sourcing and labour standards.
Conclusion: Embracing ESG is seen as crucial for sustainable growth. It
strengthens a business's long-term success, and government support and
collaboration are essential for achieving sustainable growth nationwide.
1. Introduction: Why ESG Matters Now
 ESG—Environmental, Social, and Governance—is no longer optional.
It's a global standard for how companies manage risks, ensure
sustainability, and build long-term trust.

54
  Investors, consumers, and international partners are increasingly using
ESG as a benchmark for decision-making.

 In Vietnam, ESG is gaining momentum, especially following the

government’s net-zero carbon commitment by 2050 at COP26.

 ESG is not just about compliance—it’s about future-proofing businesses

and contributing to sustainable national development.

2. Current State of ESG Adoption in Vietnam

 Limited but growing adoption: Only ~30% of listed companies in
Vietnam currently publish ESG disclosures.

 Main drivers:

o Foreign investors demanding ESG transparency.

o Global supply chains requiring ESG compliance (e.g. apparel,

electronics).

o Vietnam’s net-zero pledge, climate risks, and pressure to align

with global standards.

 Domestic awareness is improving, but most firms—especially SMEs

—struggle with:

55
 o Lack of frameworks.

o Limited expertise.

o Perception that ESG is expensive or irrelevant to their industry.

Conclusion: Vietnam is at a critical stage where ESG is transitioning from

optional to strategic.

3. Key Sectors Leading ESG Efforts

Certain sectors are showing stronger ESG adoption, particularly where
international exposure or environmental impact is high:
🔧 Manufacturing
 Export-focused manufacturers (e.g., in footwear, textiles, electronics)
must comply with ESG codes of conduct set by global brands like Nike,
Adidas, H&M.

 Focus areas: labor rights, waste reduction, and carbon neutrality.

⚡ Renewable Energy
 Vietnam has become a leader in Southeast Asia for solar and wind
energy.

 Major projects backed by international climate funds and ESG-focused

capital.

 Government feed-in tariffs and green finance have helped accelerate

growth.

💰 Banking & Finance

 Banks such as Vietcombank and BIDV are incorporating ESG into
lending practices.

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  Issuance of green bonds to fund environmental projects.

 The State Bank of Vietnam encourages sustainable finance.

🌾 Agriculture
 Movement toward sustainable farming practices: less pesticide, water
use efficiency, animal welfare.

 Vinamilk and TH Group are applying circular models, biogas systems,

and clean energy.

💻 Technology
 Increasing focus on data privacy, cybersecurity, and AI ethics.

 ESG compliance in digital infrastructure is attracting impact

investment.

4. Major Challenges to ESG Implementation

While momentum is growing, multiple challenges still hinder broader ESG
adoption:
 No unified national ESG reporting standard: Companies follow
different global frameworks (GRI, SASB, TCFD), causing inconsistency.

 Low technical expertise: Many businesses, especially SMEs, lack

knowledge in ESG strategy, metrics, and data collection.

 Cost: ESG implementation is perceived as costly, especially when

return on investment is not immediate.

57
 o According to a 2023 survey, 60% of Vietnamese companies
cited high cost as the top barrier.

 Limited regulatory enforcement: ESG reporting is mostly voluntary

and lacks standardized enforcement.

 Cultural mindset: Some business leaders still view ESG as an

"external" or "foreign" concept rather than a core business value.

5. Business Benefits of ESG Reporting

Despite these challenges, ESG offers multiple long-term advantages:
 Access to capital: ESG-compliant firms are prioritized by foreign
investors, development banks, and ESG-focused funds.

 Improved brand trust: Stakeholders—consumers, employees, and

partners—favor companies with strong ESG commitments.

 Efficiency and cost savings: ESG often leads to better waste

management, energy use, and supply chain optimization.

 Stronger risk resilience: ESG helps identify and mitigate long-term

risks such as climate disruptions, labor strikes, or regulatory changes.

 Attracting talent: Young professionals prefer working for companies

with a strong ESG reputation.

o Example: VietJet Air promotes fuel efficiency, carbon offsetting,

and social engagement to attract green-conscious customers and
employees.

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6. The Financial Case for ESG
Beyond reputation, ESG directly impacts a company’s financial performance:
 Higher ROI: ESG-focused companies often outperform peers on stock
markets in the long term.

