It is expected that the Vietnamese government will soon adopt Vietnam’s National Climate Change Strategy (NCCS) to 2050, in which the latest draft outlines total national greenhouse gas (GHG) emissions to fall by 43.1 per cent by the end of this decade, compared to the business-as-usual scenario.

In the new strategy, Vietnam will continue to develop small hydropower plants that meet environmental protection standards and expand the number of medium and large hydropower plants. “It will also increase the capacity of concentrated solar power plants, rooftop solar power, onshore and offshore wind power, biomass power, and developing technologies for hydrogen, ammonia, tidal, and wave energy,” said Pham Van Tan, vice director of the Ministry of Natural Resources and Environment’s Department of Climate Change directly drafting the strategy.

Vietnam will also gradually shift from coal power to cleaner energy, while reducing the proportion of fossil fuels, not developing new coal-fired thermal power projects after 2030, and gradually reducing the scale of coal power after 2035, Tan added. “Moreover, Vietnam will also consider developing nuclear power plants after 2035 when conditions on advanced technology and safety are met.”

A series of opportunities will be offered to investors in developing energy storage technologies such as lithium batteries, pumped hydropower, heat storage, and smart grids that aim to ensure a high level of stability and integration of renewable energy in the power system.

Expected capacities

Over the next few years, Vietnam will develop anti-heat buildings and houses using green, nature-based cooling solutions to reduce urban heat island effects, thanks to low-emission building materials and recycled materials. To this end, the government will apply energy efficiency standards and regulations to buildings.

“The government will restructure the transport market, including the transition from road transport to inland and coastal waterways; and shifting from road to railway transport, increasing freight transportation by rail,” said the draft NCCS. “It will also increase efficiency through construction and expansion of the road network and the North-South high-speed railway, while transitioning from private to public transport through the expansion of bus and BRT systems and metro systems in big cities.”

The new NCCS would mean that Vietnam will have to gradually revise its strategies for developing coal-fired power plants, projects for manufacturing steel and cement, and many other ventures that feature major amounts of fossil fuels.

Total electricity capacity by 2030 is expected to be 146,000MW, down by 35,000MW as compared to the draft version proposed in March – meaning a reduction of investment by nearly VND2 quadrillion ($87 billion). The latest national draft Power Development Plan also advances a roadmap for reducing coal power in order to create opportunities for developing clean energy sources, especially wind and gas-fired power.

It is targeted that by 2040, coal power will account for only 9.6 per cent of total electricity output, while the rate for wind power and solar power will be 50.7 per cent.

If this draft plan is approved, it would guarantee that Vietnam will become more reliant on renewable energy to power its fast-growing economy at a time when financiers and insurers are refusing to support new projects because of fuel’s large climate change impact.

Currently, 50 per cent of Vietnam’s electricity comes from coal, making the need to develop a greener, lower-carbon economy - including necessary financing - crucial for the country to meet its reduced carbon emission commitments.

Extending support

Last November at COP26, Prime Minister Pham Minh Chinh impressed the international community with his strong commitment to a net-zero target in reducing GHG emissions by 2050. The target was based on Vietnam’s own domestic resources, along with the international community’s support, in terms of finance and technology, including through mechanisms under the Paris Agreement.

Also at COP26, Vietnam participated in the Global Methane Pledge initiative, which aims to reduce global methane emissions by at least 30 per cent by 2030; the Glasgow Leaders’ Declaration on Forests and Land Use; the Global Coal to Clean Power Transition Statement; and the Global Climate Change Adaptation Alliance.

According to International Finance Corporation, Vietnam’s overall climate-smart investment potential is estimated at $753 billion by 2030, of which up to $59 billion is in the renewable energy sector. However, the share of climate financing - as a percentage of total bank lending - in Vietnam was just about 5 per cent or $10.3 billion as of 2016, indicating a significant climate finance gap.

The Asian Development Bank (ADB) said it stands ready to assist Vietnam in its journey to net zero in GHG emissions. Last November, PetroVietnam and the ADB signed an MoU on establishing a strategic partnership in the 2021-2024 period to promote clean and renewable energy development as well as to achieve PetroVietnam’s targets in the green energy transition, carbon capture and storage, hydrogen development, and offshore wind energy development.

“The ADB and PetroVietnam have established a partnership for collaboration and cooperation in the activities identified for the mutual interest of both parties,” said Andrew Jeffries, ADB country director for Vietnam. “As a multilateral financial institution and as a catalyst for global and regional climate funds, the ADB could provide support to PetroVietnam through policy and technical advice, funding for investment from its own financing, and/or leverage financing from other sources.”

Also last November, Standard Chartered Bank Vietnam committed MoUs worth $8.5 billion in sustainable financing for the three Vietnamese businesses of T&T Group, Geleximco Group, and Van Lang Investment and Education Management Corporation, to support their sustainability goals.

Under the MoUs, the bank will arrange financing for T&T Group’s environment, waste treatment, liquefied natural gas (LNG) fired power plants, and renewable energy projects; Geleximco Group’s paper, pulp, afforestation, LNG power plants, tourism complex, and seaport projects; and Van Lang’s construction of a green university campus.

Under its Country Programme Document for Vietnam 2022-2026 released in January, the United Nations Development Programme said it will support the Vietnamese government, the private sector, and financial institutions to design and implement low-carbon development, a circular economy, and environmental protection. “The aim is to work together to achieve green growth and Nationally Determined Contribution targets. In support of a more decarbonised economy, resources will be deployed to develop and implement energy-efficient business models, expanding the use of clean and renewable energy,” read the document.