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Vietnam’s National Strategy on Energy Development up to 2025, with a vision to 2035
11/1/2019 9:5' Send Print
Illustration photo. Photo: VNA

Vietnam's economy has changed dramatically in the last few decades, with the gross domestic product (GDP) per capita rising from US$114 in 1990 to $2,385 in 2017. Vietnam stands at the middle income group. In the energy sector, this is the transition from an energy-intensive agricultural economy based on traditional biomass fuels to an economy using modern and aggregated forms of energy.

A number of Vietnam’s primary energy sources, such as crude oil, coal, gas, hydropower and non-commercial energy (energy used in daily life, such as wood, waste from agricultural production, garbage) are produced or exploited domestically. In recent years, total energy production has been stable, mainly due to the fact that the volume of commercially exploited products has not had a significant increase. With a high demand for primary energy for economic development and energy security, Vietnam has become a net energy importer since 2015.

Vietnam's total primary energy supply in 2015 was 70.6 million tons of oil equivalent (TOE), of which commercial energy accounts for 83.1% and non-commercial energy 16.9% of the total primary energy consumption. The share of non-commercial biomass energy in total primary energy supply decreased significantly from 44.2% in 2000 to 16.9% in 2015. The decline was attributed to the replacement of non-commercial biomass energy by commercial energy forms. The shift to fossil fuels has increased “greenhouse” gas emissions.

The Government has always considered economic growth a top priority, but the Government’s strategies emphasize that rapid growth must go hand in hand with sustainable development, link to social equity and inclusion. In the context of enhanced international integration and development of a market-oriented energy sector to ensure adequate, stable and secure energy supply for socio-economic development, the development of Vietnam's National Strategy on Energy Development up to 2025, with a vision to 2035 is very necessary in terms of legal aspects, overall vision for achievement of the targets of socio-economic and environmental development.

The National Energy Development Plan for the period 2016-2025, with a vision to 2035

The Ministry of Industry and Trade has prepared a Submission No.12005/TTr-BCT dated 21 December 2017 for the Prime Minister’s approval of the National Energy Development Plan for the period 2016-2025, with a vision to 2035 which includes viewpoints and targets for Vietnam's energy development up to 2025, and orientation to 2035 as follows:

Development perspective:

First, maximally develop the overall energy system to provide adequately energy and ensure energy security to meet the requirements of socio-economic development. Second, efficiently use primary energy sources to conserve domestic energy resources in combination with rational energy import to diversify energy supply. Third, promote energy efficiency and encourage the development of renewable energy sources to ensure national energy security, conserve energy resources and mitigate negative impacts to environment in energy activities. Fourth, develop competitive energy markets in line with the roadmap to diversify modes of energy investment and trade and at the same time increase the efficiency of energy supply and use systems. Fifth, step by step improve the quality of energy supply services, implement the market prices of energy products in order to encourage investment in developing clean energy and promote energy efficiency and conservation. Sixth, gradually improve the energy policy and mechanism to ensure sustainable energy development and achieve development goals.

Development objectives:

- Overall objectives: Mobilize all domestic and international resources for energy development to ensure the adequate supply of energy with higher quality at reasonable prices for socio-economic development; rationally use diversified primary energy sources at home and abroad; promote energy efficiency and encourage renewable energy sources development to ensure energy security, reduce dependence on imported energy, mitigating climate change, enhance environmental protection and sustainably achieve energy, socio-economic development goals; step by step build competitive energy markets to increase operation efficiency and encourage investment in clean energy production.