 Lower capital costs: Lenders view ESG-compliant businesses as

lower risk.

 Access to green finance:

o Green bonds, sustainability-linked loans, and climate

finance are becoming more accessible in Vietnam.

o In 2023, ESG funds globally outperformed traditional funds

by 20%.

 Reduced insurance premiums: Strong ESG policies—especially in

safety and compliance—lead to lower operational risk and insurance
costs.

7. The Government’s Role in Promoting ESG

Government action is essential to mainstream ESG across sectors. Key roles
include:
 Developing a national ESG framework: Standardized reporting
templates, scoring systems, and disclosure requirements.

 Providing financial incentives:

59
 o Tax deductions for ESG investments.

o Preferential access to green loans and public funding.

 Building capacity:

o Government-led training and certification programs for ESG

knowledge.

o Technical support for SMEs and local governments.

 Green public procurement: Incorporating ESG criteria in supplier

selection and bidding processes.

 Promoting awareness: National campaigns to educate business

leaders and the public on ESG’s value.

8. Policy Recommendations
To accelerate ESG adoption in Vietnam, the following policy actions are
recommended:
1. Mandate ESG disclosures for listed and large private companies.

2. Introduce a national ESG rating and audit system for

transparency and benchmarking.

3. Support SMEs with technical assistance, toolkits, and ESG integration

grants.

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 4. Encourage cross-sector collaboration: Government–Business–
NGOs–Academia.

5. Offer tax incentives and co-investment for green projects.

6. Learn from regional models:

o Example: Singapore’s Green Plan 2030, a strategic national

ESG roadmap.

9. Local Success Stories

Some Vietnamese companies are already demonstrating ESG success:
 TH Group: Uses biogas and organic farming, reducing methane
emissions and water use.

 Unilever Vietnam: Applies sustainable sourcing, reduces plastic

packaging, and cuts carbon footprint across operations.

 Vietcombank: Issued green bonds to support clean energy and

environmental projects.

 Masan Group: Committed to ethical sourcing, labor rights, and

responsible governance.

These examples show that ESG is not only possible in Vietnam—it’s already
happening and creating measurable impact.

10. Conclusion: ESG as a Catalyst for Sustainable Growth

 ESG adoption is no longer a question of "if"—but "how fast".

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  Businesses that lead in ESG will:

o Access more capital,

o Build stronger brands,

o Manage risks better,

o Attract high-performing talent.

 The government’s support is crucial—through regulation, incentives,

and education.

 With a unified effort, Vietnam can become a regional leader in

sustainable development and ESG-aligned economic growth.

11. FINANCIAL SOURCES FOR GREEN

TRANSFORMATION IN VIETNAM
I. INTRODUCTION
1. Background and Significance of the Research:
- Global Trend of Green Transformation:
Green transformation is no longer merely an option but has become an
imperative global trend. The escalating urgency of climate change, pervasive
environmental pollution, and the alarming depletion of natural resources
necessitate a fundamental shift in nations' economic development
paradigms towards greater sustainability. This green transformation
encompasses a comprehensive restructuring of economic sectors, the
widespread adoption of clean and innovative technologies, a significant pivot
towards the utilization of renewable energy sources, the active promotion of
environmentally sound transportation systems, and the implementation of
sustainable agricultural practices. The overarching aim is to substantially

