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VIETNAM 1. 2. 3. 4. GENERAL OPERATING ENVIRONMENT ENERGY AND RENEWABLE ENERGY ENVIRONMENTAL GOVERNANCE ORGANIZATIONS, SOURCES, REFERENCES 2 (30) VIETNAM report -1GENERAL OPERATING ENVIRONMENT 1.1 Basic Facts & Geography 1.2 People & Society 1.3 Culture & Business Culture 1.4 Infrastructure & Logistics 1.5 Government & Legislation 1.6 Economy & Trade 1.7 Vietnam & Finland 1.8 Education 1.9 General Operating Environment - Summary 3 (30) VIETNAM report 1.1 BASIC FACTS & GEOGRAPHY Location Area Borders Climate Terrain Natural hazards South-eastern Asia 331 050 km2 (94% land, 6% water) Gulf of Thailand, Gulf of Tonkin and South China Sea China, Laos, Cambodia Tropical in south; monsoonal in north with hot, rainy season (May to September) and warm, dry season (October-March) Low, flat delta in south and north; central highlands; hilly mountainous in far north and northwest Occasional typhoons with extensive flooding (especially in the Mekong River delta). Source: CIA, World Bank Vietnam, formally the Socialist Republic of Vietnam, is the easternmost country on the Indochina Peninsula in Southeast Asia. It is positioned on the Gulf of Thailand and Gulf of Tonkin. The country is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea to the east. The combined length of the country's land boundaries is 4,639 km, and its coastline is 3,444 km long. Vietnam's land is mostly hilly and densely forested, with level land covering no more than 20%. Mountains account for 40% of the country's land area, and tropical forests cover around 42% Because of differences in latitude and the marked variety in topographical relief, the Vietnamese climate tends to vary considerably from place to place (Wikipedia). Vietnam is a densely-populated developing country that in the last 30 years has had to recover from the ravages of war, the loss of financial support from the old Soviet Bloc, and the rigidities of a centrally-planned economy. While Vietnam's economy remains dominated by state-owned enterprises, which still produce about 40% of GDP, Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration (CIA). 4 (30) VIETNAM report 1.2 PEOPLE & SOCIETY Population, total Population, growth Population, density Urban population Rural population Population (0-14 years) Population (15-64 years) Population (65 years and above) Life expectancy at birth Major cities (2009) 2009 2010 2011 86,03 mil. 86,93 mill. 87,84 mill. 1% 1% 1% 2 2 277/km 280/km … 30 % 30 % 31 % 70 % 70 % 69 % 24 % 24 % 23 % 70 % 70 % 70 % 6% 6% 6% 75 75 … Hanoi (capital): 2,7 mil., Ho Chi Minh City: 5,9 mil., Haiphong: 1, 9 mil., Da Nang: 0,8 mil. Source: CIA World Fact Book Population of Vietnam is about 91 million and it is growing by approximately 1, 0 % every year (CIA). The population in urban agglomerations of more than 1 million (% of total population) in Vietnam was last reported at 12.60 in 2010 (World Bank) Median age is 27,8 years (year 2011) (CIA). The French language, a legacy of colonial rule, is still spoken by some older Vietnamese as a second language, but has declined in popularity. In recent years, as Vietnam's contacts with Western nations have increased, English has become more popular as a second language; the study of English is now obligatory in most schools, replacing French, though the latter is used at times in higher education (Wikipedia). The ratio of population in poverty has fallen from 58 % in 1993 to 14.5 % in 2008, and most indicators of welfare have improved. Vietnam´s socio-economic development strategies give attention to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability. It defines three "breakthrough areas": (i) promoting human resources/skills development (particularly skills for modern industry and innovation), (ii) improving market institutions, and (iii) infrastructure development (World Bank) The overall goal is for Vietnam to lay the foundations for a modern, industrialized society by 2020 (World Bank). 5 (30) VIETNAM report 1.3 CULTURE & BUSINESS CULTURE Language Ethnic groups Religion Official: Vietnamese Other: English, French, Chinese and Khmer, mountain area languages Kinh (Viet): 86 % Tay: 2 % Thai 2 % Other: Vietnam has got 52 ethnic minorities. Buddhist 9 % Catholic 7 % Other: 4 % None: 80 % Source: CIA, World Bank Vietnam is home to many different ethnic groups. Kinh people cover the majority of the population. As a largely homogeneous group the Kinh possess significant political and economic influence over the country. However, Vietnam is also home to 54 ethnic minority groups, including the Hmong, Dao, Tay, Thai, and Nung. The official spoken and written language of Vietnam is Vietnamese, currently written in the Latin alphabet. The characteristics of Vietnamese culture can be viewed as humanity and harmony. Vietnamese highly regard family value and community value (Wikipedia). Over the last quarter of a century, Vietnam's politics and society have gradually evolved towards greater openness and space for civil participation. For many decades, foreign cultural influences were shunned, and emphasis was placed on appreciating and sharing the culture of communist nations such as the Soviet Union, China, and Cuba. However, since the 1990s, Vietnam has seen a greater exposure to Southeast Asian, European and American culture and media (Wikipedia). Promising sign for foreign investors: The Vietnamese government has shown its commitment to economic liberalization and international integration. Structural reforms to modernize the economy have been implemented, helping to produce more competitive, export-driven industries. Being one of the most group-orientated societies, business organizations in Vietnam tend to be hierarchical. Decisions and ideas are generated at the top, and more often than not, the eldest person has the most influence over the decision. Status is important in the Vietnamese society, and is obtained with age and education. Titles are very important in Vietnamese business culture and one should respect senior individuals, whether by education, job position or age. In business meetings, it is usually the eldest member of the group who enters the room first. 