Vietnam needs to invest about $368 billion from now until 2040 to build a climate resilient and low-carbon economy, according to the Vietnam Country Climate and Development Report released by the World Bank Wednesday.
Carolyn Turk, country director of the World Bank in Vietnam, said that the country is increasingly seeing its development affected by climate change and now faces critical questions about how to respond.
Climate change costs up to 14.5% of GDP
With a coastline of 3,260 kilometres that includes major cities and production sites, Vietnam is among the world’s most vulnerable countries and is highly exposed to sea-level rise, extreme weather and temperature rise.
Initial studies show that the country lost about $10 billion in 2020, equivalent to 3.2% of GDP due to the impact of climate change.
Without appropriate mitigation and adaptation measures, it is estimated that the country will lose up to 15% of GDP per year by 2050, resulting in one million people falling into poverty again by 2030.
“The country’s rapid economic growth, urbanisation, and industrialisation have been powered by coal-dependent energy creating significant greenhouse gas (GHG) emissions,” Turk said.
Vietnam is not a major contributor of greenhouse gas globally, with 0.8% of the world’s emissions. But over the past two decades, it has emerged as one of the fastest-growing per capita GHG emitters in the world.
Moreover, Vietnam’s GHG emissions are also associated with the toxic air pollution that plagues many of its cities, especially Hanoi, with implications for human health and labour productivity.
She said there is a path for Vietnam to address the climate risks while sustaining robust economic growth - a combination of adapting to climate change by taking decisive measures to protect people, assets, and sectors, and mitigating climate change by steering the economy away from carbon-intensive energy.
If well designed, the country would expand its GDP per capita by more than 5% a year - the average rate needed to become high-income by 2045 while achieving its climate objectives.
According to the report, a series of urgent and impact interventions should be focused on, including a coordinated regional programme for the Mekong Delta, an integrated coastal resilience investment programme for urban centres and connecting infrastructure, a targeted air pollution reduction programme for Hanoi, accelerated clean energy transition, and a new social contract to protect vulnerable people.
In order to become a climate-resilient and net-zero-emissions economy, the country will need to allocate additional investments of about 6.8% of GDP annually, or $368 billion cumulatively by 2040.
It recommends the amount can be funded by both the public and private sectors and a combination of domestic and international financial sources.
Adaptation measures will entail significant investments to upgrade and retrofit public assets and infrastructure. Protective investments to manage rising sea levels will also require substantial financing.
To achieve net-zero, Vietnam will have to make substantial investments in its main emitting sectors, including energy, transport, agriculture, and industry. Dynamic strategies will be required to curb emissions, especially in the energy sector, where renewables should be promoted, the report noted.