Can Vietnam have both double-digit growth and net zero: Swedish professor

At a research conference for students and young scientists organized by the University of Economics Ho Chi Minh City (UEH) on Friday, Professor Hans Lööf of Sweden’s KTH Royal Institute of Technology posed the question: “How can a country like Vietnam maintain double-digit economic growth while moving toward net zero?”

From this question, the Swedish professor analyzed the challenges Vietnam faces and proposed possible ways forward.

Vietnam faces an unprecedented challenge

To illustrate Vietnam’s growth ambitions, Professor Hans Lööf presented a scenario in which the economy grows by 10 percent annually for the first five years, followed by 7.5 percent for the next five years and 5 percent for the final five years. 

Based on cumulative growth, the economy could nearly triple in size over 15 years if it maintains this assumed trajectory.

However, he noted that sustaining 10 percent growth over a five-year period is rare globally. 

Citing data from 185 countries between 1960 and 2023, he said very few economies had achieved such growth over a five-year cycle.

The challenge lies not only in maintaining high growth but also in expanding the economy while sharply reducing carbon emissions in line with the government’s commitments.

Professor Hans Lööf cited Japan in the 1960s-1970s, South Korea in the 1970s-1980s and China from 2000 to 2015 as examples. 

During periods of rapid industrialization and growth, CO2 emissions in all three economies increased significantly.

“In China alone, over a 15-year period, the economy nearly doubled in size while CO2 emissions increased by 171 percent,” the Swedish professor said.

How can Vietnam grow fast without missing its net zero goals?

Despite the challenges, Professor Hans Lööf said Vietnam can still find a way to combine economic growth with emissions reductions through technological innovation, the energy transition and changes in its growth model.

To sustain its growth momentum, Lööf said Vietnam needs to move up the global supply chain, gradually shifting from processing and assembly to higher-value activities such as engineering, design and product development.

Alongside changes to its growth model, Vietnam needs to improve energy efficiency, accelerate clean technologies and expand renewable energy, particularly solar, wind and hydropower, while reducing its reliance on fossil fuels.

According to Professor Hans Lööf, Europe’s experience shows that economic tools can be used to encourage businesses to cut emissions.

For example, under an emissions trading system, companies are allowed to emit within a set limit. That limit is gradually lowered over time, forcing businesses to find ways to save energy, adopt new technologies and reduce emissions.

Access to capital is also a major challenge in the green transition. To attract green financing, businesses need to improve information transparency, which can help them access funding for technological innovation and emissions reductions.