6 (30) VIETNAM report 1.4 INFRASTRUCTURE & LOGISTICS Railways: Roads: Waterways: Airports: 2 632 km 180 549 km 17 702 km 44 (2012) Source: CIA, World Bank Vietnam has several major sea ports, including Cam Ranh, Da Nang, Hai Phong, Ho Chi Minh City, Hong Gai, Qui Nhơn, and Nha Trang. Further inland, the country's extensive network of rivers play a key role in rural transportation, with over 17,700 kilometres (11,000 mi) of navigable waterways carrying ferries, barges and water taxis (Wikipedia). Vietnam operates 17 major civil airports, including three international gateways: Noi Bai serving Hanoi, Da Nang International Airport serving Da Nang, and Tan Son Nhat serving Ho Chi Minh City (Wikipedia). The territorial and offshore waters in the South China Sea are seen as high risk for piracy and armed robbery against ships (World Bank). Over 90% of the population is now connected by all-weather roads. Working in 33 provinces, the World Bank’s Third Rural Transport project is reaching some of the most difficult mountainous regions of Northern and Central Vietnam, linking poor and marginalized communities to better markets and services. Bicycles, motor scooters and motorcycles remain the most popular forms of road transport in Vietnam's urban areas, although the number of privately owned automobiles is also on the rise, especially in the larger cities. Public buses operated by private companies are the main mode of long-distance travel for much of the population. Averaging 4.5% of GDP investment, Vietnam is the leading investor in Asia in its roads infrastructure Vietnam's primary cross-country rail service is the Reunification Express, which runs from Ho Chi Minh City to Hanoi, covering a distance of nearly 2,000 kilometres (Wikipedia). Infrastructure (especially, seaports and electric power) is the most important concern for the country's economy. Infrastructure constraints threaten foreign direct investment in manufacturing and exports. Private sector participation in infrastructure development, finance and management is needed urgently, especially in electric power and deep-water seaports (Finpro). 7 (30) VIETNAM report 1.5 GOVERNMENT & LEGISLATION Official name Conventional short form Form of state Regions and districts Government Legal system Independence Corruption perception index (2011) Socialist Republic of Vietnam Vietnam Communist state 58 provinces President: Truong Tan SANG (since 25 July 2011) Cabinet: appointed by president based on proposal of prime minister and confirmed by National Assembly Parties: Communist Party of Vietnam; other parties proscribed Civil law system ( the civil code of 2005 reflects a Europeanstyle civil law) 2 September 1945 112 (out of 183 countries) Source: CIA, World Bank The Government's overall strategic priorities and goals are to support: (i) strengthening Vietnam's competitiveness in the regional and global economy, (ii) increasing the sustainability of its development, and (iii) broadening access to opportunity (World Bank). Key cross-cutting themes are (i) strengthening governance, (ii) supporting gender equity, and (iii) improving resilience in the face of external economic shocks, natural hazards and the impact of climate change (World Bank). The Corruption Perceptions Index ranks countries/territories based on how corrupt their public sector is perceived to be on a scale of 0 - 10, where 0 means that a country is perceived as highly corrupt and 10 means that a country is perceived as very clean: Vietnam’s index is 2.9 Vietnam is ranked 112th country in relation to other countries in the world (Transparency International). Corruption, lack of accountability and transparency, and burdensome bureaucracy impact the effectiveness of the government in formulating and implementing policies. Corruption is endemic in Vietnam at all levels of the government, and acts as a major barrier to foreign investment. The authorities had announced aggressive plans to fight corruption, and encouraged the media to act as a watchdog. However, these efforts lost steam after several journalists were detained for reporting on major corruption scandals (Finpro). 8 (30) VIETNAM report 1.6 ECONOMY & TRADE World bank ranking Currency GDP (current US$) (billions) Structure of the economy (% of GDP) - Agriculture - Industry - Services GDP growth (annual %) GNI per capita, PPP (current intl.) Inflation, consumer prices (annual %) Lower-middle Income Dong (VND) 2009 $ 97,18 Ease of doing business ranking 21 % 40 % 39 % 5% $ 2840 7% 92 (out of 181) 2010 $ 106,43 2011 $ 123,96 21 % 41 % 38 % 7% $ 3060 9% 93 (out of 178) 20 % 41 % 39 % 6% $ 3260 19 % 78 (out of 183) Source: CIA, World Bank Vietnamese labour force is 44, 48 million (2011 est., CIA). Meaning 50% of total population. Vietnam is seen as a lower middle income country by World Bank In 1986, the Sixth Party Congress of Vietnam introduced free market economic reforms as part of the Doi Moi reform program, resulting in a socialist-oriented market economy. Private ownership was encouraged in industries, commerce and agriculture (Wikipedia). Vietnam is now one of Asia's most open economies. Vietnam's economy still remains dominated by state-owned enterprises, which still produce about 40% of GDP The Government has implemented the structural reforms needed to modernize the economy and to produce more competitive export-driven industries. Agriculture's share of economic output has continued to shrink from about 25% in 2000 to about 22% in 2011, while industry's share increased from 36% to 40% in the same period. Vietnam’s shift from a centrally planned to a market economy has transformed the country from one of the poorest in the world into a lower middle-income country. Vietnam now is one of the most dynamic emerging countries in East Asia region (World Bank). The Vietnam National Administration of Tourism is following a long-term plan to diversify the tourism industry, which brings foreign exchange into the country. Tourism and related services account for more than 30 percent of Vietnam's GDP (Finpro). The country's economy is developing. However, it would have a hard time catching up with other countries, and is therefore considered under-developed. Vietnam's economy also faces challenges from falling foreign exchange reserves, an undercapitalized banking sector, and high borrowing costs (Finpro). A sustained growth rate of around 8% for over 15 years shows great progression and is one of the many reasons for the increasing number of foreign investors. Entry costs for investors are still low. Cheap labour costs coupled with a young, literate workforce make business investment a very attractive and lucrative prospect. 9 (30) VIETNAM report Vietnam became a member of the WTO on 11 January 2007. This ensures more influx of foreign investment into the country. Moreover, Vietnam has been actively seeking to establish a healthy trade agreement with major developed nations to further boost its exports industry (Finpro). 