GREEN BUILDINGS IN VIETNAM – SOME SUGGESTIONS TO IMPROVE THE POLICY AND LEGAL FRAMEWORK
GREEN BUILDINGS IN VIETNAM – SOME SUGGESTIONS TO IMPROVE THE POLICY AND LEGAL FRAMEWORK
Nguyễn Lâm Trâm Anh
Master of Law, Faculty of Law, Saigon University
ABSTRACT
Like other countries in the world, Vietnam is facing global challenges from the adverse impacts of climate change, the depletion of natural resources, fossil energy, and environmental pollution issues. Accordingly, the development of energy-efficient, resource-saving, and green buildings has been and continues to be one of the top priorities for many countries worldwide, including Vietnam. This article clarifies the concept of green buildings, the current state of the law, and proposes solutions to improve the policy and legal framework on green buildings in Vietnam, effectively responding to climate change.
Keywords: green buildings, climate change, real estate business law.
I. INTRODUCTION
In recent decades, green buildings have become symbols of sustainable development, reflecting the responsibility to ensure long-term balance in economic, environmental, and social health (Hikmat H. Alia, Saba F. Al Nsairatb, 2008). The sustainability factor plays different roles in various types of real estate and has become an important criterion for decision-making processes for parties involved in purchasing, using real estate, or related services. For example, in the current hospitality industry, as tourists become more concerned and aware of the impact of tourism activities on the environment, there have been significant changes in the selection of more sustainable tourism products, reducing the environmental impact.
Especially for localities with tourism development strengths like Nha Trang, Đà Lạt, Đà Nẵng, the sustainability factor of tourism real estate is inseparable from the local sustainable development goals. Thus, the locality can both develop tourism activities and preserve community values while maintaining environmental and landscape quality (Electronic Newspaper of the Communist Party of Vietnam, 2024). For commercial real estate, more and more tenants, especially foreign enterprises, require buildings to meet the criteria of green and sustainable buildings.
Construction projects are considered core components of national infrastructure. If developed in a “green” direction, these projects will prioritize the efficient use of environmentally friendly materials, recycled materials, the efficient use of renewable energy sources in the operation process, creating green spaces, saving water resources, and addressing urban flooding, as well as preventing groundwater pollution through the recycling and reuse of rainwater (Trần Linh Huân, Hà Gia Linh, 2024), effectively helping to reduce negative environmental impacts, solve energy crises, and provide health benefits to the community directly using or being impacted within the project’s radius.
Green buildings are also considered one of the effective solutions for transition, meeting the development requirements, minimizing the most negative impacts on the environment, and reducing greenhouse gas emissions (SGGP Newspaper, 2024) when the construction, operation, and dismantling processes of buildings are major sources of negative environmental impact.
For investors, green buildings help real estate products achieve better selling prices and optimize operational costs compared to traditional products, providing long-term economic benefits. Therefore, the trend of developing green buildings and using energy efficiently in the coming time in Vietnam, in general, and in Hồ Chí Minh City, in particular, is expected to increase significantly as this is seen as one of the important solutions to cope with climate change during urbanization, increasing energy demands, and the strong development of science and technology.
II. POLICY AND LEGAL FRAMEWORK FOR GREEN BUILDINGS IN VIETNAM
According to Clause 10, Article 3 of the 2014 Law on Construction (amended in 2020), construction works are defined as “products constructed according to design, created by human labor, construction materials, and equipment installed in the work, connected and located with the land, which may include the underground part, the ground part, the underwater part, and the above-water part.”
Point b, Clause 1, Article 107 of the 2015 Civil Code of Vietnam also lists “houses, construction works attached to the land” in the provisions on real estate. Thus, the provisions of the law on construction works in general and green buildings, in particular, cannot be separated from the provisions of the law on land, real estate business law, housing law, and construction law.
Regarding the concept of green buildings, the World Green Building Council (WGBC) defines green buildings as structures designed, constructed, or operated to minimize negative impacts and can create positive impacts on our climate and environment. Green buildings conserve valuable natural resources and enhance quality of life.
