By Rabea Brauer | Vu Dang Tuan
Although Vietnam has very comprehensive frameworks for its climate and energy policy, there are justified doubts about the practicability of the strategy and its compatibility with economic development. This is reflected in the current climate and energy policy. Right now, it is impossible to consistently pursue the goal of balancing an effective climate policy with a low-carbon economy. This is because the goal is at odds with current developments in Vietnam’s energy sector. Germany Trade & Invest says that, in contrast to Germany’s energy policy, Vietnam has made the construction of coal-fired power plants a top priority, and this despite the fact that the country has considerable potential when it comes to renewable energies
(hydropower, biomass, nuclear energy).
CLIMATE OR THE ECONOMY? VIETNAM’S ATTEMPTS TO BALANCE GROWTH AND THE ENVIRONMENT
How do you achieve harmony between economic prosperity and a decisive climate policy? Governments all over the world are facing this dilemma and trying to tackle the serious challenges presented by the reciprocal relationship between economic policy and climate policy.
The Vietnamese government, like so many others, is taking the problem very seriously and knows that climate change will affect the country’s economic development. With this in mind, Vietnam has spent the past few years successfully constructing a climate policy framework designed to minimise the harm that climate change can do to economic development. The National Target Program to Respond to Climate Change (NTP – RCC), which is closely aligned with the international regulations of climate legislation, forms the institutional framework for Vietnam’s climate policy and was adopted on 2 December 2008. The National Committee for Climate Change was founded on 9 November 2011 and tasked with drawing up a detailed climate strategy. The National Climate Change Strategy was ready and approved by December, and will run until 2050.
CLIMATE STRATEGY VS ECONOMIC DEVELOPMENT
The current climate strategy contains ambitious targets and takes extensive account of the ways in which climate change can affect economic development. Businesses are to become less energy intensive and greatly reduce their energy consumption. The
industrial and construction sectors alone are the focus of targets that aim to make 90 percent of industrial plants more environmentally friendly in terms of energy, fuel and materials consumption by 2020.
The industrial and construction sectors make up some 39 percent of Vietnam’s GDP (US$155.8 billion in 2012)and 52.5 percent of the country’s total electricity consumption. This means industry and construction are not just important cornerstones of the Vietnamese economy, but also its most energy intensive sectors. Another target involves raising the share of renewable energy sources in electricity generation from around 3 percent today to 4.5 percent by 2020 and 6 percent by 2030.
Vietnam’s climate policy does not, in principle, conflict with the country’s socioeconomic development strategy up to 2020. Under the strategy, Vietnam has set itself the ambitious task of becoming an industrialised country by 2020. It also says energy consumption should be cut by 2.5 to 3 percent, and that all new companies and their plants should use “clean” technologies Vietnam’s development plans are closely linked to measures designed to protect the climate and save energy.
ENERGY POLICY: COAL AND NUCLEAR POWER
Although Vietnam has very comprehensive frameworks for its climate and energy policy, there are justified doubts about the practicability of the strategy and its compatibility with economic development. This is reflected in the current climate and energy policy. Right now, it is impossible to consistently pursue the goal of balancing an effective climate policy with a low-carbon economy. This is because the goal is at odds with current developments in Vietnam’s energy sector. Germany Trade & Invest says that, in contrast to Germany’s energy policy, Vietnam has made the construction of coal-fired power plants a top priority, and this despite the fact that the country has considerable potential when it comes to renewable energies (hydropower, biomass, nuclear energy).
Coal, gas and oil are on track to be covering 72.4 percent of Vietnam’s electricity generation by 2020 (they accounted for 53.8 percent in 2012). The idea is that support for fossil fuels will help meet Vietnam’s energy demand, which is already high and is set to keep growing. The Ministry of Industry and Trade estimates that electricity consumption will increase by an average of 9.3 percent by 2020. The fact that the share of non-renewable energies in electricity production is rising more than that of renewable energies is a clear indication that the intended climate strategy cannot currently be implemented as planned and that it deviates from the original development strategy. This tallies with the decision to delay, due to a lack of framework and safety conditions, the construction of the Ninh Thuan nuclear power plant, which was planned for 2020. Thirty more nuclear power plants were due to follow by 2030, but it is likely they will also be delayed.