1.7 VIETNAM & FINLAND Finnish exports (2011) Finnish imports (2011) 66 mill € (machinery and equipment, paper and paper products) 115 mill € (Articles of apparel and clothing accessories) Source: Finnish Customs Trade and investment relations between Finland and Vietnam are still rather modest. However, there has been a clear increase in the trade figures in recent years, the annual growth rate of bilateral trade being about 20-40 per cent. The bilateral two-way trade between the two countries amounted approximately 180 million euros in 2010 (Embassy of Finland). Today there are about 85 Finnish affiliated companies in Vietnam, some with several offices, and more are on the way. Finnish companies have been representing in Vietnam mainly through local agents, and a couple of companies have a representative office lead by either Finnish of foreign personnel (Embassy of Finland). Vietnam is also one of the most important development partners for Finland. The development program includes a number of business programmes that aim at supporting private industry and offers extensive range of possibilities for both Finnish and Vietnamese companies. These include Innovation Partnership Program (IPP), Energy Partnership Program (EPP), and Concessional Credits (Embassy of Finland). Top ten Finnish export products in 2010 Product Machinery for specialized industries Value of Exports (million EUR) 13.4 Cork and wood 9.0 Road vehicles 8.9 Paper, paperboard and articles thereof 6.8 Electric machinery, n.e.s. and parts 5.3 Iron and steel 3.6 General industrial machinery n.e.s. 3.4 Instruments and apparatus n.e.s. 2.4 Power generating machinery and equipment 2.0 Manufactures of metals n.e.s. 1.8 Total exports to Vietnam 65.7 n.e.s. = not elsewhere specified Source: Finnish Customs 10 (30) VIETNAM report Top ten Finnish import products in 2010 Value of Imports (million EUR) Product Articles of apparel and clothing accessories 25.5 Footwear 22.5 Telecommunications and sound recording equipment 19.9 Furniture and parts thereof 10.3 Miscellaneous manufactured articles, n.e.s. 6.1 Office machines and adp machines 5.3 Manufactures of metals, n.e.s. 3.9 Travel goods, handbags and sim. Containers 3.9 Coffee, tea, cocoa, spices 3.3 Crude rubber (incl. synthetic) 1.5 Total imports from Vietnam 114.4 n.e.s.= not elsewhere specified Source: Finnish Customs 1.8 EDUCATION Literacy rate, % of people ages 15 and above, 2009 Primary school enrolment, % net, 2009 Higher education: 93 % 99 % 2 % of total population Source: UNESCO, Ministry of Education and Training of Vietnam Adult literacy rate is almost 94 % (2009). Vietnam has an extensive state-controlled network of schools, colleges and universities, and a growing number of privately run and partially privatised institutions. Education is not free; therefore, some poor families may have trouble paying tuition for their children without some form of public or private assistance. Regardless, school enrolment is among the highest in the world, and the number of colleges and universities increased dramatically in the 2000s, from 178 in 2000 to 299 in 2005 (Wikipedia). In the academic years of 2002-2003, there are 111 universities and 119 colleges in the higher education system. The total number of students reaches 1,020,670 and 64% of whom are full-time students. The Government also encourages foreign investments in the higher education system in the form of joint training and research programs, foreign owned universities and overseas research fellowships (Ministry of Education and Training). VIETNAM report 11 (30) Based on data from Ministry of Education and Training in 2007, access to higher education is still low and only about 2% of the population moves into higher education study. This figure is low in both a regional and an international context. Linguistically diverse ethnic minority populations struggle with mandatory instruction in Vietnamese by mainly Vietnamese (Kinh) teachers. This contributes to a far lower education attainment among ethnic minority children. For example, primary completion rate for Kinh students was 86 per cent, while the rate for ethnic minority children was only 61 per cent (UNICEF). In the school year 2010-2011,Vietnam had a total of 163 universities (including senior colleges and institutes) and 223 junior colleges, in which 50 senior colleges and 30 junior colleges are non-public (Wikipedia). 1.9 GENERAL OPERATING ENVIRONMENT - SUMMARY Deep poverty has declined significantly. Vietnam is working to create jobs to meet the challenge of a labour force that is growing by more than one million people every year. In recent years, the nation has been rising as a leading agricultural exporter and an attractive foreign investment destination. Vietnam's key products are: rice, cashew nuts, black pepper, coffee, tea, fishery products and rubber. Manufacturing, information technology and high-tech industries constitute a fast growing part of the economy. Vietnam is also one of the largest oil producers in the region (World Bank). 12 (30) VIETNAM report -2ENERGY & RENEWABLE ENERGY 2.1 General Situation in Energy Sector 2.2 Energy Policy 2.3 Renewable & Fossil Energy Resources 2.4 Supply & Demand for Energy Solutions 13 (30) VIETNAM report 2.1 GENERAL STATE OF ENERGY SECTOR Total energy consumption: Energy consumption per capita: Electricity consumption: Electricity consumption per capita: Access to electricity: Access to electricity urban population Access to electricity rural population Energy imports (% of energy use) Electricity imports (% of electricity use) Power production capacity: Hydropower production capacity: Electricity production: Renewable electricity production: Share of population using solid fuels: Fossil fuels % of total energy 2009 744,9 TWh 8,7 MWh/capita 78,93 TWh 918 kWh/capita 97,6 % close to 100 % ~89 % -20 % 4,29 % 8,35 GW 5,50 GW 83,19 TWh 29,98 TWh significant 56,2 % 1990 282,6 TWh 3,3 MWh/capita 6,48 TWh 54 % (1993) less than 15 % (1993) -2 % 4,43 GW 8,68 TWh 10,58 TWh (1995) 20,3 % (IEA, World Bank, IRENA, UN data) Major sources of commercial energy in Vietnam are coal, petroleum, hydropower and natural gas. Significant number of households is using traditional solid fuels such as fuel-wood and charcoal in residential sector for heating, light and cooking. The residential sector contributed 52 % of energy consumption in 2009. Energy efficiency improvements in residential sector would reduce consumption greatly. Self-sufficiency Vietnam is net exporter of energy due to its oil and coal resources Previously, due to a lack of indigenous refining capacity, all crude oil production was exported. The economy imports most of its petroleum products, but the Dung Quat refinery in Quang Nam province (capacity 150,000 b/d) has been in operation since February 2009, providing around 6.5 Mt of petroleum products annually for domestic consumption. Oil product imports increased from 4,713 ktoe in 1995 to 14,737 ktoe in 2008, an average annual growth rate of 10%. In 2009 Vietnam’s net import of electricity was 4 %. At present, Vietnam supplies electricity to the Lao PDR and Cambodia by medium voltage lines, and purchases electricity from China through 110 kV and 220 kV lines. In 2007, Vietnam imported nearly 1,800 GWh of electricity from China. The country is predicted to buy more electricity from China over the coming years, as power shortages are expected. Vietnam is diversifying its energy consumption by developing regional indigenous resources and expanding regional cooperation. The country hopes to minimize its dependence on oil, and places priority on ensuring that energy supplies meet the needs of a growing population, and support socio-economic development. In addition, diversification will reduce the threat posed by drought to hydro-electric power generation. Beyond 2015, Vietnam expects a transformation from being a net energy exporting economy to being a net importing economy. (Reegle Country Profile) VIETNAM report 14 (30) Electricity availability At the end of June 2005, the National Power Grid has reached all provinces, connecting 95% of communes and 89% of households in