A cement factory in northern Dien Bien Province. Cement, construction, electricity, garments and textiles and five other sectors are advised to apply green technologies to reduce carbon dioxide emissions and protect the environment. — VNA/VNS Photo Manh Thanh

HA NOI (Biz Hub)— Financial institutions, banks and financial firms have been urged to support the nation's green growth strategy by providing capital to green projects.

At a workshop yesterday, green finance and banking were asked to get a bigger role because of State budget's limited resources.

Director General of the State Bank of Viet Nam's Department of Organisation and Personnel Nguyen Kim Anh said for emerging countries like Viet Nam, this was actually important.

As defined by UN Economic and Social Commission for Asia and the Pacific (UNESCAP), green finance is the financing of technology, projects, industries or environment-friendly business.

Green banking is the operation of banks in a way which promotes environmental activities and lowers carbon emissions.

However, Deputy Head of the Ministry of Planning and Investment's Central Institute for Economic Management Vu Xuan Nguyet Hong said the two concepts were new to Viet Nam and would be unlikely to assist the implementation of the national strategy launched last year.

"Few solutions relating to green finance and banking are included in the strategy.

"Commercial banks are not ready to offer green finance products or services," she said, blaming the lack of public awareness as "investment for green growth is considered a price to be paid for the environment, not a business opportunity."

Moreover, green projects relating to energy saving and renewable energy usually required huge investment but posed high risk.

Hong said the Government should improve the field's legal framework while considering offering guarantees for green projects.

To ensure a yearly reduction of 85.12 million tonnes of carbon dioxide in nine selected industries - including construction, cement, garment and electricity - Viet Nam needed over US$30.7 billion, an official from the Ministry of Planning and Investment (MoPI) said.

Head of the MoPI's Department for Science, Education, Natural Resources and Environment Pham Hoang Mai said that more incentives were needed to attract financial resources from domestic and foreign investors.

The Government spends about $1 billion each year on climate change projects and programmes. In the last 20 years, it has received around $2 billion in official development assistance for climate change.

Roland Gross, head of the Sector Project on Financial Systems Development of Germany Agency for International Co-operation, said money was not enough to promote green growth and finance.

It was essential to develop capacities for policy makers, public and private banks and enterprises, he said, adding that the lack of consistency, coherence and effectiveness at policy making level could be major obstacles for green finance. — VNS