With a cumulative score of 1.8, Vietnam ranks number 14 among emerging markets and number 40 in the global ranking.
- Emerging markets
2.19 / 5
0.90 / 5
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Net-zero goal and strategy
At the COP26 climate meeting in November 2021, Vietnam announced a net-zero emissions by 2050 goal. A month after the COP26 announcement, Vietnam’s prime minister launched a national steering committee to implement the net-zero target. The committee is engaging with all relevant ministries to develop the implementation plan.
In April 2022, the government also released its Draft National Strategy on Climate Change by 2050 setting greenhouse-gas emission reduction goals for key sectors by 2030 and 2050.
In January 2022, Vietnam also legalized the establishment of a carbon market under its revised Law on Environmental Protection. Vietnam is planning the pilot launch of the Carbon Credit Exchange by 2025 with full operation by 2028
Nationally Determined Contributions (NDC)
Under its Nationally Determined Contribution, or its official plan to cut emissions under the Paris Agreement, Vietnam commits to reducing its greenhouse-gas emissions by 9% under a business-as-usual scenario by 2030, and up to 27% reduction by the same year with international support.
Fossil fuel phase-out policy
There is no fossil fuel phase-out policy in Vietnam
To spur development in wind and solar, Vietnam introduced FiT schemes for wind and solar projects. The first wind FiT implemented in 2011 at $78/MWh failed to incentivize development. It was subsequently revised in September 2018 – the onshore wind FiT was increased to $85/MWh and an offshore wind FiT of $98/MWh was introduced. The FiT scheme expired in November 2021.
Power prices and costs
The solar FiTs successfully attracted investments into the sector, allowing Vietnam to emerge as the regional clean energy leader in Southeast Asia. The two solar FiT schemes drove almost 19 gigawatts of solar build in just two years and propelled Vietnam to become the third-largest solar market in 2020. This led to a significant change in the makeup of Vietnam’s power mix. In 2020, the share of fossil fuel fell significantly to just 42% of installed capacity, from 83% in 2019. However, as most of the solar boom in 2020 occurred in December, coal and gas still generated 66% of electricity that year, falling to 57% in 2021. The rapid development of solar and wind have, however, has given rise to grid and curtailment concerns.
Vietnam’s power market is dominated by state-utility Vietnam Electricity Group (EVN). The generation sector is open to the participation of independent power producers. Two consecutive solar booms in Vietnam over 2019-20 and a 2021 wind build rush greatly diversified generation capacity mix and ownership. These feed-in tariff (FiT) schemes helped make Vietnam the largest market for solar and wind in Southeast Asia with some 20.6 gigawatts of capacity installed by the end of 2021.
EVN retains a monopoly in the transmission, distribution and electricity retail segment. The government targets liberalizing its electricity retail market by 2025 starting with a planned 1 gigawatt direct power purchase agreement pilot
Vietnam has witnessed strong power demand growth over the last decade. Between 2015 and 2021, Vietnam’s electricity demand increased at a compounded annual growth rate of 7.9%, primarily driven by increased foreign investment in Vietnam’s manufacturing sector. Delays in planned fossil fuel plants and exhaustion of the country’s large hydro potential led to power supply shortage concerns. This led to a pivot in the government’s attention away from coal and toward renewables and gas as suggested by the draft power development plan VIII. The latest draft of the PDP VIII sees coal capacity additions ending in 2030; it also envisions rapid growth of gas power capacity and renewable energy
Installed Capacity (in MW)
Electricity Generation (in GWh)
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
The investment climate in Vietnam is stable. There are no known defaults by the single off-taker, EVN. There are no barriers to entry in the form of foreign ownership restrictions or local content requirements. There is however uncertainty in the future revenue and offtake schemes for solar and wind projects. After the expiry of the last solar FiT in December 2020 and wind FiT in November 2021, the government has yet to release any new pricing mechanism for solar and wind projects.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
While there are little to no passenger EVs in Vietnam’s vehicle fleet currently, the country leads the Southeast Asia region in electric two-wheelers with over 3.96 million units. In 2021, the country accounted for 99% of all-electric two-wheeler sales in Southeast Asia. This high adoption rate is driven by lax rules on low-speed electric two-wheelers. The country historically allowed these vehicles to be driven without a driver’s license and without registration, making it a popular choice of transportation.
The Vietnam government published its Action Plan on Green Energy Transition and Reducing Carbon and Methane Emissions from the Transport Sector on July 22, 2022. The action plan lays out various short- to long-term targets for the adoption of low-emission drivetrains across various modes of transport, including road, rail, waterways, aviation and urban transport.
Vietnam is the second country after Singapore in Southeast Asia to officially set an end date for the sales of gasoline and diesel vehicles. As part of the 2050 net-zero goal, the government aspires to end the manufacture, assembly, import, and sales of gasoline and diesel vehicles by 2040.
There are currently no incentives for the purchase of electric vehicles (EVs) though the country imposes a lower excise tax of 5-15% on battery EVs compared to 35-90% for internal combustion engines. The Ministry of Industry and Trade has said it was considering additional tax incentives to encourage the development and use of electric vehicles in Vietnam. However, none has been finalized.
Fuel economy standards
Does the country have a fuel economy standard in place?
Vietnam’s low-carbon heating market is in its infancy.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
In 2006, Vietnam approved the first Vietnam Energy Efficiency Program that outlined measures for improving energy efficiency and conservation across different sectors of the economy. The program is now in the third phase for the period 2019-30.
The national technical regulation on energy efficiency buildings code applies to the design, construction or retrofit of buildings with a gross floor area of 2,500 square meters or larger. The energy efficiency building code regulates and sets minimum standards for building envelope, ventilation and air conditioning systems, lighting systems and electrical equipment. Although the regulation was first adopted in 2013, compliance is reported to be low.
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