rural areas. About 73% of the economy’s 85 million people live in rural areas, and 6% of households in those regions have no access to electricity. The state power company, Electricité du Vietnam (EVN) plans to develop a national electricity grid by 2020, by inter-connecting several regional grids. The distribution infrastructure has been poorly maintained, but has benefited from recent improvements. A North-South power cable transmits electricity from Vietnam’s largest generator, the Hoa Binh hydropower plant in the North, to large population centers in the South, helping to alleviate electricity shortages in Ho Chi Minh City. The total distribution network of EVN extends 19,396 km. Transmission occurs at 500 kV, 220 kV and 110 kV, with a 35/22 kV medium-voltage distribution network. (Reegle Country Profile) Electricity capacity Vietnam is one of the fastest growing economies in South East Asia. Its power supply is currently insufficient and, in line with the country’s GDP growth, it has been forecast that electricity demand in Vietnam is likely to more than treble in the next decade. Asia Pacific climate change policy series (link) Total installed electricity capacity (2009): 18,481 MW; of that total, 69% was managed by Viet Nam Electric Power Group (EVN) and 29% was managed by others. In addition, more than 4100 GWh was imported from China. Vietnam is diversifying its energy consumption by developing regional indigenous resources and expanding regional cooperation. The country hopes to minimize its dependence on oil, and places priority on ensuring that energy supplies meet the needs of a growing population, and support socio-economic development. In addition, diversification will reduce the threat posed by drought to hydro-electric power generation. Beyond 2015, Vietnam expects a transformation from being a net energy exporting economy to being a net importing economy. European Chamber of Commerce in Vietnam (EUROCHAM) (link) The economy needs to overcome many challenges to ensure energy security: oil products will still have to be imported, although Vietnam’s first oil refinery was completed in 2009; the economy currently has no strategic oil stockpiling; the power sector is in the early stages of reform; electricity shortages still occur; and power systems operate without adequate reserves. Investment in energy development, especially in electricity generation, is currently insufficient to meet rapid demand growth. It is estimated that energy demand will be 110-120 million toe by 2025 and 310-320 million toe by 2050. (Reegle Country Profile) VIETNAM report 15 (30) Source: IEA Country Energy Balance, 2009 16 (30) VIETNAM report 2.2 ENERGY POLICY Energy policy publications Organizations responsible for energy policies Targets to increase use of renewable energy Subsidies/ Incentives for Renewable Energy The National Energy Development Strategy for the period up to 2020, with an outlook to 2050 Ministry of industry and trade (MOIT) 3% (2010) 5% (2025) 11% (2050) Avoided Cost Tariff for renewables The National Energy Development Strategy (link) for the period up to 2020, with an outlook to 2050 Developing power plants and power networks, ensuring sufficient supply of electricity for socio-economic development, and ensuring the 99.7% reliability of electricity supply in 2010; Achieving a share of renewable energy in the total commercial primary energy supply of 3% in 2010, 5% in 2025 and 11% in 2050; Completing the energy program for rural and mountainous areas, and increasing the proportion of rural households using commercial energy to 50% in 2010 and 80% in 2020 (by 2010, 95% of rural households will have access to electricity) Actively preparing the conditions for putting the first unit of a nuclear power plant into operation in 2020, and then increasing the contribution of nuclear power to the economy’s energy structure (by 2050, nuclear electricity will account for about 15%–20% of total commercial energy consumption). The Renewable Energy Action Plan (link) Developed by the World Bank and State-owned power company Vietnam Electricity (Asia Pacific climate change policy series) Areas of focus: Renewable Energy Policy development, Grid connected renewable electricity, Isolated and distributed energy solution, Technology and market development Production of ethanol and vegetable oil planned to satisfy 1 % of the country’s gasoline and oil demand by 2012 and 5 % by 2025 (Asia Pacific climate change policy series ) Power Development Master Plan of Vietnam (link), period of 2011- 2020, outlook to 2030 The priority is given to development of renewable energies for electricity production and share of electricity generated from these resources will be increased from 2% in 2010, to 4.5% of total electricity production in 2020 and 6.0% in 2030. In which, total capacity of wind power will be increased from negligible level at present to 1,000MW in 2020, and about 6,200MW in 2030; biomass power, power cogeneration at sugar plants will have total capacity of about 500MW in 2020, and increased to 2,000MW in 2030. Together with many legal documents promulgated such as Electricity Law (2004); Environmental Protection Law (2005); Vietnam national energy development strategy for period up to 2020, vision to 2050 (2007); Energy conservation and energy efficiency law (2010), the Government has been continuing to issue support policies for strong development of renewable electricity such as Decision on some financial policy mechanisms for CDM projects (2007); Regulation on avoided cost based electricity tariffs for small VIETNAM report 17 (30) hydropower plants which use renewable energy (Ministry of Industry and Trade - 2008); Decision on support mechanism for development of wind power projects in Vietnam (2010), etc. Subsidies/ Incentives for Renewable Energy Avoided Cost Tariff (ACT) the electricity tariff calculated by avoided costs of the national power grid when 1 kWh is generated to the distribution power grid from a small renewable energy power plant”, with the “avoided cost” defined as; “the production cost per 1 kWh of the most expensive power generating unit in the national power grid, which would be avoided if the buyer purchases 1 kWh of electricity from a substitute small renewable energy power plant”. A project which is eligible for the Avoided Cost Tariff must have installed capacity of not more than 30 MW, and all electricity must be generated from renewable energy. In addition, the renewable energy project must employ the standardised power purchase agreement, in a form issued by the Ministry of Industry and Trade pursuant to the SPA Regulation, for the sale of electricity. Standardised Power Purchase Agreement for Small Renewable Energy Power Plants (SPPA Regulation) Further information on the SPPA Regulation and the ACT Regulation is provided in Asia Pacific Renewable Energy Manual (link). Power plants with a capacity of more than 30MW can sell their electricity to Vietnam for a guaranteed price. Further, there are major tax incentives for renewable power projects for the first 15 years of their operation. The