The reason for this lies in the country’s economic development over the past few decades. When the doi moi reforms were introduced in 1986, the Vietnamese economy began growing very fast. Up until 2007, growth was always between seven and eight percent. However, things have cooled off a lot since 2008. The country has experienced years of macroeconomic instability, with the banking and financial crisis doing a lot of damage to its economy. Although a recovery has set in over the past two years, economic output is still a long way off Vietnam’s original targets. These years of unexpectedly low economic growth, mostly around five percent, have left Vietnam lagging behind the economic targets set out in its development plan. The weak economic development is putting the government under increasing political pressure. As a result, Vietnam’s leaders currently have a great deal of interest in helping the country regain its previous economic momentum. The focus for the short and medium term is therefore on economic development.
From a political perspective, this is not surprising, given that the legitimacy of the Communist Party of Vietnam derives mainly from Vietnam’s economic ascent over the last few decades. In the wake of the economic crisis years, the government not only has to implement effective economic policy measures – it also has to introduce energy policy measures that support the economy, such as providing support for coal. The public are not exerting any pressure on the government with regard to its climate and energy policy, as they, too, are focusing primarily on economic development.
Vietnam’s journalist association says that while reporting on climate-related issues is gradually increasing, media and public interest in the topics is still in the early stages. This means the government currently has no incentive to pursue its climate and energy policy persistently enough to actually achieve the targets that have been set. This highlights the weak point in Vietnam’s climate strategy. Although the government has recognised the long-term economic opportunities that an innovative climate and energy policy can create, errors of economic judgement have led to overblown expectations and thus to an unrealistic climate strategy. The original plans assumed average economic growth of between 7 and 8 percent up until 2020. However, the past three years saw growth of just 5.6 percent. Yet even at the time that the National Climate Change Strategy was being decided, it was clear that the economy would not recover so quickly and that the country was unlikely to achieve the development strategy’s economic target by 2020. Vietnam therefore cannot implement its climate and energy policy as planned because it is based on conditions that are no longer realistic.
1 | Soc. Rep. Vietnam, Ministry of Natural Resources and Environment, “National Target Programme to Respond to
Climate Change (NTP-RCC)”, 3 December 2007, http://bit.ly/1u3Pjdq%5B31 July 2014]
2 | Soc. Rep. Vietnam, Government Portal, “National strategy on climate change”, 5 December 2011,http://chinhphu.vn/portal/page/portal/English/strategies/strategiesdetails?categoryId=30&articleId=10051283%5B31 July 2014]
3 | The World Bank, “Vietnam”, 10 May 2014, http://dataworldbank.org/country/vietnam%5B31 July 2014]
4 | Thomas Hundt, “Vietnam leitet ‘Energiewende‛ zur Kohle ein” (Vietnam initiates energy transition to coal), German Trade & Invest, 9 May 2014, http://bit.ly/1qNx26z%5B31 July 2014]
5 | VientamEnergy, “National Master Plan for Power Development for the 2011 – 2020 Period with the Vision to 2030”, 8 March 2014, p. 2, http://nangluongvietnam.vn/news/en/policy-planning/national-master-plan-forpower- development-for-the-2011-2020-period-with-thevision-to-2030.html[31 July 2014]
6 | Soc. Rep. Vietnam, Government Portal, “Vietnam′s Socio-economic development strategy 2011 – 2020”, 8 November 2011, http://bit.ly/XkgENO%5B31 July 2014]
7 | Hundt, n 4
8 | Hundt, n 4
9 | N 6
10 | The World Bank, “GDP growth (annual %)”, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries [28 July 2014]
Source: CLIMATE REPORT 2014 ENERGY SECURITY AND CLIMATE CHANGE WORLDWIDE
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