Toward 2045: Vietnam’s Strategy for Net Zero, Resilience, and Inclusive Growth

Prepared by the World Bank in collaboration with Australian Aid and key Vietnamese institutions such as the Ho Chi Minh National Academy of Politics and the National Institute of Economics and Finance, the report “Vietnam 2045: Growing Greener – Pathways to a Resilient and Sustainable Future” presents a compelling case for integrated climate action. It warns that Vietnam’s ambition to reach high-income status by 2045 is at serious risk from intensifying climate hazards. With over 3,260 kilometers of coastline, vast river deltas, and densely populated coastal cities, the country is ranked among the most climate-vulnerable globally. Climate change is already manifesting through rising temperatures, stronger typhoons, saline intrusion, and sea-level rise, posing existential risks to infrastructure, agriculture, and urban development. Typhoon Yagi in 2024 alone inflicted damages worth US$955 million in the industrial port city of Haiphong, underlining the immediacy of these threats.

Without intervention, the economic fallout will be significant. Modelling shows that climate impacts could reduce Vietnam’s GDP by up to 12.5 percent by 2050, with the biggest losses coming from labor productivity decline due to heat stress, destruction of capital stock, and declining agricultural yields. Urban heat islands are already emerging in cities like Ho Chi Minh City, while 71 percent of apparel and 74 percent of electronics firms, key contributors to exports, are located in zones highly exposed to heat risks. Over 1.3 million workers, most of them women, are at risk of reduced working hours and health impacts from extreme heat.

The Economic Logic of Investing in Adaptation

To counteract these threats, the report recommends investing US$233 billion over the period 2025–2050 in adaptation measures, roughly 0.75 percent of GDP annually. These investments include infrastructure that withstands extreme weather, climate-smart agriculture, heat-mitigation strategies in cities, and early-warning systems. The benefits of such investments go beyond just avoiding losses. They bring “triple dividends”, reducing vulnerability, improving productivity, and promoting environmental and social co-benefits. For instance, a World Bank project in the Mekong Delta showed that the benefit-cost ratio of adaptation efforts jumped from 1.27 to 14.67 when broader social and environmental benefits were included.

Encouragingly, private households and firms are already stepping up. Farmers in the Mekong Delta are adopting alternate wetting and drying (AWD) rice cultivation to reduce water use and methane emissions. In cities, small manufacturers are adapting by installing pumps and elevating machinery to avoid flood damage. However, adaptation at scale still faces hurdles. Households often lack credit or climate information, especially small businesses and poorer communities. Government support is therefore essential, through financial incentives, accessible insurance markets, and improved access to localized climate risk data.

Greening the Economy Without Slowing Growth

While adaptation is vital, so too is mitigation. Vietnam remains one of the most carbon-intensive middle-income economies, with emissions per unit of GDP 45 percent higher than the average for its peers. Coal still plays a dominant role in electricity generation. Although per capita emissions remain modest at 5.2 tCO₂e, they are growing rapidly. The government’s 2022 National Strategy on Climate Change sets a bold goal of reaching net-zero emissions by 2050 and cutting emissions by 43.5 percent by 2030. The Eighth Power Development Plan (PDP8), revised in 2025, calls for a fivefold increase in solar capacity to 73GW by 2030 and nearly doubling wind energy to 38GW.

Current policies, if fully implemented, would enable Vietnam to meet 85 percent of its 2030 target. But the net-zero goal for 2050 will remain elusive without deeper reforms and new technologies. An accelerated decarbonization scenario, combining industrial modernization, carbon sinks, and cleaner transport, could bring emissions down by 74 percent while raising GDP by 4.4 percent by 2050 compared to the baseline. When local co-benefits like improved air quality are included, even short-term GDP gains become positive.

A Green Export Strategy for a Changing Global Market

Reducing carbon is no longer just a domestic issue. The global economy is tilting rapidly toward net-zero, with more than 90 percent of global GDP under some form of climate pledge. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a harbinger of the future, linking trade to emissions. Vietnam’s export-dependent economy is particularly exposed, as over half of its exports, worth US$225 billion in 2024, go to OECD markets. Simulations show that if Vietnam loses 30 percent of this export market due to high emissions, GDP could be 6 percent lower by 2030. However, this challenge is also an opportunity. Vietnam has the highest wind and solar potential in Southeast Asia, estimated at 1,000GW annually, and is already increasing exports of electric vehicles and solar components.

The private sector will play a key role. With the right regulatory framework, carbon markets, and green finance, industries can shift quickly. A pilot Emissions Trading System (ETS) is set to begin in 2025 for power, steel, and cement, and a moderate carbon tax is under consideration. The report urges policies that blend incentives, pricing, and institutional reform to make the green transition both equitable and competitive.

Blue Economy: A Hidden Engine for Climate Resilience

The marine economy is Vietnam’s untapped growth engine. Coastal zones support nearly 30 percent of the population and a growing share of GDP, including tourism, fisheries, aquaculture, and shipping. But unsustainable development, overfishing, and pollution, especially plastic waste, have degraded ecosystems. Mangrove forests, which act as natural flood barriers and carbon sinks, have declined by 72 percent since 1950. The government’s Resolution 36 envisions the marine sectors contributing 10 percent to GDP by 2030, but this requires urgent action.

The report calls for a marine spatial planning framework, ecosystem restoration (including 50,000 hectares of mangroves), and incorporation of marine ecosystem services into economic planning. If managed well, the marine economy could become a cornerstone of green growth, offering both climate mitigation and adaptation benefits.