62
mitigate negative impacts on the environment and to foster a future where
economic progress and ecological harmony are intrinsically linked.
- Vietnam's Commitments at COP26:
At the 26th Conference of the Parties to the United Nations Framework
Convention on Climate Change (COP26), Vietnam articulated a robust
commitment to achieving net-zero emissions by the year 2050. This
ambitious pledge underscores Vietnam's resolute determination to actively
participate alongside the international community in the global endeavor to
combat climate change. Realizing this demanding objective necessitates a
profound and extensive transformation across all facets of Vietnam's
economic and social landscape, a transition that will require the mobilization
of substantial financial resources.
- National Strategy on Green Growth:
In a strategic move to concretize its sustainable development objectives and
proactively address the challenges posed by climate change, Vietnam has
promulgated the National Strategy on Green Growth for the period spanning
2021 to 2030, with a long-term vision extending to 2050. This pivotal
strategy unequivocally emphasizes the central and indispensable role of
green finance in the effective mobilization and judicious allocation of
financial resources towards the realization of sustainable and
environmentally responsible development projects. Green finance is
strategically identified as a critical instrument for catalyzing investments in
key areas such as renewable energy infrastructure, the development of
efficient public transportation systems, the promotion of sustainable
agricultural practices, the implementation of effective natural resource
management strategies, and the deployment of innovative solutions aimed
at reducing greenhouse gas emissions.
2. Objectives and Research Questions:
This research report is undertaken with the following primary objectives:
- Identify financial sources for green transformation in Vietnam:
To meticulously analyze and clearly delineate the existing and prospective
sources of capital that can be effectively channeled towards financing
activities integral to Vietnam's green transformation, encompassing public
sector funds, domestic private sector investments, and international financial
flows.
- Assess the challenges in mobilizing financial resources:
To systematically identify and comprehensively analyze the various barriers,
impediments, and difficulties that Vietnam currently encounters in its efforts
to mobilize and effectively access the requisite green financial resources.

63
- Propose solutions to enhance the efficiency of green finance
mobilization:
To formulate and present a set of specific, practical, and comprehensive
recommendations and solutions designed to significantly enhance Vietnam's
capacity to mobilize and utilize green financial resources with optimal
efficiency in support of its overarching green transformation agenda.
To achieve these overarching objectives, this report will focus on providing
insightful answers to the following key research questions:
- What specific financial sources are presently contributing to, and hold
significant potential for further supporting, the green transformation process
within Vietnam?
- What are the principal challenges and critical impediments that
currently hinder the effective mobilization and accessibility of these essential
financial resources?
- What strategic solutions and actionable measures can be effectively
implemented to substantially enhance the efficiency of mobilizing and
deploying green finance to accelerate and support the green transformation
across Vietnam?
3. Methodology
This report employs a mixed methods research approach, integrating both
qualitative and quantitative research methodologies to ensure a
comprehensive and robust analysis of the information required to address
the research questions effectively.
- Qualitative Research:
+ Documentary Research: This method involves the systematic collection
and in-depth analysis of a wide range of secondary data sources. These
sources include pertinent legal and regulatory documents, relevant national
strategies and plans, insightful research reports, scholarly publications, and
pertinent information obtained from key organizations and businesses
actively involved in green finance and the broader green transformation
landscape.
+ Comparative Analysis: A comparative analysis of the international
experiences in mobilizing green finance, particularly focusing on the
strategies and outcomes observed in countries such as Indonesia, Thailand,
and Denmark, will be conducted to extract valuable lessons and best
practices that may be applicable to the Vietnamese context.
+ Content Synthesis and Analysis: The qualitative data gathered from the
diverse range of sources will be meticulously synthesized, systematically
organized, and rigorously analyzed to identify key financial sources,

64
underlying challenges, and promising potential solutions relevant to
Vietnam's green transformation financing needs.
- Quantitative Research:
+ Descriptive Statistics: This involves the utilization of statistical data
pertaining to outstanding green credit portfolios, the total value of green
bond issuances, the quantum of investment originating from the state
budget, and the inflow of international financial resources. The aim is to
provide a clear and descriptive overview of the current state of green finance
within Vietnam. Key data sources for this analysis will include the State Bank
of Vietnam (SBV), the Ministry of Finance, the General Statistics Office, and
comprehensive reports published by relevant international organizations.
+ Trend Analysis: A longitudinal analysis of the growth trends exhibited
by various green financial sources over a defined period will be undertaken.
This analysis is crucial for evaluating the trajectory and overall development
of the green finance market within Vietnam, identifying patterns and
projecting future trends.
- Synthesis and Recommendation Methods:
+ Drawing upon the comprehensive findings derived from both the
qualitative and quantitative analyses, the key insights will be synthesized to
provide direct and well-supported answers to the core research questions
that guide this study.
+ Based on the integrated analysis, practical and comprehensive
solutions aimed at enhancing the efficiency of green finance mobilization in
Vietnam will be formulated and proposed. These recommendations will take
into careful consideration the specific economic, social, and legal context of
Vietnam, as well as the valuable lessons and successful strategies gleaned
from international experiences in the field of green finance.

