Vietnam's rising coal use clouds energy transition plan

04:17 PM @ Tuesday - 06 June, 2023

Coal use in Vietnam is expected to rise for the foreseeable future, increasing the country's electric power capacity but clouding its long-term energy transition plans.

By 2050, Vietnam hopes to ditch coal and hit net-zero emissions, but its energy plan also raises coal-based electricity capacity to 30,000 megawatts by 2030. This would decrease coal's ratio in the power mix but still result in an increase in absolute capacity from 2020, when coal-fired output was closer to 20,000 MW, according to the U.S. International Trade Administration.

A recent ESG (environment, social and governance) forum in Ho Chi Minh City highlighted the country's slow transition to cleaner energy.

"The problem with Vietnam is [some] coal plants are very young in our country, less than 10 years old," said Tung Ho, country head of energy advisory Allotrope, at the forum on May 31. "And for banks, a coal plant should operate for 35 years before it's considered outdated." The forum was hosted by consultancy Raise Partners and online publication Vietcetera.

Power outages are hindering one of the world's fastest-growing economies, but the country lacks the capital and capacity to add solar and wind power.
Vietnam is one of the target countries of the Just Energy Transition Partnership led by the European Union, U.K., Japan and other developed economies. The partnership funds efforts by emerging countries to shift to a greener economy.

But the $15.5 billion earmarked for Vietnam over five years is "not enough," said Hang Dao, co-head of the World Resources Institute's Vietnam Clean Energy Investment Accelerator, at the forum. Vietnam's power plan requires $13.5 billion a year.

Though Vietnam has the most solar capacity in Southeast Asia, investment has stalled since 2020 after the government stopped subsidizing solar energy producers. Some companies complain their wind power and solar power is curtailed when the legacy grid is overloaded, while others say the government is not helping cover outlays. But one source in the renewables sector said the companies missed delivery targets, pandemic delays notwithstanding, and that users should not have to foot the bill in the form of higher electricity prices as a result of the discontinued subsidies.

Another roadblock to investment is that Hanoi has yet to pass laws letting companies buy renewable energy directly from private producers.

Adovocates say Vietnam needs climate activists to monitor progress, such as on the country's 2050 net-zero pledge and how it spends the JETP cash.

"You cannot support a clean energy transition without civil society, nor when the locals are being arrested precisely for leading anti-coal movements," read a May petition to free an environmental activist arrested in the country. More than 160 people are in prison for peaceful activism, including environmentalists, Human Rights Watch said in January.

In reply to Nikkei Asia's question about the detentions and contributions of campaigners, the foreign ministry said Vietnam "extensively consults" with environmental groups and "acknowledges" their contributions as long as they follow the law.    – Nikkei –