Power Development Plan (PDP) - investors who contribute to small-scale hydropower projects, wind energy, solar energy, geothermal energy, biomass and biofuels will receive government support. Other Vietnam has not made any commitments or set voluntary targets under the Copenhagen Accord Vietnam Energy Efficiency Program (VNEEP) is a set of activities aimed at encouraging and promoting Energy Efficiency and Conservation (EE&C) in public science and technology research activities. In 2008, 36 billion VND (about US $2.25 million) was allocated for some 48 energy efficiency projects. Vietnam is also an active participant in the global secondary carbon market as a host country for emissions reducing projects. It is engaged in the UNFCCC’s Clean Development Mechanism (CDM) and has a fully operable Designated National Authority under that scheme, the Ministry of Natural Resources and Environment of Vietnam. There are 56 registered CDM projects currently in Vietnam with well over 6 million CERs issued to date and an expected production of around 2.15 million CERs per year. Key areas of CDM project investment to date include: hydropower, land-fill gas recovery power generation, biomass energy production, and reforestation. Investment in these projects flows principally from Europe and Japan. Asia Pacific Climate Change Policy Series. In accordance with the Strategy for Electricity Sector Development approved by the government in October 2004, Vietnam is implementing a policy to gradually establish a competitive power pool, to diversify investment and trading, and to stimulate the participation of several economic sectors. The state maintains a monopoly on transmission and the operation of large-scale hydropower and nuclear power plants. The 18 (30) VIETNAM report Electricity Law, approved by the Vietnam National Assembly, came into effect in July 2005. The law outlines the major principles for the establishment of the power market in Vietnam. Prime Ministerial Decision 26/2006/QD-TTg (January 2006) establishes the development of a competitive electricity market that attracts investment from foreign and domestic companies. EASE (Enabling Access to Sustainable Energy) project, in partnership with the Institute of Environment and Sustainable Development (IESD) and CSTM Technology and Sustainable Development (University of Twente, Netherlands) is conducting a study into biogas impact assessment in the country. Energy cooperation with Laos and Cambodia for promoting regional integration. The United Nations Development Programme (UNDP) and the Vietnam Ministry of Science and Technology have been implementing a project to raise the effectiveness of energy use in small and medium enterprises (SMEs). The project is funded by the Global Environmental Fund through the UNDP. Finally, the World Bank supports improvements in energy efficiency in Vietnam with a US$225 million credit. The funding is expected to help optimise the transmission and distribution system, reduce system peak load, and improve the rural power networks so that the poor in the rural areas have access to good quality electricity at reduced prices. The Decree on Energy Saving and the Efficient Use of Energy (102/2003/ND-CP) of 2003 institutes a number of measures to improve efficiency, particularly that of large consumers of energy. These measures include mandatory annual energy reports from consumers of 1,000 toe or 3 million kWh of electricity, as well improved energy efficiency incentives, and improved labelling standards for appliances. The residential energy efficiency programme, from 2004-2006, through the second phase of the DemandSide Management (DSM) programme by EVN and its subsidiary companies, was expected to achieve a 120MW reduction in the peak demand over three years. One of the major activities conducted by EVN in the second phase of its DSM programme was to promote the sale of 1 million Compact Fluorescent Lamps (CFLs) to households located in high-load areas. (Reegle Country Profile) 2.3 RENEWABLE AND FOSSIL ENERGY RESOURCES Significant renewable energy resources Proven oil reserves Wide renewable energy resources 600 mil BBL (est. 2011) OPEC Vietnam is currently dependent on hydropower for around 35 per cent of its electricity use. Investment in renewable energy also focuses on hydropower projects which comprise over 70 per cent of the CDM projects approved by the Ministry of Natural Resources and Environment as the Designated National Authority under the Kyoto Protocol. There are also other opportunities in the biomass industry, such as ethanol production from cassava. There is high potential in Vietnam for the development of wind projects, however owing to high development costs; the process of implementing wind power projects is expected to be slow. Asia Pacific Climate Change Policy Series VIETNAM report 19 (30) Hydropower Vietnam has 2,400 rivers of 10 km or longer, indicating high potential for small- and large-scale hydro-electric power generation. The economic hydropower potential is estimated at 84 TWh/yr, which is in excess of the total electricity consumption of 46 TWh in 2005. Vietnam currently has five hydroelectric expansions underway. The country’s Son La project, which began construction in late 2005, is anticipated to have a generating capacity of 2,400 MW by 2012, and will be the largest hydroelectric project in Vietnam, producing almost 10 billion kWh each year. Vietnam also plans to build three additional plants in the near future. In 2008, about one-third of generating capacity came from hydroelectric power (second after oil and gas). The potential generating capacity from hydropower in Vietnam is estimated to be around 800-1,400 MW. Vietnam’s economic potential for pumped storage hydro-electricity is over 10,000 MW. These resources are mainly located in the northern and southern areas. 408 sites have been identified as suitable for small-hydro plants, with a total potential capacity of 2,887 MW. (Reegle Country Profile) Biomass Biomass resources that could be used for generating electricity include rice husks, paddy straw, bagasse (sugar cane, coffee husk, and coconut shell), wood and plant residue, with an annual output of approximately 93 Mt, and an estimated potential of 1000-1600 MW. In addition, it is estimated that 25,000 household biogas digesters have been installed in the country since the 1960s. The livestock population is estimated at 30 million, although the lack of industrial-scale poultry or pig farming makes large-scale biogas production difficult. Rice husking plants in the Mekong Delta region could fuel a power station with a capacity of 70 MW, and waste materials from sugar cane could produce 250 MW. So far only 3 from 43 sugar plants supply surplus electricity to the power grid - about 50 MW in total. In 2005, the first 750 kW waste-to-power project was completed (US$16m, 60% funded by the Netherlands). Two additional turbines were commissioned in 2006, with the potential to generate about 250-400 MW in total. (Reegle Country Profile) Solar energy Vietnam lies from 23° to 8° North latitude, and has good