The growing importance of green finance in Vietnam’s energy sector is drawing increasing attention – not only for its role in mobilizing much-needed capital, but also for the institutional and market reforms it necessitates.

In this article, Vilasia’s Ngu Truong and Trang Nguyen explore how green finance is evolving into a strategic driver for Vietnam’s energy transition, particularly in the context of rising investment demands, ESG integration, and the development of sustainable financial instruments.

Through an in-depth analysis of current market conditions and policy gaps, the article highlights key challenges, including the absence of a unified green taxonomy, limited market readiness, and barriers to accessing international capital. It also outlines three critical reform areas that could unlock green investment flows and enhance Vietnam’s competitiveness in the global energy landscape.

The article was originally published in Vietnamese in The Saigon Times on September , 2025. The digital version is available here.

Green Finance – The Key to Attracting Capital in the Energy Sector

Trương Hữu Ngữ – Nguyễn Thùy Trang (*)

(The Saigon Times) – Vietnam’s energy investment needs by 2030 will require more than USD 135 billion, which is a financial burden that far exceeds the capacity of both the public sector and domestic private enterprises. In this context, green finance is emerging not only as an additional source of capital but also as a mechanism that reshapes the rules of sustainable development.

To implement international commitments in the energy sector, policy alone is insufficient. According to World Bank estimates and figures in the revised Power Development Plan VIII, Vietnam needs to mobilize around USD 136.3 billion in investment capital for energy development during the 2026-2030 period. Of this, transmission infrastructure accounts for about USD 18.1 billion, and power generation accounts for about USD 118.2 billion. These figures far exceed the self-financing capacity of both the public sector and domestic enterprises. In this context, green finance is emerging as an indispensable strategic lever to support Vietnam’s energy transition process to occur faster, deeper, and more effectively.

Green Finance – More Than Just Low-Cost Capital

Green finance is not merely low-cost funding; it is an entire ecosystem that determines how financial flows are raised, allocated, and monitored under sustainability principles. Tools such as green bonds, sustainable loans, transition finance, blended finance, and investments aligned with environmental, social, and governance (ESG) standards are no longer academic concepts but have become mainstream transaction standards in global financial markets.

In Vietnam, organizations such as the International Finance Corporation (IFC), the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), the German Development Agency (GIZ), and the Green Climate Fund have financed or co-financed wind and solar projects, transmission grid upgrades, and energy efficiency programs. However, Vietnam’s ability to absorb green capital remains limited due to a lack of legal standardization, incomplete information, and enterprises being ill-equipped with access skills. Unlocking these capital flows requires a stronger institutional framework, a transparent financial market, and greater readiness from both the State and the private sector.

Although still in its early stages, Vietnam’s green finance market holds significant potential. By the end of 2023, the country had issued just USD 1.2 billion in green bonds, a figure far below that of its ASEAN peers. However, demand for green capital is rising rapidly, particularly in energy infrastructure, green building construction, transportation, and smart cities.

The current bottleneck is the lack of a unified standard system regarding what qualifies as “green.” Enterprises seeking to issue green bonds or borrow green capital face high certification costs and complex ESG reporting requirements, while lacking clear guidance from the State. This prevents many environmentally friendly projects from mobilizing capital through green mechanisms, leading to missed international financial opportunities.

Three Institutional Reforms to Attract Green Capital

For green finance to become a true driver of Vietnam’s energy transition, three key groups of reforms need to be implemented in parallel:

First, establish a national green taxonomy. The Ministry of Finance is working with international partners to develop a system tailored to Vietnam’s economy while aligning with ASEAN and EU standards. This will serve as a “common dictionary” to help enterprises assess eligibility and enable investors to price risks accurately.

Second, develop blended finance mechanisms that share risk among the state, development organizations, and private investors. Such mechanisms are particularly critical for capital-intensive projects with long-term risks, such as offshore wind, energy storage, and smart grid modernization.

Third, strengthen institutional capacity and build transparent data systems. The adoption of standardized ESG reporting and open databases on emissions and green finance will boost investor confidence, especially among organized investment funds and global financial institutions.

Opportunities for Pioneering Businesses

In this transition, private enterprises, especially in energy, real estate, and manufacturing, will play a central role. Those that lead in ESG transparency, produce emissions reports aligned with international standards, apply life-cycle assessments (LCA), and publish Environmental Product Declarations (EPD) will gain access to international capital at lower costs, with longer maturities and more flexible terms.

In addition, enterprises can proactively participate in carbon credit programs and prepare for trading once Vietnam establishes its domestic carbon market. This offers not only a way to reduce compliance costs but also the chance to generate new revenue from the “intangible asset” of emissions reductions.

Green finance is no longer optional. It has become a prerequisite if Vietnam is to meet its net-zero commitment and remain competitive in the global supply chain transition. Achieving this will require coordinated institutional reforms, stronger public governance, and a shift in business mindset.

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(*) Vilasia Law Firm