Net-zero in Vietnam and the role of renewable energy

At the COP26 in 2021, Prime Minister Pham Minh Chinh made a Net-zero commitment for Vietnam by 2050. For a developing country like Vietnam with an economy heavily dependent on fossil fuels, Is the goal feasible, and how?

The latest 2021 report from the Intergovernmental Panel on Climate Change (IPCC) states that world needs to reduce greenhouse gas (GHG) emissions to 0 (zero) by 2050 in order to control the global average temperature increase to no more than 1.5 degrees Celsius, avoiding catastrophic and irreversible climate disasters.

Therefore, the goal of “Net-zero” is one of the key topics discussed at the 26th United Nations Conference on Climate Change (COP26) in 2021. In brief, Net-zero involves achieving a balance between the amount of GHGs emitted into the atmosphere and the amount absorbed at any given stage.

As of now, 137 countries, representing 88% of total world emissions, including major emitters such as the United States, China, and India, have committed to or are working towards the Net-zero goal. Each country sets its own timeline to achieve this goal, with the majority aiming for 2050, a few exceptions targeting 2035, and the latest commitment extending to 2070.

At the conference, Prime Minister Pham Minh Chinh committed to achieving Net-zero emissions for Vietnam by 2050. For a developing country like Vietnam, with an economy heavily reliant on fossil fuels, how feasible is this goal, and what is the approach?

Main source of greenhouse gas emissions in Vietnam

Participating in the Paris Agreement on climate change, Vietnam commits to mitigating GHG emissions in its Nationally Determined Contributions (NDC) in 2015. The 2020 NDC sets a target commitment to reduce greenhouse gas emissions 9% unconditional (with domestic resources) and 27% conditional (with international support) by 2030 compared to the Business-As-Usual (BAU) development scenario.

The NDC 2020 estimates total GHG emissions to reach 528.4 million tons CO2eq(CO2equivalent) in 2020 and 927.9 million tons CO2eqin 2030. Among the five main emission sectors according to the IPCC classification – energy, agriculture, land use, land-use change and forestry (LULUCF), waste treatment and industrial processes, energy is the sector with the largest emissions, accounting for approximately 65.8% of the total GHG emissions in 2020 and estimated to increase to 73.1% in 2030.

In the energy sector, 60% of emissions in 2020 came from the energy industry – primarily from electricity generation. Therefore, reducing GHG emissions in electricity generation is extremely important for Vietnam to achieve its commitments in the NDC and the Net-zero goal.

As of 2020, the total installed capacity of the national power system reached approximately 69.3 GW, with renewable energy accounting for 55.3% (hydropower 30% and other non-hydro renewable sources 25.3%); fossil fuels accounted for 44%, and the remaining 0.8% was from imported electricity. In the draft of the National Power Development Plan VIII (PDP8), the projected total installed capacity is expected to more than double, to 138GW in 2030 and reaching 276GW in 2045, but the power source structure does not change significantly.

According to this draft, Vietnam will still predominantly rely on energy from fossil fuels (approximately 42% of the total installed capacity) to meet the rapidly increasing electricity demand by 2045.

The scenario for the Net-zero goal

Our analytical model estimates total GHG emissions from 2031 to 2050 based on the 2020 NDC data and other development assumptions, indicating that Vietnam could peak around 1,254.6 million tons of CO2eq in 2040, gradually decreasing to 1,214.4 million tons of CO2eq by 2050. In this analysis model, this represents the BAU scenario according to the NDC commitments before the Net-zero commitment. So, how does the new Net-zero goal impact emissions by sector?

To achieve the Net-zero goal, the forecasting model calculates that Vietnam’s electricity sources need to be deeply decarbonized, with electricity from fossil fuels accounting for only 10% of the total capacity. However, it is not enough, and ambitious measures are required to significantly reduce emissions in other sectors, while also increasing CO2 absorption.

Depending on the nature and technological feasibility of each sector, we present emission reduction scenarios for each sector. For example, transitioning at least 85% of the vehicles from fossil fuels to electric vehicles, reducing 50% of emissions from agricultural activities, increasing CO2 absorption by 50%, and simultaneously reducing emissions from LULUCF by 30% compared to the BAU scenario according to NDC commitments.

How to reduce emissions to achieve Net-zero?

For electricity generation, achieving a 90% increase in power from renewable energy will primarily rely on non-hydropower sources, as the potential of hydropower plants has nearly been fully exploited. Currently, the most feasible non-hydropower renewable energy sources are wind and solar energy. The increasing output structure of renewable electricity requires a stable backup power source to ensure safe operating conditions of the entire system, due to the variable and unpredictable nature of wind and solar power.

At COP26, 46 countries committed to ending the use of coal. In particular, Vietnam is one of five countries participating in the commitment and currently being one of the largest consumers of fossil fuels. Eliminating coal-powered electricity, though it is a significant step to reduce high CO2 emissions, transitioning to gas-powered electricity is not a sustainable long-term solution for the Net-zero goal, as natural gas still produces GHG emissions. In the future, in the absence of breakthroughs in carbon-free technology in the power industry, what alternative options exist for fossil fuel-based electricity to ensure the stability of the system?

For LULUCF, the goal of enhancing carbon sequestration and mitigating emissions by 2050 requires maitaining the current area of natural forest and increasing the afforested area to 1.62 million hectares in the period 2030-2050. This goal poses a significant challenge as forest areas tend to decrease due to both human-made and natural factors, requiring conversion of non-forest land to forestry land.

Analysis of the two largest emission sources reveals that the feasibility of achieving the maximum emission reduction scenario is a challenge. Even if this ambitious scenario is achieved, by 2050 there will still be approximately 240 million tons of CO2eq surplus that need to be neutralized to reach the Net-zero goal. Currently, we can only hope for an early breakthrough in the Net-zero revolution, bringing innovative carbon-free technologies to replace and transform most existing technologies. The feasibility of large-scale carbon capture and storage technologies is also crucial in this context.

Achieving Net-zero emissions will be highly costly, with the UK estimating it will need £1.4–3.2 trillion to reduce from 460 million tonnes of CO2eq in 2020 to Net-zero emissions, compared to achieving emission reductions at a lower cost. World Bank research indicates that global carbon emission reductions could increase by 50% annually with the implementation of a carbon market.

Vietnam has made a stronger commitment to accompany the international community towards the goal of “below 1.5°C”. However, realizing the Net-zero target by 2050 will be costly and requires the development of a strategic roadmap that reflects varying efforts in different sectors, especially energy and LULUCF, to help Vietnam more flexibility in achieving Net-zero.

For electricity generation, renewable sources must reach a minimum of 90% by 2050. While waiting for the new Net-zero technology breakthrough for power generation, the development of nuclear power sources should be considered, otherwise, the country’s Net-zero target will be challenging to achieve.

Source: Forbes Viet Nam

Printed version of Forbes Vietnam magazine No.100, December 2021.

Author: Dang Hong Hanh, Co-founder, CEO of VNEEC.