15.06.2017

"If it can be done there, it can be done here as well!"

Hanoi (Vietnam) – Interview on the challenges and opportunities of an energy transition for Vietnam

Koos Neefjes and Dang Thi Thu Hoai at a workshop by CIEM and FES Vietnam in Hanoi, 1 June 2017, by FES/Julia Balanowski

Many Asian governments currently face the dilemma of meeting their fast-growing electricity demand while being confronted with the need to reduce their country’s greenhouse gas (GHG) emissions intensity (the volume of pollution per unit GDP). Accordingly, their energy systems will undergo a major transformation within the next couple of years. To avoid becoming locked in to carbon-intensive energy and economic models, it is essential to shift to large-scale development of renewable energies and energy efficiency.

To answer the question of how an energy transformation can be implemented in a socially just manner, Friedrich-Ebert-Stiftung (FES) through its Vietnam office is supporting a comparative study series on the political and socio-economic drivers and challenges of an energy transition in eight Asian countries, including Vietnam.

On 1 June, Vietnam’s Central Institute for Economic Management (CIEM) and FES Vietnam presented the first results from the country’s case study at a joint workshop.

Authors Koos Neefjes and Dang Thi Thu Hoai based the study on numerous interviews and their long experience in the climate and energy sector in Vietnam. Neefjes is a senior expert on climate change and director of Climate Sense, who works for different development agencies and NGOs, with a current focus on Vietnam. Formerly, he worked as a policy advisor with Oxfam GB and the United Nations Development Programme (UNDP). Dang Thi Thu Hoai works as a senior expert for the CIEM, a Vietnamese governmental agency under the Ministry of Planning and Investment.

The interview was conducted by Julia Balanowski, a consultant working for FES Vietnam.

What has happened in Vietnam in terms of clean energy and energy efficiency efforts in the last couple of years?

Dang Thi Thu Hoai: Discussion about these topics has clearly been increasing and getting more attention in recent years. In fact, Vietnam has recently taken several actions pushing the clean energy development. , Policy documents have been issued related to the expansion of renewable energies and the mitigation of greenhouse gas (GHG) emissions. In the national Green Growth Strategy, the Vietnamese Government highlights quantified targets relating to clean energy for 2011-2020. It is stated that the intensity of energy use per unit of GDP will decrease by 1.5 per cent annually. Also, GHG emissions in the energy sector will be reduced about 10 to 20 per cent compared to a business-as-usual baseline. Furthermore, Vietnam has recently revised its Power Development Plan. In the revision, the share of clean energy and in particular, renewable energies was increased.

Still, Vietnam continues to rely significantly on coal-fired power plants, with a targeted share of more than 50 per cent in the energy generation mix until 2050. How does this fit together?

Koos Neefjes: The big question is why Vietnam is slow on what we call non-hydro renewable energy transition. In the field of energy efficiency, ok, there are some successes. But Vietnam is slow on wind, solar power and on biomass except from biogas. The answer to this question is: vested interests.

In terms of clean energy development, we need to get some forces and voices from outside to push the process. We cannot simply rely on the MoIT alone unless there is a significant institutional change.

Dang Thi Thu Hoai: When I repeatedly hear the leaders of the Ministry of Industry and Trade (MoIT) mentioning the need to expand coal development instead of alternatives like renewable energies, I’m always very surprised, because that represents a huge disconnect with the wider discourse, and with Vietnam’s requirements. On the one hand, there are a lot of discussions on renewable energy potential, and there are even discussions about making the renewable energy industry a priority sector that Vietnam should develop in the future. On the other hand, people at MoIT seem not to appreciate all that kind of potential. Is it a because of the strong vested interests? In terms of clean energy development, I think we need to get some forces and voices from outside to push the process. We cannot simply rely on the MoIT alone unless there is a significant institutional change.

Koos Neefjes: But it is the vested interests combined with the perception. The leaders’ statements relate also to their perception; it is not that they defend only their political interests. They seem to genuinely believe that the intermittent power generation of solar photovoltaic (PV) systems is a problem and the scale is peanuts—the Chief of the General Department of Energy once told me to my face that rooftop solar for households is not worth it. They do not read all those international newspapers that someone from a NGO or a researcher does read.

The United Kingdom had a huge amount of solar power production last week. Most of its power came from solar. Do you know how cloudy it is in the UK? It is not a sunny country! Or take the Netherlands, my own country, also not sunny: The total amount of solar is already cumulatively the same as several big power plants. And my country is not a champion like Germany or Denmark. So, if it can be done there, it can be done here as well. It is, however, important to overcome these untrue perceptions.

How to achieve this?

Koos Neefjes: Awareness raising is a central point. People’s awareness is increasing, and this is the most critical thing. Because if people at every level are more aware, decisions have to become more rational. And who are people? They are a mixture of ordinary citizens, students, and officials at different levels in different places. Take CIEM as an example, or the Institute of Energy. They always must brief the minister, vice minister, or prime minister on this or that. So, whatever they do with our upcoming study and the relating info in their computer, they will pass on the key points at an appropriate moment. So, our research report is contributing to the body of knowledge on this issue. I think this a very healthy project: The country will do something, but we first need to know the facts. That is very rational.

Dang Thi Thu Hoai: I also strongly recommend improving not only the awareness within the government departments but also in the party organizations and the National Assembly. I think their role is increasing and they can have an influence on this.

What is essential to achieve the transition in a just manner?

Koos Neefjes: Our report makes some recommendations on this. The word “just” means that you must look at potential losers of the transition, or of the business-as-usual-scenario, because the losers might be the same in both scenarios. In both cases there will be a time when, for example, energy prices must go up. This may not be by a lot, but it still means poor people need some form of protection.

