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COVER STORY

SUSTAINABILITY IMPERATIVE

Climate change may disproportionately affect Vietnam and the country could consider several
priority areas if it hopes to achieve its commitment of reaching net-zero emissions by 2050.

PHUONG HOA Reports

rime Minister Pham Minh Chinh
mentioned Vietnam’s aspiration
P to reach net-zero emissions by 2050
at the 26th UN Climate Change Conference
(COP26) in Glasgow last November. Viet-
nam does have pathways to net-zero, Mr.
Bruce Delteil, Managing Partner of McK-
insey & Company in Vietnam, told the
Vietnam Connect Forum 2022 in Ho Chi
Minh City in early April.

POSITIVE SCENARIO
Vietnam’s sector- and segment-level
growth continue at the level prescribed in
the government’s plans, while technology
adoption and fuel efficiency remain at the
same level as in 2018. With its current
trajectory, Vietnam is unlikely to achieve
the commitment made at COP26. “Achiev-
ing net-zero emissions by 2050 will require
effort and improvement across a number
of areas, such as the efficient use of energy PHOTO: VIET TUAN
and technology,” Mr. Delteil said.
McKinsey has mapped what it would
take for Vietnam to reduce emissions by
100 per cent from business-as-usual levels, Mr. Delteil believes there are many to identify project financing products to
and the pathway involves radical changes solutions for implementing these tasks in enable investments in decarbonization.
in key technologies and behavior. Vietnam the most economical manner. Investments By 2025, these financing products could
has some challenges to overcome, including in targets could be costly in the beginning become a $1.5-billion revenue opportunity
modernizing the power grid, increasing but will bring positive impacts in the long for banks in Vietnam.
the share of renewables in the power gen- term. “Eighty-seven per cent of emissions As climate change could disproportionately
eration mix, electrifying transportation, reduction could be achieved by implementing affect Vietnam through physical risk and
and protecting natural abatement areas. major initiatives in transport, industry, transition exposure, Mr. Delteil added, decar-
As part of net-zero assumptions in the power, and Land Use, Land-Use Change, bonization by 2050 is of great importance.
pathway, renewable energy needs to be and Forestry (LULUCF) at a cost of $24 The power sector merits a unique focus,
increased to be 80 per cent of the nation’s per tCO2e [tonnes of CO2 equivalent] or given that part of the potential pathway
power generation mix - with wind power lower,” he said. for Vietnam to achieve net-zero includes
and solar power increased to 23 per cent Another positive sign that could support the installation of 70 GW of solar power
and 18 per cent of maximum potential Vietnam in achieving this goal is that, over and 150 GW of wind power by 2050.
additional capacity, respectively. Emissions the past four years, investment in renewable Electrifying road vehicles will be another
from steel and cement industries need to energy in the country has increased from key area of focus, and Vietnam is already
be reduced by 90 per cent. $2 billion in 2018 to $21 billion in 2021. taking a pioneering role in electric two-
The net-zero assumptions also stipulate Offshore wind power accounts for 95 per wheeler and three-wheeler adoption.
that all road transport needs to be electrified, cent of this investment, or about $20 In addition, it is necessary to have coor-
while 30 per cent of passengers traveling billion. “This shows that Vietnam’s renew- dinated efforts across all sectors to accelerate
by air need to switch to high-speed rail. At able energy is attractive to investors,” Mr. decarbonization, especially in implementing
the same time, 7.5 million ha of land with Delteil said. Moreover, the shift by indus- key levers such as high-speed rail, public
abatement potential needs to be protected, tries towards green development also brings transport, and shifting towards advanced
and new agricultural techniques and tech- new investment opportunities for investors, manufacturing. “As we saw from global par-
nologies need to be adopted to enable decar- especially foreign investors. ticipants at COP26, both a sector approach
bonization across Vietnam’s fragmented and coordinated efforts between the private
agricultural sector. By completing such tar- PRIORITIES NEEDED and public sectors will be required,” said
gets, Vietnam could potentially achieve the With limited resources, the govern- Mr. Delteil. “We believe Vietnam is in a
goals in its net-zero emissions process. ment and Vietnamese businesses need strong position to make this happen.” %

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