II. THEORETICAL FRAMEWORK AND LITERATURE REVIEW

1. The Concept of “Green Transformation”
- Definition:
Green transformation is a fundamental and comprehensive process of
reorienting an economy and society towards sustainability. It centrally
involves a concerted effort to substantially reduce greenhouse gas
emissions, promote the efficient utilization of natural resources, actively
protect and enhance environmental quality, and significantly bolster
resilience against the adverse impacts of climate change. This is a
multifaceted and dynamic process that necessitates profound shifts in policy
frameworks, technological innovation and adoption, and the behavioral
patterns of both individuals and businesses.

65
- Scope and Key Pillars:
The scope of green transformation is broad and encompasses numerous
interconnected sectors, built upon the following fundamental pillars:
- Renewable Energy:
This pillar prioritizes the aggressive development and widespread utilization
of clean and renewable energy sources, such as solar photovoltaic systems,
wind power generation, small-scale hydroelectric projects, and biomass
energy conversion. This transition aims to progressively replace reliance on
conventional fossil fuel sources that are significant contributors to
environmental pollution and climate change.
- Green Transportation:
This involves actively encouraging the development and extensive use of
efficient public transportation systems, the adoption of electric vehicles and
hybrid technologies, and the implementation of intelligent transportation
solutions. The primary goal is to significantly reduce greenhouse gas
emissions and other pollutants originating from transportation activities.
- Sustainable Agriculture:
This pillar focuses on the adoption of environmentally benign farming
practices, the efficient and responsible management of land and water
resources, the minimization of synthetic agricultural chemical inputs, and the
promotion of organic and circular agricultural systems.
- Green Industry:
This entails actively promoting the adoption of clean technologies and
processes within industrial sectors, enhancing energy and resource efficiency
in manufacturing operations, and significantly reducing the generation of
waste and emissions from industrial activities.
- Resource and Waste Management:
This pillar emphasizes the need to enhance the efficiency of natural resource
utilization across all sectors, promote the principles of the circular economy,
and implement sustainable management practices for solid waste, hazardous
waste streams, and wastewater treatment.
- Green Building:
This focuses on the development and construction of buildings that are
highly energy-efficient, utilize environmentally friendly and sustainable
building materials, and minimize their overall environmental footprint
throughout their lifecycle.
2. Theories of Mobilizing Finance for Sustainable Development
- 3P Framework (Public - Private - Partnership):
The Public-Private Partnership (PPP) model plays a pivotal role in effectively
mobilizing the substantial capital required for green projects. This

66
collaborative framework, which strategically aligns the resources and
expertise of the public sector (including government agencies and state-
owned entities) with those of the private sector (encompassing businesses
and investors), facilitates the sharing of project-related risks and the
leveraging of the unique strengths of both parties to invest in initiatives that
yield both significant economic and substantial environmental benefits.
Governments can play a crucial enabling role by establishing supportive
policy environments, providing catalytic seed funding, or offering strategic
guarantees to effectively attract private sector investment into strategically
important green projects.
- “Blended Finance” Model:
The blended finance approach represents an innovative strategy that
strategically combines concessional capital originating from development
organizations (such as multilateral development banks and non-
governmental organizations) with commercial capital from private sector
investors. The primary objective of this model is to strategically utilize the
more flexible and often lower-cost capital provided by development
organizations to effectively de-risk investments in projects that exhibit
significant potential for positive developmental impact but may not initially
offer purely market-competitive financial returns. This risk mitigation is
crucial for incentivizing private sector participation in impactful but
potentially less conventional investments.

3. International Experience in Mobilizing Green Finance

- Indonesia:
Indonesia has been proactive in issuing green bonds as a key mechanism for
financing projects in critical areas such as renewable energy development,
the establishment of sustainable transportation infrastructure, and the
implementation of effective natural resource management strategies.
Recognizing the importance of transparency and accountability, the
Indonesian government has also established comprehensive guidelines and
clear standards for green bond issuances to ensure the integrity and
environmental credibility of the projects being financed.
- Thailand:
Thailand has taken a significant step towards promoting green finance by
establishing the Thailand Green Fund. This national-level financial
mechanism is specifically designed to provide crucial financial support for a
diverse range of environmental projects and initiatives aimed at effectively
addressing the challenges posed by climate change. The Green Fund offers
various forms of financial assistance, including concessional loans with