constant solar sources, with roughly 2,000-2,500 hours of sunshine per year. In the southern and central areas, solar radiation levels range from 4 to 5.9 kWh/m2/day, uniformly distributed throughout the year. The solar energy in the north is estimated to vary from 2.4 to 5.6 kWh/m2/day. Solar PV systems are currently installed in off-grid applications, e.g. telecommunications and rural health services. At present, the total installed capacity of solar photovoltaic systems in Vietnam is estimated at 650 kW, with about 5,000 sites around the country. The potential generating capacity of the off-grid solar PV systems is estimated at around 2 MW. (Reegle Country Profile) Wind energy With a coastline of 3,000 km, and average wind speeds of 5.6 m/s in coastal regions, and up to 8 m/s on certain islands, the potential for wind power generation is high. Vietnam has approximately 513 GW of theoretical capacity. Excluding restrictions on the exploitation of the potential, 120.5 GW of wind power VIETNAM report 20 (30) capacity, about 10 times the peak load demand in 2005, is estimated as being economically feasible for producing electricity. Around 10 sites are currently being investigated for large wind-power generation, however, no preferential pricing scheme is given to the technology by EVN, as is the case with biomass or hydropower technologies, and hence the development of the resource is at a disadvantage. Wind Power Plant no1 in the southern coastal province of Binh Thuan is one of the large projects hosted by Vietnam, and was the first wind turbine plant project in South-East Asia. Two other wind power plants in Binh Thuan are scheduled to be completed in 2010, and will have a combined capacity of 75MW. In April 2010, the Government approved the development by EVN of a pilot wind power project, with a capacity of 30MW, in the central coastal province of Ninh Thuan. (Reegle Country Profile) Geothermal energy With more than 300 hot streams from 30 °C to 148 °C, Vietnam is estimated to have 1,400 MW of suitable geothermal potential, for direct use and producing electricity. From this potential, 400 MW of could be developed for producing electricity by 2020. Several potential sites have been identified, with plant capacities ranging from 20 to 50 MW. (Reegle Country Profile) Waste-to-energy The strong economic growth and urbanization rates in the last decade in Vietnam have pushed the issue of solid waste management to the forefront of environmental challenges which the country must contend if it is to continue on the path to industrialization. The amounts of solid waste that the urban populations are projected to generate necessitates action from the government in a dire way. Clearly, the current solid waste management system is unsatisfactory and needs to be addressed in a dire way. Safer and regulated sanitary disposal facilities have to be built. Given high rates of organic matter in their waste and the high moisture content, waste to energy facilities in the form of composting plants and bio-gas recovery landfills may be the most viable option In 2005 first waste-to-energy power station put into operation in Vietnam that produces electricity from household and industrial waste. Solid Waste Management in Vietnam (link) 2.4 SUPPLY & DEMAND FOR ENERGY SOLUTIONS Households Heat for cooking and warm water Power for lighting, communication and electronics Commercial and public services - including healthcare, education, administration, business Power, heat and cooling VIETNAM report 21 (30) Infrastructure - including water supply, sanitation, communication, waste management Power, heat and fuels Traffic and transportation Fuels and power for vehicles Agriculture fuels for vehicles Fertilizer Power and heat for processing crop Industry Heat, cooling and power Tourism - including resorts, lodges etc. Heat, cooling, electricity, warm water Competition Total installed electricity capacity (2009): 18,481 MW; of that total, 69% was managed by Viet Nam Electric Power Group (EVN) and 29% was managed by others. EVN is responsible for electricity supply to support economic development, and to provide power to meet the needs of the people. EVN also has the key responsibility of ensuring investments in power generation and network expansion to meet power demand in the economy. Apart from EVN, other companies are also responsible for many aspects of the market, supplemented by the Build–Operate–Transfer and independent power producer (IPP) schemes run in partnership with private investors. In 2009, 32% (~5,400 MW) of the power supply system in Vietnam was owned by companies other than EVN. EVN is an entirely state-owned and vertically-integrated company. PVN has a wide range of public and private owners, with the government holding the dominant share. PVN is also a vertically-integrated company. In accordance with the Strategy for Electricity Sector Development approved by the government in October 2004, Vietnam is implementing a policy to gradually establish a competitive power pool, to diversify investment and trading, and to stimulate the participation of several economic sectors. The state maintains a monopoly on transmission and the operation of large-scale hydropower and nuclear power plants. The Electricity Law, approved by the Vietnam National Assembly, came into effect in July 2005. The law outlines the major principles for the establishment of the power market in Vietnam. Prime Ministerial Decision 26/2006/QD-TTg (January 2006) establishes the development of a competitive electricity market that attracts investment from foreign and domestic companies. Under this legislation, Vietnam’s power market will be established and developed through three levels: 22 (30) VIETNAM report o Level 1 (2005–2014): an end to subsidised prices and generation monopoly. Generation companies compete to sell electricity to EVN. o Level 2 (2015–2022): the establishment of a competitive wholesale power market. Competition in generation is intensified, power companies and large customers participating in the market have a choice of whom to buy power from. o Level 3 (after 2022): the realization of a competitive electricity retail market. Retail distribution companies compete to sell power, and all customers will have a choice of whom to buy power from. As of 2011, reform of the power sector has not occurred outside of the successful establishment of IPP involvement in generation, predominantly due to EVN’s development of its current conglomerate model. The 2007 proposal by EVN to establish a Power Trading Company, owned in majority by EVN, to act as a singlebuyer whilst keeping the structure of the company intact, was eventually rejected by the government on grounds of conflict of interest, which has led to further delays in the reform of the power sector. (Reegle Country Profile) 23 (30) VIETNAM report -3ENVIRONMENTAL GOVERNANCE 3.1 Description of Environmental Governance 3.2 Environmental & Social Requirements for Projects VIETNAM report 24 (30) 3.1 DESCRIPTION OF ENVIRONMENTAL GOVERNANCE Vietnam has experienced rapid economic growth since