By Mehmet Enes Beşer
Vietnam has been the fastest-growing economy in Southeast Asia over the last decade or so, experiencing high-speed industrialization, export-led growth, and improved regional standing. However, the progress has had an astronomically high environmental cost. Coal continues to dominate the energy mix and is the single most important cause of all air pollution and greenhouse gas emissions. As Vietnam continues its green growth ambitions—specifically those it committed in its updated Nationally Determined Contributions (NDCs) and the Just Energy Transition Partnership (JETP)—the consequences are monumental. Large-scale deployment of renewable power and enabling the phase-out of coal are not goals to be wished for; they are the pillars of sustainable economic progress in a carbon-limited world.
Vietnam is not starting from zero. The solar and wind capacity of the country increased between 2019 and 2021, and Vietnam was briefly a regional solar installation leader. This was because of the following: favorable feed-in tariffs (FiTs), good irradiance for solar, and increasing local demand for clean energy. The growth momentum has since been given up due to grid limitations, skepticism regarding transparency of plans, as well as policy uncertainty. Investors, who had been optimistic, are now wait-and-see—waiting for firmer policy signals and sustained follow-through.
What Vietnam needs to overcome in its efforts to make this work right now is not shortage of opportunity but shortage of governance. Vietnam possesses every aspect to make its productive renewable energy industry a success: abundance of natural resources, growing energy requirements, strong manufacturing capability, manufacturing, and thriving technical human assets. Now all it requires is an overhauling open-ended and coordinated national energy transition plan involving planning, infrastructure, finance, and administrative capacity in the government to manage effectively.
Top of the agenda is to have a good, long-term regulatory system and uphold it. Delay and ambiguity in Power Development Plan VIII (PDP8) announcement only helped prolong institutional upheaval and policy uncertainty which helped kill investor confidence. Going forward, Vietnam must ensure that power planning will be scientifically grounded and fiscally prudent, and strictly followed. Ongoing stakeholder consultation—like with the private sector, the provinces, and the civil society—will be essential for ownership and accountability.
Just as crucial is upgrading the national grid to serve variable renewable energy (VRE). South and central highlands bottlenecks have stranded or underutilized the majority of solar and wind projects. Without significant public investment in grid infrastructure and smart technologies, further renewable development will be constrained. Strategic public-private partnerships (PPPs) and concessional finance—particularly through the JETP—need to be tapped to facilitate grid upgrades and enhance energy storage solutions.
Vietnam’s coal phase-out also must be done with caution and foresight. Coal is a politically and economically entrenched industry, with many thousands of jobs and powering much of the country’s industrial park growth. Phasedown that is abrupt or untimely risks economic dislocation as well as societally driven resistance. rather, a fair transition policy must be undertaken, with retraining programs, economies diversification in coal-committed towns and cities, and stakeholder consultation to reduce job and revenue loss. Vietnam’s coal retirement plans must be ambitious but resolute, considering the net-zero ambitions of Vietnam and external funding assistance.
Transition governance can’t be dissociated from energy transition. The corruption and bureaucratic inefficiencies disease has affected infrastructure development in Vietnam, and the energy sector in particular. Over-license, bid opacity, and politicization of awards have all been established in the recent past. For Vietnam to attract significant climate finance and clean tech investment, it needs to ensure that its institutions are not just capable but clean as well. Prioritizing enhancing regulatory capability, simplifying approval processes to be automated, and empowering watchdog institutions with powers must become part of cross-cutting public sector reform.
Provincial role should also be highlighted. Decentralization in Vietnam means that provincial governments have significant sanctioning powers over projects and land use planning powers. It can foster local responsiveness but can also cause uneven implementation, corruption, and regulatory capture. Strengthening provinces at the expense of national cohesion is something the central government must balance—through capacity building, audit arrangements, and incentives alignment.
International cooperation can bridge capacity gaps. Vietnam must increase cooperation with governments and development banks, think tanks, universities, and civil society organizations. Technical support, climate finance, and peer-to-peer exchange can all assist Vietnam in the production of solid and future-oriented energy transition equipment.
Conclusion
The fate of Vietnam’s green growth hinges on whether it can make that crucial pivot away from coal and towards renewables. It has the resources to position Southeast Asia at the cutting edge of the transition. But to achieve this, it must gain definiteness in strategy, integrity of government, and coordination in implementation.
A successful transition will not only sweep Vietnam’s skies clean and reduce emissions—it will power a new era of industrial competitiveness, energy security, and global legitimacy. In an increasingly rapid flip-flopping towards sustainability, Vietnam’s choice is not to transition—but whether to lead or follow. The choice will not be so much about technology or money, but about political will and transformation.