67
favorable terms, strategic guarantees to mitigate investment risks, and
valuable technical assistance to both public and private sector entities
undertaking environmentally beneficial projects. Furthermore, Thailand has
developed and issued specific guidelines pertaining to green bonds to
actively encourage the growth and maturity of this important segment of its
financial market.
- Denmark:
Denmark stands out as a global leader in the realm of renewable energy and
has implemented a comprehensive suite of financial instruments and policy
measures to effectively support its ambitious green transition. A key element
of Denmark's strategy has been the implementation of carbon taxes, which
serve as a powerful economic incentive for businesses and industries to
actively reduce their greenhouse gas emissions. Complementing this
regulatory measure, the Danish government has also established various
financial support programs, including targeted subsidies and grants,
specifically designed to encourage and facilitate investments by businesses
in cutting-edge green technologies and the development of renewable
energy infrastructure.
- Lessons for Vietnam:
The international experiences of countries like Indonesia, Thailand, and
Denmark offer valuable insights and key lessons for Vietnam as it seeks to
enhance its own green finance mobilization efforts. These lessons underscore
the critical importance of:
+ Establishing a clear, consistent, and robust legal framework specifically
tailored to green finance, encompassing well-defined standards and
unambiguous definitions for what constitutes a “green project.”
+ Strategically diversifying the sources of green finance, effectively
combining public sector allocations, domestic private sector investments,
and international financial flows to create a resilient and comprehensive
funding ecosystem.
+ Actively incentivizing and facilitating the robust participation of the
private sector through the implementation of well-designed preferential
policies and effective mechanisms for mitigating investment risks associated
with green projects.
+ Substantially enhancing the technical and institutional capacity of both
financial institutions and businesses in the critical areas of assessing,
evaluating, and effectively managing green investment projects.
+ Ensuring the highest levels of transparency and rigorous accountability
in the allocation and utilization of green financial resources to maintain
investor confidence and project integrity.

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III. CURRENT STATUS OF MOBILIZING FINANCE FOR GREEN
TRANSFORMATION IN VIETNAM
1. Public Finance
- State Budget and Environmental Funds:
The central and local government budgets play a crucial foundational role in
allocating funds towards projects aimed at environmental protection and
proactively responding to the challenges of climate change. According to
estimates from the World Bank, Vietnam requires a substantial investment of
approximately USD 368 billion to achieve its green growth objectives during
the period spanning 2022 to 2040, which translates to an average annual
investment of around USD 20 billion. However, current budgetary allocations
for environmental initiatives constitute a relatively modest proportion,
typically ranging between 1% and 1.5% of the total state budget
expenditure. For instance, in the fiscal year 2019, the total expenditure
dedicated to environmental protection amounted to VND 20,442 billion.
Recognizing the need for dedicated funding, Vietnam has also established
the Vietnam Environment Protection Fund. This fund is primarily capitalized
through revenues generated from environmental taxes and pollution fees,
and its core mission is to provide financial support for a wide array of
environmental protection and sustainable development projects across the
nation.
- Preferential Tax and Fee Policies:
The Vietnamese government has implemented a range of tax and fee
policies specifically designed to incentivize and promote environmentally
friendly activities across various sectors. Revenues generated from the
environmental protection tax and pollution fees are strategically channeled
into the Vietnam Environment Protection Fund, providing a dedicated
financial resource for environmental initiatives. Furthermore, the government
has introduced measures such as exemptions and reductions in corporate
income tax (CIT) and import duties for businesses and projects that adopt
clean technologies and utilize environmentally sound equipment. A
preferential CIT rate of 10% is also applied to income derived from projects
that have a primary focus on environmental protection and sustainability.
Current assessments suggest that the government's revenue collection
policies, particularly those related to environmental taxes and pollution fees,
are increasingly being leveraged as effective instruments to drive and
support the broader agenda of green growth within the country.
- Preferential Credit and Policy Banks:
The Vietnam Bank for Social Policies has taken a proactive role in
implementing preferential credit packages specifically targeted towards