economic renovations (doi moi) in the 1980’s. During the same time, environmental issues began to rise into policy discussions and strategies. The National Law on Environmental Protection was passed in 1993, and the Ministry of Science, Technology and Environment (MOSTE) that is now Ministry of Natural Resources and Environment (MONRE) was established. The implementing agency for MONRE is the Vietnam Environment Administration. Challenges with environmental governance have included capacities to enforce the legal framework, a lack of coherence between different legislative measures and the limited institutional capacity and the relatively weak position of the Vietnamese environment ministry. (Quitzow, Bär and Jacob 2011, 7). The Law of Environmental Protection was revised in 2005, which removed some inconsistencies and broadened the scope of the legislative framework. It has also introduced a number of new policy instruments, such as an expanded framework for environmental impact assessment. (Ibid. 13). In recent years the concern for climate change has also advanced environmental governance. According to Quitzow et al. (2011, 14) “The increasing importance placed on climate policy and the development of an eco-efficient economy is accompanied by the willingness to experiment with new policy tools and institutional mechanisms.” 3.2 ENVIRONMENTAL & SOCIAL REQUIREMENTS FOR PROJECTS Environmental Impact Assessment was first introduced into the Law on Environmental Protection in 1993 and amended in 2005. There are two types of EIAs. A simplified EIA, or Environmental Commitment is required for small projects. A full EIA is obligatory for medium sized and large projects. The full EIA is reviewed at the national or provincial level, while the Environmental Commitment is reviewed at the district level. Projects financed from Official Development Assistance (ODA) sources always must have a full EIA done in the early stage of pre-investment. EIA reports are appraised by an EIA Commission before being approved by MOSTE. The EIA Commission-- as stipulated in governmental decree-- consists of scientists and managers and may also include representatives of social organizations and representatives of the population. Consultation with local level authorities is also a part of EIA process. According to an evaluation, the quality of EIAs varies significantly. EIAs are rarely carried out before the licensing of the project; instead they are usually done after decision making and before the beginning of construction. Thus EIAs mostly serve to mitigate project impacts, rather than offering alternatives. Other challenges with EIAs include a lack of capacity for enforcing implementation. (Le Hoai Nam 2010). According to Hostovsky et al. (2010), public participation in EIAs is generally technocratic, expert – driven and non – transparent. Public involvement usually occurs through authorized state channels such as commune leaders, mass organizations and professional organizations. 25 (30) VIETNAM report -4ORANIZATIONS, SOURCES, REFERENCES 4.1 Organizations & Funding Possibilities 4.2 Sources of Information, References & Links VIETNAM report 26 (30) 4.1 ORGANIZATIONS & FUNDING POSSIBILITIES ENERGY Ministry of industry and trade (MOIT) Ministry of industry and trade is responsible for management of all energy industries, including electricity, new and renewable energies, coal, oil and gas industries. It is in charge of the formulation of law, policies, development strategies, master plans and annual plans for those sectors, and submits them to the Prime Minister for approval. The Ministry is also responsible for directing and supervising the development of the energy sector, and reporting its findings to the Prime Minister. Inside MOIT, the Energy Department administers the Vietnam Electric Power Group (EVN), the Vietnam National Coal and Mineral Industries Group (Vinacomin) and the Vietnam Oil and Gas Group (PVN). Many other ministries also have responsibilities relating to energy. (Reegle) Ministry of Planning and Investment (MPI) (link) The MPI sets the Socio-economic Development Strategy and Plan, coordinates the distribution of economywide capital investment among projects submitted by ministries and agencies, and distributes foreign direct investment. (Reegle) Ministry of Finance (MOF) (link) The MOF has jurisdiction over tariffs and taxation related to energy activities. The Ministry of National Resources and Environment (MONRE, www.monre.gov.vn) plays a key role in research and development in energy and environmental protection. (Reegle) Electricity Regulatory Authority of Vietnam (link) The ERAV assists the MOI in managing the power sector, including the regulation of electricity tariffs. (established 2005) Ministry of Natural Resources and Environment Institute of Energy (link) Key organisations studying or developing renewable energy. Centre for Renewable Energy and Clean Development Mechanisms in 2007, and conducting the Master Plan on Renewable Energy in Vietnam. Electricity Vietnam (MPI) (link) The MPI sets the Socio-economic Development Strategy and Plan, coordinates the distribution of economywide capital investment among projects submitted by ministries and agencies, and distributes FDIs. VIETNAM report 27 (30) OTHER Intergovernmental regional organizations There are several intergovernmental regional organizations active in Vietnam. These include The Association of Southeast Asian Nations (ASEAN) (link) and The UN Economic and Social Council for Asia and Pacific (ESCAP) (link). The Mekong River Commission (MRC) (link) works directly with the governments of Cambodia, Lao PDR, Thailand and Viet Nam on joint management of shared water resources and sustainable development. Banks Both the Asian Development Bank (ADB) and the World Bank (WB) have various projects in Vietnam, including a number of projects directed at rural electrification. The Banks also have resident missions in the country. ADB’s country strategy with Vietnam focuses support on six core sectors: agriculture and natural resources; education; energy; finance; transport; and water supply and other municipal infrastructure. The United Nations (UN) (link) The United Nations Country Team consists of all the UN agencies, funds and programs in Vietnam. Global Environment Facility (GEF) (link) Has 42 national projects in the country. There are several projects on the focal area of climate change, which include renewable energy projects. Nordic Development Fund (link) Supports projects in Vietnam. Clean Development Mechanism (CDM) (link) projects First CDM projects in Vietnam were began already in 2006, and over 130 projects are being implemented. National and international NGOs are active in Vietnam. VUFO-NGO Resource Centre (link) offers a directory of international NGOs and other services on its webpage. 