Accordingly, there are established standards for evaluation such as: LEED (Leadership in Energy & Environmental Design), the green building standard of the United States, issued by the USGBC – US Green Building Council. This is considered the most popular standard in the world today; the first green building assessment standard in the world, issued by BRE (Building Research Establishment) of the United Kingdom; Green Star, the green building assessment standard in Australia, issued by GBCA – Green Building Council of Australia; Green Mark, issued by the BCA – Building and Construction Authority of Singapore (Vietnam Green Building Council Portal, 2024).
The criteria for evaluating green buildings are often integrated from multiple factors such as: planned construction location, energy use and encouragement of renewable energy use, water saving, material saving or using sustainable materials to replace energy, minimizing emissions and pollution to the environment, ensuring user health, with a comprehensive approach and focus on ensuring the environmental footprint of a structure throughout its life cycle, from design, initial construction to operation during the use period and the results from the final dismantling of the building (Congressional Research Service, 2021).
In Vietnam, this concept is mentioned in Clause 3, Article 6 of Decree 15/2021/NĐ-CP detailing several contents on investment project management (referred to as the Decree); according to that, a green building is a construction designed, built, and operated to meet criteria and standards for efficient energy use, resource saving, ensuring comfort, quality of living environment inside the building, and protecting the external environment.
This definition is also recognized by the Vietnam Green Building Council (Vietnam Green Building Council Portal, 2024). In addition to acknowledging the concept of green buildings, the Decree also introduces the concepts of Energy Efficiency Buildings and Resource Efficiency Buildings. Thus, it can be understood that a green building is an overarching concept, ensuring both energy efficiency and resource efficiency.
For large urban areas like Hồ Chí Minh City, green buildings are mainly mentioned in the context of residential housing, commercial real estate (including green offices, industrial parks, green warehouses, etc.); additionally, in the context of climate change, the development of green buildings can also be considered a criterion of climate-adaptive urban areas, contributing to the goal of reducing greenhouse gas emissions.
Currently, to evaluate a building that meets green standards, Vietnam has the following tools: the Green Building tool compiled by the Vietnam Association of Building Environment; EDGE – a system for evaluating resource-efficient buildings developed by the International Finance Corporation, a member of the World Bank Group;
LOTUS – a green building evaluation system developed by the Vietnam Green Building Council, a non-governmental organization and member of the World Green Building Council; LEED – a green building evaluation system developed by the US Green Building Council and applied to both buildings within and outside the United States; Green Mark – a green building evaluation system developed by the Singapore Green Building Council, under the Ministry of Construction of Singapore (Vietnam Ministry of Construction Portal, 2015).
Due to the integration of many factors that need to be ensured throughout the lifecycle of the building, the legal regulations governing this issue are mentioned in multiple documents. All these documents have created the necessary legal framework to support the development of green buildings in Vietnam over the past period, specifically:
– The National Strategy on Green Growth for the 2011 – 2020 period and vision to 2050, issued with Decision No. 1393/QĐ-TTg dated September 25th 2012 of the Prime Minister, outlined goals and solutions for the efficient and economical use of energy in construction, the development of green buildings, including green real estate on the basis of strengthening investment in the conservation, development, and efficient use of natural capital, reducing greenhouse gas emissions, mitigating the impacts of climate change, improving environmental quality, thereby stimulating economic growth.
– The National Program on Economical and Efficient Use of Energy for the 2019 – 2030 period, issued according to Decision No. 280/QĐ-TTg dated March 13th 2019 of the Prime Minister, includes content related to green buildings such as the goal of ensuring compliance and implementation of the requirements of the National Technical Regulation on energy-efficient buildings for construction works within the scope of the Regulation; 80 buildings achieving green building certification, using energy economically and efficiently.
– Resolution No. 55-NQ/TW of the Politburo on “Strategic Orientation for Vietnam’s National Energy Development to 2030, vision to 2045,” the Government’s Resolution issuing the Action Program for implementing Resolution No. 55 with specific goals related to the efficient and economical use of energy in the construction industry.
