BLOCK 3:

An overview of the energy transition in Vietnam:

Achievements and challenges (2)

Lecturer Series on Renewable Energy Policies in

Vietnam
Hanoi University of Science and Technology (in
cooperation with GIZ Vietnam)

Dr. David Jacobs

April 2021
Lecturer

Dr. David Jacobs

o Worked as lecturer for master students on energy and
climate issues at Hertie School and FU Berlin
o 15+ years experience in renewable energy policies
o 70+ publications on energy and climate
o PhD in renewable energy policies (feed-in tariffs)
o Founder and director of IET

o Focus on sustainable energy policy and

market design
o Consulting and presentations in 40+ countries
around the world
o Clients: IRENA, UNEP, IEA RETD, World Bank,
OSCE, GIZ, etc.
2
Agenda and Sessions

Session Date Session Title

Programme for 19 April: International Overview and Vietnamese Energy Transition
Block 1 Overview of international energy transition trends: Technologies
and policies
Block 2 An overview of the energy transition in Vietnam: Achievements and
Challenges
Programme for 20 April: Challenges for the Vietnamese energy transition and de-risking

Block 3 An overview of the energy transition in Vietnam: Achievements and

Challenges
Block 4 Risk and de-risking policies for the energy transition
Programme for 22 April: Renewable energy support policies (large-scale systems)
Block 5 Renewables feed-in tariffs and auctions
Block 6 System integration of variable renewable energy sources
Programme for 23 April: Renewable energy support policies (rooftop PV) and climate policies
Rooftop solar PV policies: FITs, net metering and self-consumption
Block 7 in Vietnam
The need for speed: A new policy mix to meet the objectives of the
Block 8 Paris Agreement
3
Agenda and Learning Objectives
Agenda and Learning Objective

• Understand recent policies and achievements in the Vietnamese energy

transition
o Clean Transport (e-mobility)
o Gas sector development
o Decarbonisation

• Understand the challenges of the energy transition in Vietnam

• Understand the missing policies in the Vietnamese energy transition context

5
Options for Decarbonizing the Transport
Sector
Options for Decarbonizing the Transport
Sector

• Three major options for decarbonizing the transport sector:

o Using renewable electricity directly
o Using liquids or gases (e.g. hydrogen) converted from electricity (RE)
o Using biofuels with low greenhouse gas emissions

7
Efficiency Losses with Other Vehicle Drive
Technologies
Figure: Individual and overall efficiencies for cars with different vehicle drive
technologies, starting from renewable electricity

Source: Agora Verkehrswende (2017b)

8
Options for Decarbonizing the Transport
Sector

Source: IRENA (2018)

9
Using Electricity for Trucks

Source: SIEMENS

10
Hydrogen

Integrating renewable electricity into end uses by means of hydrogen

Source: IRENA (2018)

11
Electric mobility and clean transport
International Background:
The Rise of Electric Mobility

• Globally, the transport sector is the second largest source of energy end-use
• The global race to transform the transportation sector away from oil is
underway.
• By the end of 2019, 46 countries around the world have adopted specific
deployment targets for electric vehicles
• A few jurisdictions are taking the lead: China, Norway, California.
• Electric two- and three-wheelers already have better economics than their
internal combustion engine alternatives; the same is becoming true for cars
and light vehicles as well
• But, transitioning the transport sector to cleaner sources of fuels and engine
types takes time: important to start sending the right signals to the market
today

https://theicct.org/sites/default/files/publications/update-global-EV-stats-20200713-EN.pdf
International Background:
The Rise of Electric Mobility

There are three main drivers behind the rise of electric vehicles:
1. Cost-competitiveness of electric vehicles vs. internal
combustion engines;

2. Urban air pollution, and the impacts on human health, and

on healthcare costs;

3. Mounting concern over global climate change, and the need

to reduce emissions from the transport sector.
Transport Sector Transformation in
Vietnam
• Hanoi and Ho Chi Minh City are now among the top
15 most polluted cities in southeast Asia
• predominance of two- and three-wheelers in the
Vietnamese context should inform policies

15
Policy Toolkit
Upfront Incentives: Subsidies and rebates
o Currently most widely used
o Useful in early stages of adoption
o Becomes expensive with rising shares
Fiscal Incentives: Tax exemptions
o Used in many countries
o Provides clear incentive directly to buyers
o Can be either for individuals or for companies
Supportive Regulations: Wide range of tools
o Free parking, free charging, etc.
o Auto efficiency and emissions standards (g CO2 per km travelled)
Mandates: Quotas
o Obligations imposed on retailers or manufacturers
Bans and restrictions:
o Bans on specific vehicle types (ICEs or polluting motorcycles)
o Low-emission zones
Power to Mobility:

EVs and impact on electricity systems

Policy Toolkit
Plus, investments needed in charging infrastructure.

