Vietnam Energy Sector
Vietnam is experiencing significant economic growth and is rising as one of Asia’s fastest-growing energy markets. The Government of Vietnam expects power consumption to grow from 10% to 12% annually until 2030. Currently, Vietnam still relies dominantly on coal-fired power, accounting for 34% of power production, and hydropower at 30%, though the country is pursuing a more diversified energy mix to meet growing demand and promote a greener, more stable power system. For energy development in Vietnam to take place, it requires an overall regulatory environment and specific mechanisms which help these projects to grow. The following information gives insight into the regulatory framework in Vietnam.
Resolution No.55 endorsed by the Politburo Bureau of the Central Committee of Vietnam in February 2020 on the National Energy Development Strategy through 2030 vision to 2045, provides for the prioritization of fast and sustainable energy development while aiming to foster favorable conditions for all economic sectors, particularly the private sector, to participate in energy development. It relates to formulating policies on promoting and developing renewable energy which replaces as much fossil fuel as possible, diversifying energy sources to fully utilize sources of renewable and clean energy. In addition, roadmaps for coal-fired power reduction should be charted out while simultaneously encouraging entrepreneurs to develop energy projects. Furthermore, Resolution No.55, states that Vietnam Electricity (EVN) is committed to buying all power generated from renewable energy plants within 20 years. There are also incentives for investment, export tax, corporate income tax, land rentals, and fees for land usage.
The impacts of climate change and pollution in Vietnam, have encouraged the country’s government to adopt reforms in the power sector to establish an effective transition to a renewable energy system. Such a shift would help mitigate this issue, ensure energy security, and meet the growing demand for electricity for business activities and economic and industrial development. It is forecasted that energy demand will increase by 10% per annum during the period from 2021-2030.
For countries to meet the 26th United Nations Climate Change Conference of the Parties (COP26) goals of securing global net-zero by 2050 and keeping a 1.5ºC temperature increase within reach, they will need to accelerate coal replacement plans, curtail deforestation, switch to electric vehicles, and promote investment in renewables; (ii) adapt to protect communities and natural habitats; (iii) mobilize finance: developed countries must realize their promise to mobilize a minimum of USD 100 billion in climate finance per year from 2021 to 2025; (iv) work together to finalize the Paris rule-book and accelerate action to solve the climate crisis through cooperation between governments, businesses and civil society.
Vietnam is among the countries most vulnerable to the impacts of climate change in the world. In recent years, extreme weather events have had tremendous economic and social consequences in Vietnam. If left unchecked, climate change is likely to cause even more severe and unpredictable weather events. With the goal of containing temperature increases, Vietnam has issued policies and legislation to reduce greenhouse gas (GHG) emissions such as:
- Resolution No. 55-NQ/TW in 2020 on strategic orientations for Vietnam’s national energy development to 2030, vision to 2045
- Resolution 24-NQ/TW in 2013 on the active response to climate change and improvement of natural resource management and environmental protection.
- Ratification of the Paris Agreement on climate change 2015 at the COP21.
- Conclusion 56-KL/TW in 2019 on continuing to implement Resolution 7, term XI on proactively responding to climate change, strengthening natural resource management, and environmental protection.
- Decision No. 1055/QD-TTg in 2020 on National Plan on climate change adaptation 2021-2030, Vision 2050.
Vietnam is committed to reducing GHG emissions by 9% and 27% with domestic capacities and international support respectively. GHG reduction rates in the updated version of nationally determined contribution (NDC) are higher than the original contribution. Concerning the energy sector, it will significantly reduce coal-fired power. Meanwhile, renewable energy will be increased to 20% of the total primary supply by 2030 and 30% by 2045.
For more information please contact:
Ms. Janice Tran, Commercial Specialist at Bich.Tran@trade.gov
Mr. Nam Tran, Commercial Specialist at Nam.Tran@trade.gov