Hanoi, 13 July 2026 – New research released today finds that a 10 per cent improvement in energy efficiency could increase Viet Nam’s GDP by around 1 per cent, reduce energy consumption and emissions, and raise disposable incomes across all household groups, demonstrating how well-designed energy-transition policies can deliver economic, environmental and social benefits simultaneously.

The findings are drawn from a range of policy scenarios tested using a new set of analytical tools unveiled today at a workshop in Ha Noi. Designed to support evidence-based policymaking, the tools enable Viet Nam's policymakers to assess how different energy-transition policies could affect economic growth, emissions and the incomes of different household groups, including the most vulnerable.

These tools are built around a new Energy-focused Social Accounting Matrix (ESAM), a comprehensive economic dataset that maps the links between production, energy use, household income and emissions within a single analytical framework. The ESAM was developed by the Institute for Policy and Strategy Studies (IPSS) in collaboration with the University of Copenhagen, the Viet Nam National Statistics Office and UNDP in Viet Nam. 

Linked to economic simulation models, the ESAM enables decision-makers to test policy options and estimate their economic, environmental and distributional effects. The tools can also assess the impacts of external energy-price shocks, helping policymakers better understand risks to energy security, economic resilience and household welfare. The research applies these tools to a range of policy scenarios, such as energy efficiency improvements,  carbon pricing, and electricity-price shocks. The analysis highlights both the opportunities and trade-offs associated with different policy choices, providing evidence to support more informed decision-making.

The modelling also examined the effects of higher electricity prices, which can quickly ripple through the economy given electricity's central role in production. A 10 per cent increase in electricity prices would have the greatest impact on manufacturing and processing industries, as well as other energy-intensive sectors, leading to higher production costs across supply chains. The findings also reveal significant differences in household impacts. Urban non-farm households are among the most affected, while rural farm households are the least affected, reflecting differences in consumption patterns and exposure to energy-intensive goods and services. These results highlight the importance of targeted measures to protect vulnerable groups while maintaining economic competitiveness during the energy transition.

The research also explored policy options that may involve more difficult economic and social trade-offs. The modelling suggests that a tax of USD 15 per tonne of carbon dioxide equivalent could reduce emissions by approximately 2.9 per cent by increasing the relative cost of carbon-intensive activities. However, GDP could decline by around 0.8 per cent and, in the absence of compensatory measures, household incomes could fall across income groups. These findings underscore the importance of carefully designing carbon-pricing policies to reduce emissions while safeguarding vulnerable households and supporting a just transition.

The results show that both the effectiveness and distributional impact of carbon pricing depend heavily on policy design. When revenues are redistributed through targeted social transfers, poor rural households could experience a net income gain, helping to ensure that the benefits of the transition are shared across income groups. The research suggests that a gradual introduction of carbon pricing combined with such targeted support measures, would help manage the transition costs.

Taken together, the simulations demonstrate how the ESAM and associated modelling tools can help decision-makers compare different transition pathways, understand their trade-offs and design policy packages that combine the strengths of each approach. By enabling policymakers to assess impacts across sectors, households and the broader economy, the tools provide a stronger evidence base for navigating Viet Nam’s energy transition. 

Speaking at the workshop, Mr Nguyen Duc Trung, Deputy Head of the Central Policy and Strategy Committee, highly appreciated the research findings, noting that the dataset and analytical tools will help improve the quality of research, forecasting, and policy advisory work.

“I highly appreciate the collaboration between the Institute for Policy and Strategy Studies, UNDP in Viet Nam, the National Statistics Office (Ministry of Finance), and the Development Economics Research Group of the University of Copenhagen in developing the dataset and policymaking analytical tools to serve policy planning," he highlighted. "I am confident that these research findings will be effectively utilized, contributing to enhancing the quality of research, forecasting, and policy advisory in the implementation of the Resolution of the 14th National Party Congress and Politburo Resolution No. 70-NQ/TW on ensuring national energy security.”

In her remarks at the workshop, UNDP Resident Representative Ramla Khalidi highlighted the ESAM as a valuable tool for helping policymakers assess the economic, social and distributional impacts of energy-transition policies.

“What this research allows us to do, drawing on Viet Nam's own data, is to see clearly who stands to gain and who stands to lose as the transition unfolds. The value of a tool like the ESAM lies in helping policymakers understand these trade-offs and design policies that advance energy security, environmental sustainability and, crucially, equity. Importantly, the ESAM can continue to be applied and updated by Vietnamese institutions as new policy questions arise,” she said. 

The ESAM dataset and modelling tools will be made publicly available on the websites of UNDP and the University of Copenhagen, with regular updates planned to ensure they remain relevant as Viet Nam's energy transition advances.

As Viet Nam accelerates its transition towards a low-carbon economy, robust evidence and forward-looking policy analysis will be critical to ensuring that growth, energy security, emissions reduction and social inclusion advance together.

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For more information, please contact:
Nguyen Viet Lan, UNDP Communications Lead, email: nguyen.viet.lan@undp.org, phone: 84-914436769