Seizing the opportunity laid out by its clean energy resources and phasing out coal could be key for Vietnam's green growth path.
Vietnam's Prime Minister Pham Minh Chinh has set a deadline for sectors to build plans for their sustainable development within the first quarter (Q1) of this year as part of efforts to materialize the country's sustainable development.
|Vietnam's Prime Minister Pham Minh Chinh speaks at COP26 in Glasgow, the UK in November 2021. Photo: VNA|
The PM demanded in Q2 a comprehensive program to implement Vietnam's net-zero target that he pledged at the 2021 United Nations Climate Change Conference in Glasgow (COP26) in November 2021.
Accordingly, authorized agencies are tasked with eight issues, namely energy transition, reducing greenhouse gas emissions; lowering methane emissions; developing electric cars; planting forests to absorb carbon dioxide; building construction materials and urban development suitable for green and sustainable development; attracting the participation of people and businesses; and accelerating digital transformation.
In addition, the National Power Development Plan VIII (PDP8) must be in line with climate change response, energy transition, and sustainable development goals (SDGs), he required.
From the perspective of scientists, Vietnam's 2050 net-zero goal is considered an ambitious target, and the way it makes the goal possible matters.
|Chris Wright, Managing Director at Climate Tracker.|
"Vietnam's 2050 net-zero goal is a powerful symbol that it is taking the challenge of climate change seriously, but it needs to be backed up with detailed plans on what net zero means in Vietnam, and a clear roadmap on how it is going to meet its energy needs going forward," according to Chris Wright, Managing Director at Climate Tracker, an international non-profit organization aiming to support, train and incentivize better climate journalism globally.
"The country has some of the fastest growth in renewable energy in the region, but also one of the biggest coal pipelines and LNG consumption in the region. While it is a powerful commitment, the key that I will be looking for, is just how it plans to meet that commitment," the expert said.
Jacqueline Tao, Asia Expert at TransitionZero, said Vietnam surprised observers with an ambitious goal to achieve net-zero by 2050, alongside an equally unexpected commitment to phase out coal by 2040. However, it does not have a clear roadmap for the transformational shift required to put itself on a path towards net zero.
"Compared to other Southeast Asian countries with similar net-zero goals, Vietnam's target is bold, often coming with fewer caveats than its similarly coal-reliant neighbors," Jacqueline Tao said, noting that "With energy sector emissions accounting for the bulk of the country's emissions (~70%), Vietnam's ability to meet its net-zero target will depend heavily on its power sector decarbonization."
Meanwhile, Durand D'souza, a data scientist at Carbon Tracker in the Power & Utilities Team, applaud Vietnam's ambitious pledge to cut emissions to net-zero by 2050, saying "This commitment tells the world that Vietnam is serious about doing its part to reduce emissions in line with the Paris agreement."
"In addition, it is also sending a signal that it is serious about reducing the financial risks associated with coal power and a disorderly transition away from fossil fuels," said the expert at an independent financial think tank that carries out in-depth analysis on the impact of the energy transition on capital markets, mapping risk, opportunity and the route to a low carbon future.
|Jacqueline Tao, Asia Expert at TransitionZero.|
The experts believe that long-term vision and concrete energy plan would be significant for the way forward.
Jacqueline Tao said Vietnam's net-zero ambition can only be achieved if it succeeds in its commitment to phasing out coal. As a signatory to the Global Coal to Clean Power Transition pact, Vietnam has committed to stop building new coal plants.
Sharing the same idea, Durand D'souza said Vietnam should aim to shut down all coal power plants gradually before 2040 with a phaseout date for each power plant. It should also cancel all coal projects under construction or in development. He explained that a continued build-out of the coal fleet will result in high stranded asset risk as new coal plants will be unable to recoup their initial capital costs before they are retired.
In this regard, failure to abandon new coal projects will saddle Vietnam with unnecessary debt and higher electricity prices, making net-zero a harder challenge, and leaving its industry less competitive globally, he warned.
On the other hand, Vietnam has abundant natural resources, including strong potential for utility- and rooftop-scale solar PV, a long, windy coastline for significant offshore wind development, and demonstrable onshore wind potential too, Durand D'souza said.
He emphasized that the country should seize the opportunity laid out by its clean energy resources and avoid the "gas bridge" mistake that has plagued Europe over the past year, where volatile coal, gas, and LNG prices have resulted in sky-high electricity prices and lost industrial activity. "By doing so, Vietnam can position itself as a global leader in the race to net-zero."
|Durand D'souzadata, scientist at Carbon Tracker.|
Durand D'souza believed that getting to net-zero by 2050 is perfectly feasible for Vietnam if efforts are refocused on expanding renewables, in particular, offshore wind, solar and onshore wind, and on accelerating upgrades to the electricity grid to enable further variable renewable electricity without curtailment.
"New onshore wind and new solar PV are already cheaper than new coal power in Vietnam, and, we estimate that new onshore wind and new utility-scale solar PV will be cheaper than existing coal by 2022 and 2024, respectively, due to rising operating costs of coal and falling costs of wind and solar", he stressed.
To make the roadmap possible, the expert said Vietnam should embrace the benefits of lower-cost renewables, including offshore wind, and plan for a grid dominated by clean energy; Plan for an orderly transition away from coal and gas power, to retire half of existing coal capacity before 2030 and to phase out all coal power before 2040, to avoid the financial risks of stranded assets; Avoid the "gas-bridge" mistake that European countries have made; Phase-out and replace coal power with domestic renewable sources, rather than imported LNG gas, to avoid high electricity costs and volatile commodity markets.
Regarding the role of renewable energy, Jacqueline Tao said renewables present a viable alternative to fossil fuels for Vietnam. Vietnam is well-endowed with renewable energy resources. Official estimates place resource potential at 217 GW, 160 GW, and 434GW for onshore wind, offshore wind, and solar, respectively. This is more than sufficient to meet its growing power demand. In addition, based on TransitionZero analysis, the cost profile of coal electricity in Vietnam has deteriorated to the extent that it is cheaper to build new renewable energy capacity (solar) than continue to operate coal plants in Vietnam.
Thus, an accelerated shift to renewables will be the most direct way for Vietnam to realize its net-zero ambitions. A significant overhaul of the existing PDP8 to reflect the increased climate ambition as early as possible is also needed. This will help to guide investments towards low carbon power sector development, reduce investor uncertainty, particularly surrounding large-scale wind developments in the pipeline, and support a growing industrial value chain around renewables (which has a knock-on impact on economic growth).
Word has it that new iterations of the PDP8 will see renewable energy make up 70% of the power mix in 2045.
"If this market chatter is true, then Vietnam may be on its way to delivering on its climate promise," Jacqueline Tao emphasized.
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