28 (30) VIETNAM report 4.2 SOURCES OF INFORMATION, REFERENCES & LINKS Vietnam Renewable Energy Development Project ASEAN Business Link Finpro Business Link National Board of Customs of Finland Business Link World Bank The objective of REDP is to increase the supply of electricity to the national grid from renewable energy sources on a commercially, environmentally, and socially sustainable basis. Business Link Global Energy Network Institute Focus on linking RE resources around the world using international electricity transmission. Business Link Business Link Business Link Business Link Business Link Finnish Customs Samtrix Devi - Rewable Bach-khoa Investment and Development Of Solar Energy The World Fact Book Retail sales and distribution of solar electric power systems Organization involved in RE market in Vietnam, (research, education, training and commercialization of energy products) Product types: Solar Energy Products: PV, Solar Water Heater Wind Energy Products: Small Wind turbines for battery charging. Consultancy services, resource assessment. Green Field Consulting & Research Renewable energy, Consulting and research Business Link NelSol JSC Distributes and sells renewable energy equipment Business Link Center for Sustainable Energy Development (VSED) VSED is a NGO network with the voluntary participation of organizations, institutions and individuals in Vietnam, who work in the fields of RE, energy conservation and efficiency. Business Link Minh Ha Co., Ltd. Designing, supplying and installation of the solar power systems. Business Link Seilar Energy Vietnam Co. Ltd Distribution: Solar panels, solar collectors flat plate, packaged power systems, photovoltaic systems, Heat Pump. Business Link Viet Trung International Investment and Trading Joint Stock Company Wind turbines, solar energy, solid waste treatment technology pyrolysis, water treatment Business Ministry of Education and Training, Vietnam Education Link Unisex Education Link World Bank General Link CIA General Link General Link Asian Development Bank General Link UN Economic and Social Council for Asia and the Pacific General Link World Bank Projects and efforts of financial and technical assistance. It gives a vast inf. package on a country Mekong River Commission Regional development, environment General Link United Nations UN Country Team General Link 29 (30) VIETNAM report Main report. Vol. 1 of Vietnam 3rd Rural Transport Project : restructuring Wikipedia General Link Embassy of Finland in Vietnam General Link Embassy of Vietnam in Finland General Link VUFO-NGO Resource Centre NGO Information General Link World Bank Transport, infrastructure project Infrastructure Link Society Link Vietnam-Culture.com International Tax Deloitte Taxation highlights in Vietnam 2012 Business Link Doing Business in Vietnam HSBC Bank Business, Trade, Human Resources, Taxation, Employment Law, Banking Business Link Country Energy Information Developing Renewables Business Link Doing Business World Bank Business Link Country Risk Classification Finnvera Economy Link Corruption Perceptions Index Transparency International Society Link Country BTI Transformation Level BTI Group Economy Link General Link Country profile, energy maps, tools, programs, organizations & institutions General Link Reegle Clean energy info portal General Link Global Environment Facility The GEF unites 182 countries in partnership with intl. institutions, civil society organizations, and the private sector to address global env. issues Environmental Governance Link Environmental Governance Link BTI analyzes and evaluates the quality of democracy, a market economy and political mgmt. in 128 developing and transition countries International Energy Association Open Energy Info Country Energy Profile & Information Clean Development Mechanism United Nations Framework Convention on Climate Change The Energy and Environment Partnership Africa Project funding Business Link MBendi Economy, Risks, Industry, Business, Energy and a lot of other information Business Link Directory of Development Organizations Contains list of development organizations in the country Society Link United Nations Development Programme (UNDP) Un-political information on country's status on environmental, social and financial situation General Link Communicaid Communicaid is a culture and communication skills consultancy. They enable their clients to create profitable international relationships by building cultural bridges that enhance understanding and establish trust. Society Link Asia Pacific climate change policy series Climate change commitments in Asia Pacific: a green revolution Norton Rose Environmental Governance Link Energy Overview European Chamber of Commerce in Vietnam Business Link 30 (30) VIETNAM report European Chamber of Commerce in Vietnam Business Link Business Link General Link The Institute of Energy Vietnam General Link Norton Rose General Link School of International and Public Affairs, Columbia University General Link The Ministry of Industry and Trade Government Link The Ministry of Planning and Investment Government Link The Ministry of Finance Government Link Electricity Regulatory Authority Government Link The Institute of Energy Vietnam General Link Strategies and Policies to Support RE and EE development in Vietnam Energy and Environment Partnership - Mekong Vietnam - Renewable Energy Action Plan Energy Sector Management Assistance Programme (ESMAP) Power Development Master Plan of Vietnam, period of 2011-2020, outlook to 2030 Nguyen Anh Tuan Renewable energy in Asia Pacific Solid Waste Management in Vietnam Thao Nguyen The role of public involvement in env. impact assessment in VIE: towards a more culturally sensitive approach Hostovsky, MacLaren, McGrath Development of EIA System in Vietnam 1993-2010 Le Hoai Nam Asia at a crossroads: New trends in environmental governance in India, China, Vietnam and Indonesia Quitzow Rainer, Bär Holger, Jacob Klaus Journal of Environmental Planning and Management Bogazici University, Istanbul Renewable Energy World Presentation on regional forum "Building Partnerships for Implementing RE and EE Projects in Mekong Region" ESMAP is a special global technical assistance partnership sponsored by the UNDP, WB and bilateral official donors Published: 3/2010, p. 405-425 Presentation at the 3rd meeting of signatories to SEA Protocol and 14th meeting of Working Group on EIA Geneva, 22-26 Nov 2010 Paper presented at the 9th International conference of the European Society for Ecological Economics, 14-17 June 2011 Environmental Governance Environmental Governance Business Link Cleantech Knowledge Hub Business Link The World Council for Renewable Energy Business Link International Network for Sustainable Energy Business Link Business Link Business Link Nordic Development Fund Conferences & Expo in Africa Environmental Governance Project funding European Biomass Industry Association Global Network on Energy for Sustainable Development GNESD is a knowledge network facilitated by UN Environmental Programme Government Link Global Village Energy Partnership GVEP works with local businesses in developing countries to increase access to modern energy Business Link World Resources Institute WRI works with governments, companies, and civil society to build solutions to urgent env. Changes Government Link Economy Link The World Bank
