Foreign private investment is waiting for a complete legal framework to support Vietnam in the implementation of Net Zero. A huge resource is ready to pour into Vietnam to support the process of building a low carbon economy. In order to attract this capital, Vietnam needs to prioritize building a legal framework to balance domestic and international interests, lower barriers to entry for new businesses to develop carbon reduction solutions, and at the same time lower barriers to entry for new businesses. Time to assist fossil fuel businesses in retreat by developing financial tools and mechanisms to finance the transition.
Energy transfer process
In 2022, Vietnam’s GDP will increase by 8.02% compared with an increase of only 2.58% in 2021. This is the highest annual growth rate since 1997, an impressive result in the context of global stillness much uncertainty and volatility. One of the most invested areas to achieve the NET ZERO goal is renewable energy technologies, including wind and solar power. Renewable energy projects can reduce the use of fossil fuel sources and help move the economy towards a more sustainable energy consumption direction. In addition, investment funds can fund projects to protect radiation and reduce the vast emissions caused by industrial and mineral activities.
However, investing in renewable energy and environmental protection projects is not a comfortable way to invest. Investors and investment funds need to uphold and meet ESG standards to achieve NET ZERO in a sustainable way. Vietnam’s road to green and sustainable development must not only ensure energy security, but also achieve the socio-economic development goals of the sector master plans. This process requires support from developed countries, through financial and technical assistance.
Areas that need investment to achieve the goal of NET ZERO
Renewable Energy Technologies: Renewable energy projects can reduce the use of fossil fuel sources and help move the economy towards a more sustainable energy consumption direction. This is to solve Vietnam’s serious problems in the energy sector; There is a lot of potential for solar power generation while the price of renewable electricity has become on par with the traditional electricity selling price of Electricity.
Protect the environment: Investors and investment funds need to meet ESG standards to achieve NET ZERO goals in a sustainable way. Investment in environmental protection projects such as waste treatment and production of organic fertilizers should also be considered.
Investment in research and development funds: Finding research funds and other agencies is one of the most attractive investment areas for foreign equity. Research into advanced technologies for waste treatment and renewable energy technologies has significant investment costs. We hope investors will present the opportunity for the technology research and development needed to meet Net Zero goals in Vietnam.
Other sustainable projects: In addition to renewable energy technologies and environmental protection projects, investors can invest in technologies that promote energy saving such as control and control systems. air conditioning. In particular, this can help direct businesses to operate in energy-saving ways and improve their operational efficiency.
Need a complete legal framework
Around the world, a range of financial instruments are emerging, including carbon pricing and emissions trading systems; green bonds and green financial funds; joint venture to invest in green infrastructure on a new scale; green innovation fund; renewable energy service companies, green investment classifiers and many others.
However, the regulations, standards and financial mechanisms to make these investments in Vietnam’s carbon reduction process are incomplete or lacking. Thankfully, a framework has been designed to promote investment in the economy’s carbon footprint, facilitating investment in climate change adaptation and mitigation. Given the Government’s commitment to increasing prosperity, reducing carbon emissions for the economy, a policy framework to attract the funding needed to reduce carbon emissions will facilitate the transition. climate-resilient economy and an innovative, globally connected carbon market, while ensuring rapid climate change is tackled. To do that, the Government needs to create an investment environment that achieves three things:
The first is that a rapid transition will require large-scale international investment in Vietnam’s energy infrastructure.
Second, a fair transition will require smaller domestic and foreign investors, as well as residential households and farmers, to have opportunities across all sectors to participate in the process. Vietnam’s carbon reduction program.
Third, an equitable transition will require policies that do not prioritize investments in carbon reduction at the expense of harming Vietnam’s ecosystems and biodiversity.
What foreign investors need to do to implement the goal of NET ZERO in Vietnam
Invest in sustainable technologies and projects
One of the ways to achieve the goal of NET ZERO in Vietnam is to invest in renewable energy technologies, environmental protection and other sustainable projects. Investors need to evaluate and find ways to support environmental protection projects, technology projects, waste treatment and other sustainable projects to move the economy towards sustainable development.
Meet environmental, social and corporate governance standards
Secondly, investors need to meet environmental, social and corporate governance standards to enhance the realization of the NET ZERO goal. This can be achieved by supporting businesses that operate sustainably and meet ESG (Environmental, Social, and Governance) standards. Businesses that meet these standards will gradually replace those that do not meet ESG standards, helping to form a greener business community.
Support government agencies and related partners
To achieve the goal of NET ZERO, investors need to support government agencies and related partners to create a favorable investment environment and promote sustainable development. More than that, investors need to find opportunities to cooperate and participate in government projects, support government agencies in developing policies to support sustainable investment.
Create motivation for businesses to carry out activities that contribute to the goal of NET ZERO.
Finally, investors need to create incentives for businesses to make contributions to achieve NET ZERO goals in a sustainable and effective way. Investors can incentivize businesses to contribute to the NET ZERO goal through grants, long-term investments, local partnerships, and flexible financing solutions to support these initiatives businesses carry out activities to contribute to the goal of NET ZERO.
Summary
Investing in renewable energy technologies and sustainable projects is one of the important ways to realize the goal of NET ZERO in Vietnam. And foreign private capital plays an important role in contributing and realizing this goal. However, to achieve the goal of NET ZERO, businesses and investment funds need to ensure that they meet environmental, social and corporate governance standards.
Governments and related partners also need to support and encourage businesses and investors to contribute to the NET ZERO goal. The implementation of the NET ZERO goal in Vietnam will not only bring businesses and foreign investors great investment opportunities but also help lead the country towards sustainable development. Additionally, this initiative will create new innovative industries, and furthermore, encourage the development of green technologies in the country. With the potentials of wind and solar energy growing strongly in Vietnam, and many efforts are being launched from government agencies and international organizations, we will be able to achieve the goal of NET ZERO in Vietnam when there is a strong contribution of foreign investors. Investors need to ensure that their investment will actually contribute to the achievement of NET ZERO goals and benefit both business and society.
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Harley Miller Law Firm “HMLF”
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