– Resolution No. 140/NQ-CP dated October 2nd 2020 of the Government issuing the Government’s Action Program for implementing Resolution No. 55-NQ/TW dated February 11th 2020 of the Politburo on the strategic orientation for Vietnam’s national energy development to 2030, vision to 2045.
Other legal documents such as the 2020 Law on Environmental Protection, the 2014 Law on Construction (amended and supplemented in 2020), the 2020 Law on Investment, the 2010 Law on Economical and Efficient Use of Energy, and Decree No. 15/2021/NĐ-CP dated March 3rd 2021 of the Government detailing several contents on the management of construction investment projects also contain provisions related to green buildings.
III. CURRENT STATUS AND RECOMMENDATIONS FOR IMPROVING POLICY AND LEGAL FRAMEWORK FOR GREEN BUILDINGS IN VIETNAM
After nearly 20 years (since 2005) of the first appearance of green buildings, Vietnam now has about 300 green buildings. In Hồ Chí Minh City, with the green transformation of the construction industry initiated in 2012, the city currently ranks among the top localities nationwide for the number of green buildings with 67 buildings and ranks second in floor area certified as green buildings with a total certified floor area of 1.264 million square meters (VnEconomy Online Magazine, 2023).
Buildings in the city that have achieved the LOTUS certification of the Vietnam Green Building Council include The Sentry Z (Bến Nghé Ward, District 1), NRG Office of Artelia Company (Đa Kao Ward, District 1), Nữ House personal residence (Bình Thạnh District), Gamuda – Elysian high-rise apartment complex (District 9).
Thus, despite certain achievements, and the issuance of a system of legal documents related to green buildings over the past time, it is easy to see Vietnam’s certain interest in developing green buildings. However, there are still many limitations and inadequacies that need to be addressed, specifically as follows:
Firstly, although there is a concept of green buildings, this concept is only stipulated in a sub-law document, which is a Decree. The 2023 Law on Real Estate Business (amended in 2024) does not provide a concept of green real estate; thus, the State’s policy on investment in green real estate business has not been mentioned.
From reviewing the overall regulations on green buildings in current legal documents, it can be seen that the State does not mandate the investment, construction of projects that meet green building criteria, green real estate; the investment and development of green buildings are carried out voluntarily, depending on the investor’s choice.
At the same time, considering the concept of green buildings in an inseparable relationship with green real estate (currently there is no official concept, leading to limitations in understanding and approach), it is necessary to have a separate legal document regulating all issues related to green buildings to create legal binding for the investment and construction activities of green buildings; create the most favorable conditions for subjects participating in the investment, access, and use of green buildings in Vietnam; in which, there must be specific and appropriate regulations in the context of responding to climate change, aiming for the goal of net-zero emissions by 2025 as committed by Vietnam.
Secondly, the evaluation standards for green buildings currently applied in Vietnam include both domestic and international standards. Tools such as LOTUS and green buildings have many criteria associated with Vietnamese standards and regulations because they are developed by organizations in Vietnam. However, most foreign investors and even some Vietnamese investors still tend to prioritize choosing international tools like LEED and Green Mark due to their higher promotional value.
However, LEED is a system designed for the United States, which has a completely different climate and investment conditions compared to Vietnam, and more importantly, it aims to enhance branding while ensuring reduced operational costs of buildings. Some studies on climate calculations with buildings show that without a suitable set of tools for Vietnam, there may be wasteful investments in components that play a secondary role in energy savings for buildings.
Additionally, since 2014, EDGE – known as the evaluation system for resource-efficient buildings developed by the International Finance Corporation, a member of the World Bank Group, has been applied to assess green buildings in Hồ Chí Minh City and Hà Nội. This has shown certain suitability and effectiveness by evaluating buildings through three aspects to improve resource efficiency, including energy, water, and materials; suitable for non-premium buildings to become more sustainable and developing the online software EDGE, allowing building investors to self-assess with EDGE and immediately know the savings when applying green solutions to their buildings (Vietnam Ministry of Construction Portal, 2015).
Thus, the appearance of various tools to evaluate green buildings in Vietnam creates a diverse choice for investors, builders, and operators of green buildings in a manner suitable for scale, purpose, and maximum cost efficiency, but it also poses certain difficulties in systematically considering and evaluating green buildings in Vietnam.
