As a fast growing economy Vietnam experiences a rapid growth in energy consumption with double digit growth rates for electricity consumption. In order to meet the demand, several new coal fired power plants are under construction and more are planned for. At the same time, the country has a significant untapped potential for increased energy efficiency and use of renewable energy. Vietnam pledged at COP21 in Paris an unconditional 8% reduction target in greenhouse gasses in 2030 and a conditional 25 pct. reduction target depending on international support.
Vietnam and Denmark entered in 2013 a long-term cooperation agreement to strengthen Vietnam’s transition to a low-carbon economy.
The cooperation with Vietnam has three main focus areas: energy efficiency investments in small and medium sized enterprises with focus on the brick, ceramic and food processing industries; building code implementation for large buildings; and planning for power sector development with large shares of renewable energy.
Energy efficiency and investments
Small and medium sized enterprises account for more than 40 pct. of all industrial energy consumption in Vietnam. These enterprises have great potential to become more energy efficient, but they face a number of challenges when it comes to procuring and financing the necessary improvements.
The bilateral cooperation focuses on a limited number of widely applied industrial processes to alleviate the multitude of barriers. A financing mechanism has been devised with a loan guarantee of up to 50 pct. of investment costs and a rebate scheme for successful energy efficiency projects. In addition, technology suppliers are trained in more energy efficient solutions and small and medium sized enterprises are made aware of the benefits of energy efficiency. The component has a budget of DKK 35 million to support bankable energy efficiency investment projects of small and medium sized businesses.
Newly adopted building code
The Danish Energy Agency (DEA) is providing technical support to the Vietnamese Ministry of Construction on the implementation of a new building code regarding energy efficiency in new and large buildings. The objective is to establish mechanisms for the building regulation to increase knowledge, training and awareness in the building sector on how to design, build and inspect new buildings in a more energy efficient and cost-effective way.
A total of 50 local experts have so far been trained in design of energy efficient buildings in accordance with the new building code. The experts have already performed a series of courses for building designers, and the training material developed has been adopted in the curriculum of the universities.
Power sector development planning for renewable energy
DEA is sharing Danish expertise and experience in development of a power system which is capable of integrating large shares of solar and wind energy as well as hydro power. The cooperation on this component includes implementation and capacity building of an analysis software and to elaborate an energy outlook report on the opportunities for a low-carbon development of the power sector.
Funding from the Danish Climate Envelope
Through the Danish Climate Envelope programme the Danish Energy Agency (DEA) cooperates bilaterally with four emerging economies that experience increasing carbon emissions and have large mitigation potentials, namely China, Mexico, South Africa and Vietnam. The four programmes focus on decoupling the countries’ carbon emissions from their economic growth by reforming their energy sectors towards more renewable energy and increased energy efficiency. The four programmes were launched during the course of 2013 and 2014 as part of the framework under the 2013 Climate Envelop. The programmes are scheduled to be concluded in June 2017.
With the Copenhagen Accord adopted at COP15 in Copenhagen in 2009, developed countries committed to provide 30 billion USD for the period 2010-2012 for developing countries. The financing should work as start-up funding for their climate adaptation, mitigation actions, capacity building, technological transfer and forest protection. Denmark has since 2010 provided 2 billion DKK in funding under the Danish Climate Envelope to fight climate change. The contribution to the programme in Vietnam is 65 million DKK.