69
supporting sustainable agricultural practices and initiatives aimed at
enhancing adaptation to the adverse effects of climate change. In a parallel
effort, the State Bank of Vietnam (SBV) has issued Circular 17/2022/TT-
NHNN, which mandates that all credit institutions operating within Vietnam
must rigorously assess the potential environmental impacts of projects as an
integral part of their credit appraisal and approval processes. Furthermore,
Government Resolution 68/NQ-CP, enacted in 2025, explicitly underscores
the priority of allocating loan capital towards green credit initiatives and
actively encourages commercial banks to offer reduced interest rates for
businesses that adopt and implement clean and environmentally sound
technologies in their operations.
2. Private Finance
- Green Credit:
The commercial banking system in Vietnam is demonstrating an increasing
level of engagement in financing environmentally beneficial projects through
the establishment and expansion of various green credit programs. As of the
third quarter of 2024, approximately 50 credit institutions operating within
Vietnam were actively providing green credit facilities, with the total
outstanding balance of these loans reaching over VND 665 trillion
(equivalent to approximately USD 28 billion). The allocation of this green
credit is predominantly concentrated in key sectors such as renewable
energy and clean energy technologies, which account for about 43% of the
total, and sustainable agriculture, which represents approximately 30%.
Notably, the Joint Stock Commercial Bank for Foreign Trade of Vietnam
(Vietcombank) and the Joint Stock Commercial Bank for Investment and
Development of Vietnam (BIDV) are widely recognized as leading institutions
in the provision of green credit within the Vietnamese banking sector.
- Green/Sustainable Bonds:
The corporate bond market in Vietnam is also witnessing a notable trend in
the issuance of green bonds and sustainable bonds (which encompass both
social bonds and bonds with integrated sustainability features). During the
period spanning 2019 to 2023, Vietnamese entities successfully issued
approximately USD 1.16 billion worth of green bonds. The aggregate value of
green, social, and sustainable (GSS) bonds issued between 2016 and 2024
reached an estimated VND 33.5 trillion (approximately USD 1.4 billion).
Specifically in 2024, the issuance of green and sustainable bonds amounted
to nearly VND 6.9 trillion, representing about 1.5% of the total value of newly
issued corporate bonds during that year. Notably, the Joint Stock Commercial
Bank for Investment and Development of Vietnam (BIDV) has successfully
executed two tranches of ESG-linked bond issuances, totaling VND 5,500

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billion (comprising VND 2,500 billion in green bonds issued in 2023 and VND
3,000 billion in sustainable bonds issued in 2024). Furthermore, the Joint
Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) also
marked its entry into the green bond market with its inaugural issuance of
VND 2,000 billion in November 2024.
- Private Investment Opportunities:
A growing number of commercial banks in Vietnam are actively developing
comprehensive green finance frameworks within their operations. This
includes the adoption of internationally recognized standards, such as the
Green Bond Principles established by the International Capital Market
Association (ICMA), and the implementation of independent external reviews
prior to the issuance of green bonds to enhance credibility and investor
confidence. There is a discernible and increasing trend of private capital
flows being directed towards environmentally beneficial projects, particularly
as these financial instruments adhere to established international principles
and receive high “green” ratings from reputable assessment agencies,
indicating a strengthening commitment from the private sector towards
sustainable investment opportunities.
3. International Finance
- Multilateral Financial Institutions:
Prominent Multilateral Development Banks (MDBs), including the Asian
Development Bank (ADB), the World Bank (WB), the International Finance
Corporation (IFC), and the Asian Infrastructure Investment Bank (AIIB), have
been instrumental in providing both concessional loans, which offer favorable
terms, and non-reimbursable grants to support a wide range of crucial
projects in Vietnam. These projects are specifically focused on key areas
such as the development of renewable energy infrastructure, the
implementation of effective measures for climate change adaptation and
mitigation, and the construction of environmentally sustainable green
infrastructure. For example, the ADB has made a significant commitment,
pledging approximately USD 2.1 billion to bolster Vietnam's efforts in energy
transition and climate change adaptation. Similarly, the World Bank, in
collaboration with its partners, has established dedicated trust funds aimed
at financing sustainable urban development initiatives, exemplified by the
"Viet Nam Accelerating Green Cities" Fund, which has received a substantial
contribution of USD 5 million from SECO. Furthermore, the IFC actively
engages in providing financial support and strategic advisory services for the
issuance of sustainable bonds by domestic enterprises, thereby facilitating
the flow of private capital into green projects within Vietnam.
- Bilateral and International Aid:

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A diverse array of governments, bilateral funding agencies, and international
non-governmental organizations (NGOs), including notable

IV. CHALLENGES IN MOBILIZING FINANCE FOR GREEN

TRANSFORMATION
For example, a survey in a manufacturing business association showed that
only 1 out of 69 enterprises knew they were on the list of 1,912 businesses
required to conduct a greenhouse gas inventory according to the Ministry of
Industry and Trade's regulations – a figure clearly reflecting the lack of
connection between regulatory agencies and businesses.
1. Insufficiently Strong Support Policies and Weak Implementation
Efficiency:
In addition, existing policies lack sufficient strength and suffer from weak
implementation. Vietnam has issued many guidelines on green credit, green
bonds, and sustainable bonds, but the absence of specific classification
frameworks and criteria hinders their practical effectiveness. Government
incentives, support mechanisms, or guarantees are not strong enough to
motivate businesses and investors to participate in this sector. Green bonds,
sustainable bonds, and green credit – tools expected to play a leveraging
role – are currently not truly attractive to businesses due to a lack of clear
incentives.
2. High Initial Investment Costs and Long Payback Periods of
Green Projects:
Green projects often require significant upfront investment and have long
payback periods, which become barriers for many businesses, especially
SMEs with limited financial resources. A prime example of a Vietnamese
enterprise facing difficulties in implementing a green project due to high
investment costs is Trung Nam Dak Lak 1 Wind Power Joint Stock Company,
the investor of the Ea Nam Wind Power Plant in Dak Lak province.
Information about the project:
- Project Name: Ea Nam Wind Power Plant
- Capacity: 400 MW
- Total Investment: VND 16,500 billion (approximately USD 700 million)
- Charter Capital of the Company: VND 3,800 billion, accounting for
about 23% of the total investment
- Capital Mobilization Method: Issuance of corporate bonds worth VND
2,400 billion with a term of over 14 years.
Despite the project's significant potential in providing renewable energy and
contributing to local economic development, the company faced difficulties
in mobilizing capital due to the very high initial investment costs and the lack

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of supportive financial mechanisms. This led to the company facing serious
financial risks, especially with rising borrowing interest rates and unstable
electricity pricing mechanisms. This is a clear demonstration of the
challenges Vietnamese businesses face when implementing green projects,
particularly regarding capital mobilization and initial investment costs.
3. Macroeconomic and Market Risks: Macroeconomic and market
risks also affect the mobilization of finance for green transformation
in Vietnam:
- Fluctuations in Interest Rates and Exchange Rates:
Increase the cost of borrowing from ODA/MDB sources, reducing access to
cheap green capital. Rising global interest rates increase the cost of using
green loans, reducing the financial attractiveness and efficiency of green
transformation projects. Simultaneously, the depreciation of the local
currency increases the burden of foreign currency debt repayment, thereby
weakening the ability to access and absorb international financial resources
for sustainable development.
- Regional and Global Economic and Political Instability:
Create investor hesitancy, causing green capital flows to shift away from the
Vietnamese market. Factors such as geopolitical conflicts (e.g., Russia-
Ukraine, Middle East), US-China strategic competition, and disruptions in
global supply chains create a volatile investment environment, making
investors more cautious about long-term and high-risk investments such as
green transformation projects in emerging markets like Vietnam.

V. COMPREHENSIVE SOLUTIONS TO PROMOTE GREEN FINANCE

To overcome the challenges and effectively promote the mobilization of
finance for green transformation in Vietnam, a series of comprehensive
solutions across multiple aspects need to be implemented:
1. Perfecting the Legal and Policy Framework:
- Developing a Specialized Green Bond Law:
Enacting a separate law on green bonds will create a unified, transparent,
and reliable legal framework for this market. The law should reference
international standards such as the ICMA Green Bond Principles and ASEAN
Green Bond Standards, while clearly defining criteria for identifying green
projects, appraisal, reporting, and supervision processes. Establishing an
independent Green Project Appraisal Council (similar to the UK's Climate
Bonds Initiative) will also help enhance objectivity and prevent
"greenwashing."
- Reforming Preferential Tax Policies:

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Stronger preferential tax policies are needed to encourage investment in
green projects. Comparing with successful countries like Malaysia shows that
exempting or reducing corporate income tax (CIT) in the initial years and
exempting import tax on advanced renewable energy equipment can
significantly attract investment capital. Vietnam should consider similar
measures, while linking tax incentives to achieving reputable international
ESG certifications.
2. Enhancing Market Capacity:
- Developing a Secondary Green Bond Market:
A liquid secondary market will increase the attractiveness of green bonds to
investors. Establishing the Vietnam Green Exchange (VGX) with initial
incentives on listing fees and efficient trading mechanisms will contribute to
the development of this market.
- Developing Green Investment Funds:
Encourage the establishment and development of investment funds
specializing in the green sector, including venture capital funds and private
equity funds. Establishing the Vietnam Climate Investment Fund (VCIF) with
the participation of state capital, commercial banks, and international
investors can create a significant source of capital for green projects.
Simultaneously, favorable conditions should be created for the emergence
and development of green PE funds focusing on potential areas such as
renewable energy.

3. Innovative Blended Finance Mechanisms:

- First Loss Guarantee Model:
Applying a partial risk guarantee mechanism (First Loss Guarantee) from
public funds or international organizations can mitigate risks for private
investors and commercial banks when participating in new or high risk green
projects. For example, applying this mechanism to offshore wind power
projects can help attract concessional loans and equity.
- Debt for Nature Swap Mechanism:
Explore the possibility of applying debt fornature swap mechanisms to secure
environmental protection commitments, learning from the experiences of
other countries like Ecuador. For example, a portion of public debt could be
reduced for provinces with large forest areas in exchange for commitments
to afforestation and forest protection.
4. Technology and Transparency Solutions:
- Blockchain based Green Capital Tracking System:
Building a blockchain technology platform to track green capital flows from
mobilization to disbursement and utilization for projects. This helps enhance

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transparency, reduce audit costs, and build investor confidence. The Vietnam
Green Finance Platform (VGFP) can integrate smart contracts and ESG risk
warning systems.
- Mandatory ESG Reporting Standards:
Issue a roadmap for the mandatory application of environmental, social, and
governance (ESG) reporting standards for businesses, especially listed
companies and financial institutions. Referencing international standards
such as the GHG Protocol, AWS Standard, and GRI will help improve the
comparability and reliability of ESG information.
5. Microfinance Solutions:
- Green Credit Program for Agriculture:
Expand and replicate green credit programs with preferential interest rates
for farmers and agricultural cooperatives to promote sustainable agricultural
practices and climate change adaptation. Collaborating with international
organizations to establish a Green Credit Guarantee Fund and applying
remote sensing technology to identify priority areas will enhance the
effectiveness of the program.
- Green Fintech: Support the development of green financial technology
(fintech) companies that provide innovative financial solutions for green
projects and environmentally conscious investors. Tax incentives and the
creation of regulatory sandboxes can encourage innovation in this field.

VI. CONCLUSION AND RECOMMENDATIONS

1. Summary of Priority Solutions:
To effectively promote green finance, Vietnam needs to prioritize the
simultaneous implementation of the following solutions:
Solution Lead Agency Expected Estimated
Timeline Cost (USD)
Enact Specialized Green Ministry of 2025 2 million (WB
Bond Law Finance support)
Establish Vietnam Green State 2026 15 million
Exchange (VGX) Securities
Comm.
Establish Vietnam Climate Ministry of MPI 2024 500 million
Investment Fund (VCIF)

2. Implementation Roadmap:
- Phase 2024-2025:

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Focus on completing the basic legal framework for green finance, piloting
innovative blended finance models, and launching the VCIF.
- Phase 2026-2030:
Expand the scale of the green capital market by developing the secondary
green bond market and encouraging the participation of green investment
funds. Gradually popularize and move towards mandatory ESG reporting for
large and listed enterprises.
3. Necessary Commitments:
- Government:
Needs to demonstrate strong commitment by prioritizing budget resources
for green projects (aiming for a minimum of 3% of GDP per year), creating
investment incentives, and mitigating risks for green investors.
- Businesses:
Need to proactively raise awareness about the importance of green
transformation and commit a certain percentage of their research and
development (R&D) budget to green technologies and solutions (aiming for
20%).
- Banks and Financial Institutions:
Need to develop a roadmap for increasing green credit outstanding and the
proportion of investment in green bonds, aiming to achieve 15% green credit
outstanding by 2030.

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