In this study, BAU (a scenario based on current trends) and ALT (a greener alternative with more renewables, higher energy efficiency) are developed. The external costs of CO 2 , NOx, SO 2 and PM 10 in the Vietnamese power sector are estimated at 20, 1328, 2047 and 1460 US$/ton, respectively. The authors find that the electricity price and the domestic trade balance in ALT are less sensitive to fluctuations in the international price of coal than in BAU. The total costs accumulated between period 2010-2040 would be lower in ALT: 632 billion US$ compared with 974 billion US$. This difference arises from several factors: lower investment in new capacity (226 vs 306 billion US$); lower local pollution costs (73 vs 137 billion US$); and lower expenditures on imported fuels (57 vs 115 billion US$). The outcomes of ALT are in accord with the targets in the most recent Green Growth Strategy of Vietnam.