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Plan to Move Vietnam to Carbon Neutrality Faces Hurdles

A security guard walks past the substation at Sao Mai solar energy plant in An Giang province, Vietnam, Sept. 25, 2022.
A security guard walks past the substation at Sao Mai solar energy plant in An Giang province, Vietnam, Sept. 25, 2022.

Vietnam’s long-awaited national power development plan, aimed at achievement of carbon neutrality by 2050, was approved by Prime Minister Pham Minh Chinh on May 16, but faces obstacles in implementation and funding.

Delayed by more than two years, the plan, known as PDP8, for Power Development Plan 8, sets goals for 2030 with an eye toward the 2050 deadline. PDP8 would require $134.7 billion in funding for new power plants and grids to meet 2030 targets. To completely phase coal out by 2050, the government estimates $658 billion is needed.

Implementation, funding, and a governmentwide commitment to phase out coal face difficulties.

The plan "is a big challenge," Hanoi-based Ha Hoang Hop, associate senior fellow at the ISEAS-Yusof Ishak Institute, wrote via WhatsApp, adding that it "can be implemented well only with a restructure of the whole of Vietnam’s energy sector."

Under the plan, Vietnam would more than double power generation capacity by 2030. Coal would remain a top energy source through the 2020s. Liquefied natural gas would be the major power source in 2030, with the remainder coming from hydropower, wind and solar energy, and biomass.

Vietnam was an early success story in renewables, with Southeast Asia’s largest installed capacity of wind and solar energy by 2019, but there was little modernization of the national power grid. As a result, much of that energy goes to waste as state-run Vietnam Electricity, or EVN, caps output to prevent overloads. In addition, an investigation into the Ministry of Industry and Trade, or MOIT, revealed that officials approved more solar projects than were authorized.

Now, "there's too much solar," said Dang Nguyen, a Ho Chi Minh City-based legal expert in the energy sector. New solar projects will be put on hold until 2030 but the outlook for wind projects is more optimistic, he said.

"The MOIT, they just approved, approved, approved," Nguyen said of the solar uptick. "It is clear that the MOIT went beyond their authority."

Funding and cutting coal

Chinh committed Vietnam to net-zero carbon emissions by 2050 at the United Nations Climate Change Conference in 2021. He called on developed nations to assist Vietnam in its green transition.

International funding has come in the form of the Just Energy Transition Partnership, or JETP, a $15.5 billion financing deal between Vietnam and G7 countries plus Norway and Denmark. After lengthy negotiations, an agreement was reached in December, but the funds could not be disbursed until PDP8's approval.

The planning within PDP8 is lackluster, doing just enough to unlock JETP funds as well as private investment into renewable projects, said Zachary Abuza, a Southeast Asia expert at the National War College in Washington.

"It doesn't detail specific projects, it's surprisingly vague," he said. "They had to do just enough to unlock not just the $15.5 billion of JETP funding but there was already in the private sector some $5 billion of investment that was just stuck."

An energy expert in Ho Chi Minh City who asked that his name not be used because he has not been granted permission to speak publicly, said it is unclear how the JETP funds will be disbursed.

"Everybody talks about the JETP but to make it come to life is still a long way to go," he said. "How the money will come, nobody knows."

Further, he worries about funding through 2050 with government capital and a nationwide pricing mechanism for renewable energy lacking.

"The government doesn't have that money and for the private sector the [pricing] mechanism is the biggest problem," he added.

Total support within the government to cut coal is also questionable. The country's leading anti-coal campaigner, Nguy Thi Khanh, was sentenced to 16 months in prison on tax evasion charges in June last year. Khanh was released five months early in May 12, but her jailing showed a division within the government on moving away from coal.

"There's so many vested interests in terms of coal and other energies that had it out for her," Abuza said. "It's such an opaque and corrupt system that they were able to get charges levied."

Ben Swanton, co-director of a human rights group, The 88 Project, said Khanh's release shows the role outside pressure could have on pushing Vietnam to release jailed environmentalists.

"It is very rare for political prisoners to be released early. In Khanh's case there was significant diplomatic pressure on the Vietnamese government to release her, pressure that intensified after the government signed the JETP energy transition deal," Swanton wrote in an email.

Apparent targeting of environmentalists continues, though, with police in Ho Chi Minh City arresting prominent environmentalist Hoang Thi Minh Hong on tax-evasion charges May 30.

"Vietnam’s selective use of its vague and flawed tax law to target environmentalists and climate change activists with politically motivated prosecutions is a new, extremely troubling development. ... Hoang Thi Minh Hong is the latest victim," Human Rights Watch Deputy Asia Director Phil Robertson said in a letter to the press.

"This recent spasm of repression is occurring as Vietnam claims it is committed to the reduction of carbon emission through a massive infusion of foreign funds."