Classic “Chicken and Egg” problem

EV Charging

• EVs could cause peaks in electricity demand

• Rate design can give appropriate price signals to EV customers

• Alternatives:
o The DSO communicates potential grid connections to EV customers (direct
control over charging processes)
o Aggregators are confronted with price signal and coordinate charging accordingly
o Load management systems at distribution level

19
EV Charging

Source: IRENA (2017)

20
System Friendly EV Charging

• Charging during solar peak periods or wind peaks

Source: https://energywatch-inc.com/increase-electric-powered-vehicles-will-grid-respond/

21
Electric Mobility – Smart Charging

Goal:

Incentivize charging
during off-peak hours

Peak load reduction ➔ Reduce impact on local grid infrastructure

EV Charging: Reduction of Distribution
Network Expansion

• Reduction of
cummulative
distribution network
expansion costs in
Germany until 2030
• € 33 billion can be saved

23
Policies to Support Smarter Charging

Deadline Differentiated
Time of use Rates: Pricing:
- Provides price signals directly - Provides lower pricing for
to end-users to defer their longer charge cycles;
charging, or to “charge higher pricing for fast-
smarter” charging
- Response can be either - Differentiated pricing can be
behavioral or pre-programmed introduced in household
charging infrastructure as well
- “Load leveling”: Some
jurisdictions are offering highly - Such differentiated pricing can
discounted charging rates be regulated or left to private
during the nighttime to (or public) electric vehicle
encourage nighttime demand charging operators
 Easy-to-use charging and digital
payments infrastructure are key

https://www.thebetterindia.com/195078/buy-electric-scooter-bike-reviews-range-specifications-mileage-price-battery-india/
Gas sector development: LNG, green gases,
etc.
International Background:
Gas as a bridging technology

• As a “bridging technology”, in the electricity sector natural

gas/LNG can help countries to move from a coal-dominated
system towards a 100% renewable energy based system.
• However, the window for using natural gas in the electricity
sector is relatively short, since by 2040 or 2050 the power
system already needs to be fully decarbonized.
• Therefore, the risk of stranded investments is high.
International Background:
Sharp reduction of gas required

• According to the Intergovernmental Panel on Climate Change (IPCC), the

safest and surest way to reach the 1.5°C goal would require a 15% decline
in gas use by 2030 and a fall of 43% by 2040
o Case study Germany: To comply with the Paris Agreement objective,
the use of natural gas in Germany will need to be reduced by up to
50% until 2030 and 80-100% by 2050
LNG Expansion: Status in Vietnam

• PDP8 foresees a shift from coal to gas/LNG

• Plans for LNG import terminals (recent agreement with US and Japan)
• Risk of stranded investments if infrastructure cannot be re-purposed in
the future

Source: https://www.burckhardtcompression.com/de/solution/kompressor-losungen-fur-gastransport-und-lagerung/flussigerdgas-exportterminals/
International Background:
Moving towards cleaner gases

• Natural gas and LNG:

o In deep decarbonisation scenarios only relevant with CCS
• Biomethane/biogas:
o Produced by anaerobic digestion or thermal gasification
• Green hydrogen:
o Green hydrogen can be used directly by end customers in different markets (H2) or
it can be further processed to synthetic methane (see below).
• (Renewable) synthetic methane
o produced from H2 from (renewable) electricity through water electrolysis and CO2
obtained from biogenic sources, or captured from air by elevated temperature
processes.
o serves for long-term (seasonal), large-scale energy storage
o synthetic methane suffers from lower efficiency
Gas & LNG infrastructure – risk of
stranded assets?

