For smarter cities

As the world gradually moves toward net-zero emission targets in the 21st century, the construction and urban development industry in Vietnam faces both challenges and opportunities. This necessitates that investors and managers proactively adjust their strategies and adapt to the trends of the green and smart economy. At the “Applying Carbon Governance for Green, Smart Cities and Green Buildings” workshop, held on April 23 in Hanoi by the Vietnam Society of Civil Engineers (VSCE), experts discussed international experience in integrating carbon governance into urban planning and shared solutions for reducing emissions from transportation, using energy efficiently, and developing green infrastructure toward sustainable development.

International experience

As many countries and cities have entered the phase of implementing specific emission reduction targets, international experience shows that carbon governance is no longer just a guideline but has been deeply integrated into urban planning, infrastructure, and operations. 

Associate Professor Nguyen Dinh Tho, Deputy Director General of the Institute of Strategy and Policy on Agriculture and Environment (ISPAE) at the Ministry of Agriculture and Environment, told Vietnam Economic Times / VnEconomy that countries such as the US, China, and South Korea are exemplary models in urban governance and emission reductions that Vietnam could learn from. 

In particular, he pointed out that South Korea has made significant progress in smart governance, especially in the application of digital twin technology in urban development. Practical experience shows that smart city models in South Korea can be studied and applied in Vietnam. For example, an automated license plate recognition system that detects vehicles entering low-emission zones can send alerts to drivers within ten seconds and issue fines within just ten minutes. “This is valuable experience for Hanoi, given its planned implementation of low-emission zones starting July 1,” he added. 

Mr. Douglas Snyder, Executive Director of the Vietnam Green Building Council (VGBC), said the scope of a city’s responsibility may vary depending on how emissions are calculated, but in general the transition to electric transportation is essential. He added that another less-noticed factor is the water distribution system. Pumping water to different areas requires high-capacity pumps, and this can be one of the biggest energy consumers in urban areas. Therefore, the more efficient water use is, the more it helps reduce carbon emissions. Policies encouraging the use of water-saving equipment can therefore contribute significantly to reducing the city’s carbon footprint. 

He also believes that “cool” urban design is crucial. Increasing green spaces, creating shade, and limiting direct sunlight exposure on road surfaces will reduce the need for cooling in buildings, in turn reducing energy consumption. Therefore, solutions such as cooler cities, efficient water use, and green transportation can all contribute positively. 

Composting organic waste is also an important solution. If not properly treated, organic waste decomposes into methane - a greenhouse gas with a much stronger impact than CO2. This is also one of the methods many cities around the world are adopting to reduce carbon emissions. 

Many international experts at the workshop are supporting Hanoi in building a centralized energy management system, allowing for monitoring and control of energy consumption in public buildings. Learning from and applying smart technology solutions from international sources is expected to bring practical benefits to urban management and promote sustainable development in Vietnam. 

Opportunities for Vietnam

Vietnam has many opportunities to develop green, smart cities and green buildings. According to information from ISPAE, the country’s commitment to green growth enhances its international standing, attracting investment and foreign partnerships. It aimed to attract $38.42 billion in registered FDI by 2025, with a rapidly-increasing proportion of renewable energy, high technology, and eco-industrial parks (eco-IPs). 

Between 2017 and 2021, approximately $9 billion in FDI was mobilized into green sectors in Vietnam, focusing on renewable energy and the production of equipment and machinery for green growth projects. The proportion of FDI in the renewable energy sector is projected to increase from approximately 6.5 per cent in 2020 to 9-9.5 per cent in the 2024-2025 period. 

In the opening quarter of 2026, total FDI stood at over $15.2 billion, a 42.9 per cent increase year-on-year. Manufacturing remains the main focus, with a strong trend toward green technologies and high-value projects. Key investments include a $1 billion textile recycling project and a $500 million green hydrogen project. Furthermore, significant investment is flowing into key green sectors, including liquefied natural gas (LNG) power generation, green hydrogen, renewable energy, and eco-IPs.

The country’s green economy generates 2-4 per cent of GDP, with steady growth of 12-15 per cent a year. Of this, 41 per cent comes from the energy sector, 28 per cent from agriculture and forestry, 14 per cent from industry, and 17 per cent from transportation, communications, waste management, and construction. 

Vietnam also boasts enormous future potential, as its GDP and construction growth have been very high and are projected to remain strong for the next decade, according to the VGBC. “If Vietnam can integrate sustainability into this growth trajectory, its potential is immense,” said Mr. Snyder. “In fact, to achieve net-zero emissions by 2050, the construction industry must shift toward green and sustainable practices. This is not only an opportunity but also a necessity.” 

Regarding human resources, there is still much room for training and development. Currently, the VGBC has approximately 300 LOTUS-certified experts who can advise on projects nationwide, but this number will need to increase to thousands in the future. The VGBC is also launching a new certification - LOTUS Practitioner - not only for architects and engineers but also for real estate brokers, banks, and other stakeholders in the green building market, to prepare resources for sustainable construction projects. 

The financial sector is also expected to play a significant role in accelerating this process, according to Mr. Snyder. The State Bank of Vietnam (SBV) is developing a mechanism to allow banks to access preferential loans from the State budget for green projects. Once this mechanism is implemented, expected in early 2026, the flow of capital into green projects will accelerate significantly, providing a crucial boost to the market. 

For businesses, in the context of Vietnam’s goal of achieving net-zero emissions by 2050, carbon governance has become a critical issue for many construction companies. Businesses are facing increasing pressure to comply with stringent legal regulations from the government. 

Under Decision No. 13/2024, Decree No. 119/2025, and Decision No. 699/2026, greenhouse gas inventories, internal MRV (Monitoring, Reporting, and Verification) systems, and emission quota management are now mandatory requirements to avoid financial penalties. However, experts agree that challenges are always accompanied by great opportunities. By conducting lifecycle assessments and achieving green standards (LEED, EDGE, and LOTUS), businesses can not only more easily access preferential credit but also commercialize carbon credits on domestic exchanges, under Decree No. 29/2026), or export internationally, creating a significant competitive advantage.