Vietnam’s growing demand for energy

This file photo shows a coal mine in the Northern province of Quang Ninh in Vietnam. (AFP Photo)

With a rapidly growing economy, Vietnam is facing an increase in energy demand which is forecasted to grow 10 percent annually. The Vietnam Energy Outlook Report 2017 released by the Vietnamese government in collaboration with the Danish Energy Agency states that electricity demand is expected to grow eight percent annually until 2035.

Vietnam’s economy is forecast to grow at a rate of between 6.5 and 7.5 percent per year from now until 2030 – resulting in additional demand for energy. At the moment, Vietnam is looking to expand its coal sector to meet this growing energy demand.

Currently, the use of coal in the region is quite substantial. From 2000 to 2015, the biomass and hydro share of the total primary energy mix in Vietnam dropped to 24 percent from 53 percent while coal share grew from 14 percent to 35 percent of the total energy supply. 

Vietnam already has more than 20 coal-fired power plants with a total capacity of over 13,000 megawatts (MW). Data from S&P Global Platts, a provider of energy and commodities information, shows that Vietnam’s coal imports in April 2018 hit a record of 2.3 million tonnes, up 132.5 percent year on year. These numbers might already seem staggering but Vietnam’s coal usage in the future would most likely be significantly higher.

More coal in the energy mix

According to a Fitch Solutions report in February, coal will make up 50.5 percent of energy generation by 2028 compared to 22.5 percent for gas. Vietnam also plans to increase the number of coal-fired plants to 32 by 2020 and 51 by 2030. If that goes through, the 32 coal-fired plants in 2020 will be burning 63 million tons of coal per year. Around 129 million tons of coal per year will be burnt by the time all 51 plants are fully operational.

While Vietnam looks to develop its coal sector, more countries are starting to abandon coal and move to greener or less-damaging resources such as natural gas or renewables like solar and wind power.

Foreign investment in Vietnam coal
Source: Various

The government there last month announced plans to build four gas-fired plants with a total capacity of about 6,000 MW with Thailand’s Gulf Energy Development in a deal worth US$7.8 billion. Not only will this make Vietnam one of the world’s newest liquefied natural gas (LNG) importers, it will also cut its coal use.

The attractiveness of coal to Vietnam is probably its affordability. However, Vietnam has been facing a backlash for its plans to increase the use of coal in the country. In the summer of 2016, World Bank president, Jim Yong Kim rebuked Vietnam for their coal plans. “If Vietnam goes forward with 40 GW of coal, if the entire region implements their coal-based plans right now, I think we are finished,” said Jim Yong Kim.

Environmental issues

Most, if not all the concerns surrounding Vietnam’s increased dependence on coal are environmental in nature. A recent study by Harvard University and Greenpeace revealed that existing coal plants cause an estimated 4,300 premature deaths every year. This number could rise to 25,000 premature deaths per year. This loss of life is preventable if Vietnam refocuses its sights on renewable and sustainable energy.

Vietnam has already included a renewable energy development strategy into its energy plans. In fact, Vietnam is making great strides in developing its hydropower, solar, and wind capacity.

Despite that, coal still remains a priority for the state. As long as coal is cheaper compared to other sources of energy, it will remain the number one choice. It also doesn’t help that foreign investors are making huge investments in the country’s coal sector. In 2017, total foreign investment into coal projects in Vietnam was worth around US$20.5 billion.

If Vietnam is serious in its pledge to reduce carbon emissions to eight percent by 2030, it needs to rethink its coal plans for the future. It needs to realise that it already has great potential for renewable energy and shouldn’t be depending on coal.  

A 2017 report by the World Wildlife Fund for Nature (WWF) Vietnam and Vietnam Sustainable Energy Alliance highlighted that 100 percent of Vietnam’s power could be generated from renewable energy by 2050. With a growing economy, Vietnam has to invest in sustainability and lead the way in showing that economic growth and sustainability can go hand in hand.

This article was first published on 28 December, 2019. 

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