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Developing renewable energy in Việt Nam: Through the lens of equality and sustainability


     While Việt Nam is facing many challenges in producing electricity, renewable energy is emerging as the tipping point for advancing development that is inclusive and sustainable in the country. 

     Việt Nam set the target of an 8 percent reduction in CO2 emissions

     As climate change is progressing at an even greater pace than expected by various climate modelling scenarios, the Inter-governmental Panel on Climate Change (IPCC) is urging countries to take robust action to cut down greenhouse gas (GHG) emissions to limit the average global temperature increase to no more than 1,5 degrees Celsius by 2030. The 25th session of the Conference of the Parties (COP 25) to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2019 calls for action and champions to demand more ambition from nations to fight the climate crisis. This is also an invitation to elevate care for the environment into a national theme where all have a role to play. Việt Nam’s high-level delegation is going to join the COP 25 with strong commitments in climate change adaptation and mitigation.

     In its Nationally Determined Contributions (NDC), Việt Nam set the target of an 8 percent reduction in CO2 emissions, through measures such as land-use change, forest management and reforestation, low-carbon rice farming practices, and renewable energy development.


Việt Nam strives to reduce greenhouse gas emissions


     It is expected that by 2030, 47,3 billion kilowatt-hours of electricity in the country will come from wind and solar energy. Under the revised Power Development Plan 7 (PDP 7) of state-run Electricity of Vietnam (EVN), renewable energy will account for a modest 10,7 percent of the national electricity output in 2030 (Figure 1). In 2019, the development of renewable energy in Việt Nam has made significant progress (Figure 2). Notably, with a record level of solar power facilities put into operation, Việt Nam has become a very active and attractive renewable energy market in Southeast Asia.

     This, on one hand, contributes to the reduction of GHG emissions that Việt Nam has committed in the NDC. However, this incredible development is also posing new challenges for the steady development of the national grid, as well as land use, electricity pricing, human and financial resources and especially for equitable and sustainable development, that is, to ensure that no one is left behind because of losing their livelihoods, jobs, or agricultural land in the process.



     Oxfam in Việt Nam recommends three sets of solutions to work towards the development of an inclusive and sustainable renewable energy industry in Việt Nam.

     Sustainable livelihood and equality for all stakeholders

     The development of renewable energy, especially wind and solar energy, requires vast areas of land to be repurposed. People can lose their agricultural land if it is acquired and handed over to enterprises to develop renewable energy projects.

     Currently, there are no specific regulations to provide an explicit rate for land compensation or land price to pay landholders. The process of converting agricultural, forest and aquaculture land into land for renewable energy generation does not engage people who are directly affected but are only subjects to the agreement between provincial Governments and investors.

     The lack of engagement of local communities and civil society organizations undermines the rights of local people to voice their concerns. Consequently, affected landholders are put in a disadvantaged position, receiving low land compensation rates while losing their vital production resources.

     Currently, there are many different models for electricity sector stakeholders to join hands to reduce GHG emissions, including the conversion of low-productivity lands for renewable energy development, purchase of production land from local people, land leasing and the use of land as shares. Among these models, using land as shares is the most sustainable mechanism.

     People with land can become shareholders in renewable energy projects by contributing their plots of land, therefore, enterprises do not have to incur enormous amount of capital upfronts for land compensation and people can participate in the protection and development of renewable energy areas, which would also mean protecting their own productive assets.



     This way, people can earn dividends from electricity projects, and at the same time have a source of monthly income based on their own land and do not have to forgo the land permanently. This model requires a process of testing, cost-benefit analysis, repurposing of land use and provision of guidelines for provincial Governments to work with investors. Most of all, this shareholder model requires a participatory process that includes landholders throughout the process of developing renewable energy projects.

     Green finance for renewable energy development

     According to the Ministry of Planning and Investment, from now until 2030, Việt Nam needs about $30 billion for renewable energy development. The current green finance mechanism is a good way to attract the participation of the private sector. However, no green finance model is in place to facilitate climate change mitigation.

     In Việt Nam, there is currently no existing green financing mechanism for climate change mitigation. Commercial banks are willing to provide loans to enterprises and households to develop renewable energy.

     However, the lending interest rate of these loans is now 12 percent, which is higher than the commercial lending rate. This is not fair because enterprises and people applying new technology to reduce GHG emissions and protect the environment should enjoy a lower rate of interest than commercial loans.

     Việt Nam is part of the Climate Vulnerable Forum (CVF), which is the group of the world’s most disaster-prone, climate-vulnerable countries. There are 10 Asian members: Afghanistan, Bangladesh, Bhutan, Cambodia, Mongolia, Nepal, the Philippines, Sri Lanka, Timor-Leste, Việt Nam. With their people experiencing some of the worst impacts of climate change - from super cyclones to extreme flooding, displaced communities, and disappearing arable land - CVF Governments and their citizens know that inaction is no longer an option.

     In 2015, CVF member states created the Vulnerable 20 (V20) Group of Finance Ministers, to bring together the finance ministers of all CVF countries (which now number more than 20). The V20 is focused specifically on mobilizing financial resources for climate action. It has called on international financial institutions to align their operations with the Paris Agreement, the 1,5 degrees Celsius limit and with their member economies’ 100 percent renewable energy vision in support of sustainable development.

     Việt Nam needs to adjust the renewable energy targets in the revised PDP 7 and its Strategy of Renewable Energy Development to be consistent with the CVF vision of 100 per cent renewable energy by 2050. It should also avoid borrowing for new coal plants or lifetime extensions for existing plants. Most importantly, although the development of renewable energy to replace coal and fuel energy is essential, the development process requires consideration of sustainable livelihood solutions for the local communities and an approach for mutual benefits between investors and local people.

Hồng Nhung (VietNamNet Source)

(Source: Vietnam Environment Administration Magazine, English Edition III - 2019)


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