Birth of Renewable Energy in Vietnam

Renewable energy as an alternative to high-carbon energy is desirable for environmental sustainability, as it reduces reliance on imported energy. However, for developing countries, the technologies that produce renewable energy come at prohibitively high prices, both financially and technically.  A recent report published by the World Bank states that governments must balance the objectives that influence energy (emission) policies, which include sustaining economic growth, improving the local and global environment, and enhancing energy security.

The report, Winds of Change – East Asia’s Sustainable Energy Future, examines energy challenges of six East Asian and the Pacific (EAP) countries: China, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. These countries are experiencing high economic growth and rapid urbanization, and hence are more likely to face the challenges of environmental sustainability and energy security as their energy needs continue to grow. If governments continue to apply their current economic policies, most EAP countries will become net importers of energy in the next 20 years, leaving them susceptible to energy price fluctuations. Alternatively, the high upfront capital required to invest in renewable energy technologies is a major hurdle for developing countries. Without major financial and technical assistance from developed nations, developing countries would likely settle for less capital intensive investments, even if those investments release significantly more pollutants.

The World Bank report believes that it is possible to achieve huge energy efficiency and reduce reliance on high-carbon energy. The ambitious plan would require a combination of political will, institutional capacity, and transfer of financing and low-carbon technologies from developed countries. Under such a scenario, the total cost to bring sustainable energy to EAP countries is $3.6 trillion over a 20-year period, or $180 billion per year, which is an additional $80 billion per year in investment compared to costs under current economic policies. China alone would account for 85% of the investment. Assuming that Vietnam needs a proportionate share of the remaining 15% of the investment, Vietnam would need approximately $5.5 billion in investments per year.

Although current investments are quite distant from the World Bank’s targeted investment level for sustainable energy development, Vietnam has received significant financial and technical assistance. The Renewable Energy Development Project, which was approved in May 2009, is intended to invest in renewable energy projects, assist in developing the regulatory infrastructure, and develop a pipeline of projects. More recently, the First Power Sector Reform Development Policy Operation Program was created as part of a long term goal to reform the electric power sector and attract new investors. Finally, the Trung Son Hydropower Project, which would become the first hydropower project assisted by the World Bank in Vietnam, will be presented to its Board of Executive Directors in September 2010. The map below shows where projects have been implemented in Vietnam.

Source: World Bank.

As shown by projects above, Vietnam is receptive to adopting sustainable energy policies.  Nevertheless, much coordination and investments is still needed to guide Vietnam in the direction toward energy sustainability, and Vietnam should strive to reform its policies so it can reap the long-term benefits of these technologies.