- Specific objectives: 1. Ensure adequate domestic energy supply to meet the demand for socio-economic development with an average GDP growth rate of around 7% in the period of 2016-2035; 2. The total primary energy supply in 2025 reaches 137-147 million TOE and 218 million-238 million TOE in 2035. The total final energy consumption in 2025 is from 83 million-89 million tons and in 2035 from 121 million-135 million tons. 3. Develop oil refinery plants to meet at least 70% of domestic demand by 2035. Ensure strategic reserves of crude oil and petroleum products equal to 90 days of net imports by 2020. 4. Energy efficiency and conservation: The ratio between energy conservation and the final energy consumption compared with business-asusual scenario: 6% in 2025 and 10% in 2035. 5. Develop renewable energy to reach 5,400 MW of small hydropower, 2,300 MW of wind power, 6,000 MW of solar power, 1,200 MW of biomass power by 2025; 7,000MW of small hydropower, 12,400MW of wind power, 41,000MW of solar power and 3,800MW of biomass power by 2035. 6. Mitigate climate change in energy development: reduce CO2 emissions in energy activities compared with business-asusual scenario: 12% in 2025, 15% in 2030 and 18% in 2035. 7. Continue to implement the roadmap for developing electricity markets; develop the gas consumption market according to the market-oriented mechanism under the regulation of the State.

The National Energy Development Strategy of Vietnam

Building on the above-mentioned viewpoints and objectives, Vietnam sets out a number of national energy development strategies to ensure a competitive investment environment, attract and encourage the application of new and advanced technologies in conformity with national policies on environmental protection and energy security, specifically:

Ensuring national energy security: Enhance the ability and reliability of power supply systems and other energy systems. Step up domestic supply of fossil fuels by building reserves, investing in mines and boosting exploration and discovery of new energy resources. Construct energy import infrastructure. Reduce fossil fuel demand by promoting renewable energy and energy efficiency.

Develop new and renewable energy sources: Institutionalize legal regulations to effectively mobilize resources for renewable energy development. Establish effective support mechanisms for renewable energy. Create sustainable financial source for investments in renewable energy sources.

Energy efficiency and conservation: Strengthen the implementation of the Law on Energy Efficiency and Conservation. Create sustainable finance sources for energy conservation.

Energy prices and markets: Identify energy efficiency according to the market mechanisms, provide right price signals that regulate energy production and consumption. Gradually eliminate subsidies in production and consumption of energy. Step by step form energy markets to promote the efficiency of energy supply and consumption.

Environmental protection and sustainable development: exploit energy resources to a reasonable extent, avoid rapid exploitation that causes early exhaustion of resources; combine exploitation of domestic resources with the import of energy at rational ratio. Strictly supervise all energy exploiting and producing establishments which emit environmental pollutants and impose stringent sanctions on energy establishments violating regulations, emitting pollutants exceeding permissible levels into the environment. Study to apply financial instruments (taxes, fees, certificates, among others) to regulate the production and consumption of energy and generate revenue for investment in clean energy solutions.

Energy is an essential element for ensuring socio-economic development and is also an important component of sustainable development. In order to achieve the specific objectives of Vietnam's National Energy Development Strategy to 2025, with a vision toward 2035, it is necessary to implement synchronous solutions to develop Vietnam's energy sector in order to achieve socio-economic development targets.

During the implementation of the strategy, the energy sector will face difficulties and challenges, such as: 1. Limitations of domestic primary energy supply lead to increasing dependence on imported fuels, especially fuels for electricity generation; 2. The high demand for energy puts pressure on the infrastructure of the industry, requires large capital investment while public debt is rising and the equitization process is unfavorable; 3. Energy supply activities will cause increasing impacts on environment because of the rapid growth of domestic demand for energy and the rapid increase in the share of fossil fuel sources , especially coal in the structure of energy supply.

In order to overcome challenges of energy security, Vietnam, a country in transition to energy net import, needs to implement a set of measures to ensure the supply of fossil fuels and develop efficient energy infrastructure, diversify energy systems based on renewable energy, and energy efficiency; At the same time, measures must be taken to improve energy security, including fossil fuel supply and reduction of dependence on fossil fuels.

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This article was published in the Communist Review (November 2018)

Tran Tuan Anh, member of the Party Central CommitteeMinister of Industry and Trade