• Gas pipelines may transport natural gas, produced through

power-to-gas
• Gas pipelines may transport hydrogen after retrofitting (at
reasonable cost)
➔ Some risk of stranded assets / additional investments needed

• LNG terminals, on the other hand, are less easily convertable for
liquified H2 (LH2) if sector moves away from natural gas towards
power-to-gas
➔ Significant risk of stranded assets as technology to convert LNG to
LH2 infrastructure is not yet mature
Gas infrastructure – Retrofitting for
hydrogen transport
• The Netherlands (Gasunie) have
multiple projects for the
retrofitting of natural gas
pipelines to transport hydrogen
(some already finished)
• According to Gasunie, pipelines
can be converted gradually at a
cost of 10% of a new pipeline
• Plans are also considered for a
European-wide H2 infrastructure

Conversion of existing infrastructure for H2 transport and proposals

for new H2 pipelines in Europe (European Hydrogen Backbone
initiative, 2020)
Policy Toolkit

Assess the risk of stranded assets for different

o Higher risk for LNG terminals and import pipelines
o Distribution gas network infrastructure and gas storage facilities are
less prone to being stranded because of the multiple use options
o The risk of stranded assets in gas-fired power plants is relatively low
(relatively low share of fixed costs)

Foresee retrofitting of new gas infrastructure for clean gases

o Assure technical feasibility for retrofitting in a few decades

Advanced energy system planning:

o Include costs for retrofitting in cost assessments
o Assess the risk of stranded assets again potential decarbonisation
scenarios
Additional Policy Options for Vietnam

Shorten amortization periods for gas network infrastructure

o E.g. moving from 50 years to 30 years

Biomethane/biogas:
o Develop a biomethane strategy, including cleaning and feeding
into the gas network

Develop green hydrogen strategies

o decarbonize the more challenging parts of the transport and
industry sector

Figure XX: Viet Nam’s coal-fired operating units evolution scena

Deep Decarbonisation:

Planning beyond 2045

International Background:
Objectives of the Paris Agreement

• Limit the rise in the global average temperature to well below

2 degrees Celsius (°C), and ideally 1.5°C
• Current NDC pledges will lead
us towards a 3°C warmer
world

Source IPCC 2018

Source https://climate.copernicus.eu/surface-air-temperature-september-2020
International Background:
The role of energy

• The world’s energy-related carbon dioxide (CO2) emissions

must fall by at least 70% in 2050
• The electricity sector need to be fully decarbonized around
2050
• Major challenge:
recently built or
planned coal fired
power plants (with 40–
50-year lifetime)
Source: IEA 2020
International Background:
Decarbonization pledges from around the
world

• Already 65 national and sub-national governments pledged to

achieve net zero emissions by 2050
Oct. 2020:
Japan carbon neutral Sept. 2020:
by 2050 China carbon neutral Jan. 2021:
by 2060 USA will re-join Paris
Agreement (100%
clean power by
2035)
Oct. 2020:
Korea carbon neutral Dec. 2020:
by 2050 Pakistan will built no
new coal
Carbon intensity of the power : Status
in Vietnam

Committed emissions from Viet Nam’s

• Greenhouse gas (GHG) coal plants (2019 status)
emissions have increased Figure XX: Committed emissions from Viet Nam’s coal plants (2019 status)

rapidly in the energy sector

over the last decades, reflecting
Viet Nam’s high growth rates in
GDP and energy use.
• CO2 emissions intensity also
increased rapidly, largely
because of a growing
dominance of coal in the energy Source: Carbon Analytics (2019)

mix.
Policy Toolkit
Developing a longer-term outlook in the next iteration of the PDP
(e.g. until 2070)
o Plan the next phase, including deep decarbonization
o provide long-term predictability and certainty for investment
and already give incentives to develop technologies and
industries that will be needed in the long-term.
Implement carbon pricing
o Implementation of a small-scale emission trading scheme
(ETS) or carbon tax
Establish phase-out plans
o Decommission the oldest coal power plants first (less
efficient, most pollutant)
Additional Policy Options for Vietnam

Retrofit conventional coal power plants with CCS to reduce their CO2
emissions
Retrofitting existing coal plants to natural gas/LNG
Shorten planned lifetime of coal assets

Operating Coal Units in Vietnam

75
73 73 73 72 69
71 70 69
70
69 69 69 69 69 69 69 69 69 69 69 69 69
66 69 67 67
65
64 64
62 62 61 61
60
58
55

50

45

40
2024

2032

2040

2048
2019
2020
2021
2022
2023

2025
2026
2027
2028
2029
2030
2031

2033
2034
2035
2036
2037
2038
2039

2041
2042
2043
2044
2045
2046
2047

2049
2050
Viet Nam’s coal-fired operating units evolution scenario
Thank you very much for your
attention!

Dr. David Jacobs

Managing Director

IET – International Energy Transition GmbH

jacobs@iet-consulting.com