I think you also need to look at small and medium enterprises and micro enterprises, with regard to both workers and owners. In rural areas, these enterprises can benefit from what we call decentralized or distributed power production. Solar PV on the roof could be good for workers, and it could benefit the entrepreneur: no blackouts, no production interruptions. These opportunities are now not yet created fully.

Vietnam recently issued a support policy on solar PV. The new policy will not enable households to install small systems and reduce their monthly power bills unless additional regulation is going to be issued. To make it socially just there is lobbying work to be done.

Vietnam recently issued a support policy on solar PV, including plans for rooftop systems and "net-metering," but this refers to a power purchase agreement and not to international practices that are administratively simple. The new policy will not enable households to install small systems and reduce their monthly power bills unless additional regulation is going to be issued. To make it socially just there is lobbying work to be done. MoIT must start thinking in a different way at a high level.

Another point is access to energy. In Vietnam, the penetration of the electricity grid is extremely high. But you do need to realize that power in the remotest areas is interrupted very frequently, meaning it is not good enough for running machines, not good enough for running pumps. So, renewable energies have a role in improving power supply in remote areas, including those which are in principle connected, as well as off the grid.

We recommend in our report that we should make sure that renewable energy development benefits poor households. They can produce electricity collectively, they can group together as a cooperative just like in Germany

Dang Thi Thu Hoai: We recommend in our report that we should make sure that renewable energy development benefits poor households. They can produce electricity collectively, they can group together as a cooperative just like in Germany.

Koos Neefjes: Sure, farmers to become energy producers! The brother of a friend of mine is running a farm in Germany, making more money out of the solar panels and the wind turbines on his land than the cows in the shed. Of course, there are subsidies, but nevertheless it works, he does have the windmills and he does have the cows, and it’s good for the country. It’s a system that is not going to suddenly disappear. It is very important that people’s mindset changes. A decentralized and diverse system of power production would mean that power production is not only done by large and mostly state owned enterprises, but also by private companies, cooperatives and even households. Enabling this would create opportunities for farmers and their communities to become power producers!

Would you say that there is a public discourse outside academia on an energy transition in Vietnam, and if yes, who is holding this discourse?

Koos Neefjes: I think it is emerging, there are some researchers, there are some NGOs, there are some officials, and young people, in particular students, but also professionals who simply would like a greener and cleaner future. And they are very well informed, they know that the prices of renewable energy technologies are falling internationally, so they can combine economic benefit with a cleaner alternative. They know that Vietnam is one of the world’s most interconnected countries from an internet perspective. The penetration of mobile phones and internet access is very high. Literacy is exceptionally high. English language skills are amazingly high compared to just a few years ago. I know of 12- and 13-year-old kids in the mountains as well as in the rural area lowlands who already learn English. This means they can access all the information on the internet. Yes, the emerging discourse happens in social media, it happens in newspapers and in workshops. NGOs and development partners organize workshops based on research, and there is a dialogue happening. Yes, there is still resistance, but there is also a lot of support, and the latter is growing.

Dang Thi Thu Hoai: I think that people are now more aware of the need to protect the environment. Environmental aspects are an emerging opportunity to push the development of renewable energies.

Since you have been engaging in the sector for quite a while, was there any outcome of the study that surprised you?

Koos Neefjes: One of the key things we have put in the report very prominently is a very strong assertion of some of our interviewees regarding the question of the slowness of non-hydro clean energy development. The main answer “vested interests” was articulated stronger than I had expected. The second thing is that there is much more going on in Vietnam than I knew. Manufacturers of solar equipment, foreign investment, and so on.

In your study, you give some recommendations towards a socially just energy transition in Vietnam. If you had to pick one urgent action on energy and climate policy, what would it be?

Dang Thi Thu Hoai: The urgent is different from the feasible. Sometimes it’s urgent but it’s not feasible at the moment. One example in my opinion is the necessity to reform EVN. The reform of the state-owned enterprise (SOE) sector has already started. It is very slow and hard, but an important process. It is essential to separate EVN from the MoIT and make the MoIT more responsible for energy development in a sustainable manner.

Koos Neefjes: A more practical thing that should happen is simple regulation, for example on net-metering for households and local communities. They only need to copy regulation from somewhere else in the world, it exists in many countries. Work on it has happened, stopped, has happened, stopped and to some extent is ongoing. It’s excluded from the recent solar PV decision, but net-metering must focus on solar.

One reason why I say this is practical and urgent is because it will cost the government nothing. It will only benefit the country. It will not be an immediate avalanche because poor people will not be able to buy rooftop solar PV installations. But I will buy it immediately because I will get my money back. Even if I am not an environmentalist, I will get my money back within maybe about seven years, yet the system will be on my roof for 20 years or longer. I have nothing to do, except maybe clean it. And my neighbours will notice, and they will also build it and then the prices will come down. The south of the country is much sunnier, so if PV has a good return on investment in Hanoi, it is also in Ho Chi Minh City.

Sure, it will meet resistance in EVN and different companies because it will be a hassle for them to interconnect households. That's the key, that is what needs to be changed through lobbying the National Assembly, the MoIT, the Prime Minister. Will that make any immediate change to the country? No, but it will start changing things. And it will open so many opportunities for NGOs to work in the rural areas to help relatively poor people, small businesses and so on. Because that is where blackouts are more frequent, the payback of it is even better. And they can subsidize, if the people are too poor to pay themselves. I really think that this is simple, critical and possible to achieve. ###

Julia Balanowski supports the climate work activities of FES Vietnam in the capacity of an external consultant. For more information on climate change work by FES in Asia contact Yvonne Blos, Regional Coordinator for Climate Change in Asia, FES Vietnam Office.

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