The application of foreign standards in some cases is not suitable for the specific conditions of Vietnam, such as the requirements for reducing greenhouse gas emissions, effectively utilizing preferential policies for efficient and economical energy use, investment incentives, renewable energy development policies, etc., leading to the construction, operation, and development of green buildings in Vietnam not effectively contributing to achieving the goals of developing a green economy, circular economy, and responding to climate change. The diverse system of tools also poses difficulties for investors in choosing the appropriate tool for evaluation in the context of legal regulations scattered across various documents and the limited expertise and awareness of individuals in this field.
Thirdly, the regulations on incentives and support for green buildings are still difficult to access, even though our State has issued many policies and laws such as Directive No. 03/CT-NHNN dated March 24th 2015 on promoting green credit growth and managing environmental and social risks in credit activities; Decision No. 986/QĐ-NHNN dated August 8th 2018 of the Prime Minister on approving the Development Strategy of the Vietnamese Banking Sector to 2025, with an orientation to 2030, which includes green banking credit, integrating contents on sustainable development, climate change, and green growth in loan programs and projects of credit institutions;
Decision No. 1552/QĐ-NHNN dated August 6th 2015 issuing the Action Plan of the Banking Sector to implement the National Green Growth Strategy to 2020; the 2010 Law on Economical and Efficient Use of Energy and Decree No. 21/2011/NĐ-CP detailing and implementing measures for this Law, which stipulate mechanisms and policies on tax incentives, capital sources, and low-interest rates for energy-saving solutions in energy-efficient construction projects.
The difficulty in accessing these incentives stems from the fact that the law currently only stipulates tax incentives, credit, and land incentives for organizations and individuals investing in and producing energy-saving products. In investment activities as green building projects, considered as projects that design, construct, and operate at higher costs for investors compared to regular projects because to meet green standards,
investors must use environmentally friendly materials, reduce exploitation areas, and incur costs for installing and using high renewable energy systems; only interest rate support is being considered, without clear tax and land incentives (Green Building Solutions, 2023), while these are important factors to encourage the participation of many investors, contributing to shaping large-scale urban areas with an increasing density of green buildings.
Therefore, to attract community interest in green buildings and create a market for investors, the State needs to: (i) Firstly, supplement legal regulations in a more detailed and specific manner on mechanisms, policies, streamlined registration procedures, review, and receipt of tax, credit, and land incentives for investors choosing the green building and green real estate investment segment. (ii) Secondly, acknowledge additional incentives, financial support, rights, and legal interests for homebuyers in green real estate projects.
(iii) Thirdly, for buildings that have been constructed and are being operated but do not meet green standards, there should be legal regulations and incentives for investors during the transition process, in line with the requirements of Decree No. 06/2022/NĐ-CP dated January 7th 2022 on reducing greenhouse gas emissions and protecting the ozone layer; accordingly, commercial buildings must closely monitor their greenhouse gas emissions.
Fourthly, particularly for major urban areas like Hà Nội and Hồ Chí Minh City, to effectively implement legal regulations related to green buildings and green real estate, the city government needs to effectively delegate and decentralize to the People’s Council and the People’s Committee to enhance autonomy and responsibility in state management in several areas, specifically in construction. The development of green buildings and green real estate should be seen as an integral part of green growth, sustainable development, and the process of urban planning and construction to adapt to climate change.
IV. CONCLUSION
With significant advantages such as efficient resource use, reduced operating costs, minimized environmental impact while ensuring user comfort, green buildings have become an inevitable development trend worldwide.
Although the legal regulations related to the development of green buildings are increasingly being improved, to meet the requirements of the new situation, in the context of responding to climate change and the changes and additions to legal regulations in related laws such as the Land Law, the Law on Real Estate Business, the Housing Law, and several inadequacies in current legal regulations on green buildings and green real estate, it is necessary to supplement and amend to perfect the legal framework for green buildings, aiming to create an effective, unified mechanism, overcoming the inadequacies, and contributing to achieving the goals set by Vietnam.
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