Recognizing the negative impacts and vulnerability caused by climate change, managers have recently implemented various guidelines, policies, laws, and measures to effectively respond to climate change and ensure sustainable development. This has particularly focused on the energy sector. In December 2022, Vietnam participated in the Just Energy Transition Partnership (JETP).
With policy support, the solar and wind power markets have developed rapidly, significantly contributing to the energy structure. The Vietnam Energy Outlook Report – Path to Net Zero (June 2024) highlights noteworthy figures: from 2020 to 2023, the total mobilized wind power capacity increased from approximately 538 MW to about 5,059 MW; solar power capacity increased from 8,823 MW to about 16,568 MW. Additionally, there are 23 biomass power projects with a total capacity of about 523 MW. The total renewable energy capacity in the entire system increased from 15.6% to 27.1%, with Vietnam’s electricity system now leading ASEAN.
However, evaluations indicate that the overall development of energy, particularly renewable energy, has revealed limitations and created barriers to the transition and development of domestic renewable energy.
Addressing the challenges of renewable energy development, Dr. Nguyễn Đức Hiển, Deputy Head of the Central Economic Committee, noted that the localization rate of energy technology is still low, lacking mechanisms to support and promote technological localization. The localization rate needs to be increased, but currently, most equipment for transmission and the energy industry still needs to be imported.
Forecasts show that in the coming years, domestic electricity demand will grow by about 8-10% per year. Meanwhile, fossil energy sources like coal, oil, and gas are gradually depleting and harmful to the environment. This poses a significant challenge in ensuring a stable and sustainable energy supply.
According to Mr. Stuart Livesey, a member of the Executive Board and Co-Chair of the Green Development Subcommittee of the European Chamber of Commerce in Vietnam (EuroCham), Vietnam has achieved initial success in energy transition but needs to maximize international financial support mechanisms and strengthen the trust of FDI enterprises.
Elaborating further, Mr. Stuart Livesey shared that renewable energy accounts for a significant share of Vietnam’s power generation capacity. Some important regulations to promote renewable energy development have also been approved. However, the approved policies have not yet instilled confidence in the foreign business community.
“In other sectors like industry and manufacturing, investors clearly understand the regulations and know the return on their investments. However, in Vietnam’s energy sector, there are still unclear factors making FDI enterprises hesitant to invest. To attract investment, policies need to be transparent and clear,” Mr. Stuart Livesey recommended.
To motivate the development of the domestic renewable energy market, representatives of foreign business associations suggested that Vietnam leverage international financial mechanisms, including the Just Energy Transition Partnership (JETP). This mechanism allows Vietnam to access $15.5 billion in public and private capital over 3-5 years to address urgent needs, acting as a catalyst for Vietnam’s just energy transition. This amount will mainly be allocated as loans, with the remainder being grants.
Experts also believe that continuous policy updates and amendments to certain laws are necessary to attract resources for energy development, ensuring energy security and promoting renewable energy. The energy transition process will require a significant increase in investment capital and minimizing the impact on electricity costs. To meet these financial needs, a combination of resources, including international financial support, private investment, and state budget funds, is required.
Source: Khanh Lê – baomoi.com
