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Shaken by news that Vietnam had confirmed plans to build another 40 gigawatts worth of coal-fired power plants by 2030, World Bank President Jim Yong Kim ad-libbed a few lines into a May 2016 speech to an audience of government and business leaders. “If Vietnam goes forward with 40GW of coal, if the entire region implements the coal-based plans right now, I think we are finished,” Kim said. “That would spell disaster for us and our planet.”
The people in Hanoi who make energy policy were very likely startled to learn that what Vietnam does or does not do as it develops its energy sector has world-shaking importance. In a mere quarter century Vietnam has raced from the back of the Third World pack to middle-income status. In the process, however, Vietnam’s economic growth has had an outsized environmental impact; between 1991 and 2012, the country’s GDP grew by 315 percent, while its greenhouse gas emissions rose by 937 percent.
Now that China, which took the “capitalist road” a decade earlier than Vietnam, is stepping up to the challenge of climate change and taking bold steps to clean its air, its neighbor Vietnam risks becoming the new pariah polluter.
EVN — Electricity of Vietnam — is the state power company. It succeeded brilliantly in the 1990’s when ordered to light up thousands of villages. With Russian help, EVN has done a fair job of building some big dams. In the new millennium, however, EVN has gone from failure to failure. The economy is performing well overall, but EVN has been notoriously slow to change. Current leadership has acknowledged EVN is bloated and inefficient, wedded to old methods and overly fond of yesterday’s technologies, and has vowed to catch up with the company’s ASEAN peers.
Vietnam’s doi moi reforms made room for capitalism 30 years ago. For long afterward, however, Soviet-style industrial planning survived at EVN, and to a considerable extent also at the coal and minerals monopoly Vinacomin and the oil and gas monopoly, PetroVietnam (PVN). These three state companies and their nominal supervisors in the Ministry of Industry’s Energy Directorate wield considerable influence in the institutions and councils of Vietnam’s Communist Party. Until recently, all have been dominated by people who cut their teeth on five-year plans for heavy industry and were taught that resources exist to be exploited and that externalities are costless.
EVN, Vinacomin and PVN aren’t typical of modern Vietnam, or even of the state-owned large enterprise sector. In digital telecommunications, for example, state companies display striking capability to embrace, master and deploy new technologies. Nor is the public shy of change. Mobile phones are ubiquitous. In cities and towns, rooftop solar water heaters have become common. A quarter of a million rural families have built biodigesters to recycle farm waste into methane for cooking and heating and fertilizer for their crops.
Up to now in the energy sector, however, Vietnam does not have a comprehensive, reliable energy database. One consequence is that it is virtually impossible to calculate the energy-savings impact of any project. Nor, noted the Asia Development Bank (ADB) late in 2015, is there an integrated master plan for energy resource development.
EVN has struggled to meet the nation’s surging demand for electricity. Brownouts are endemic during the dry season. Because it’s forbidden to cut power to foreign-invested factories, households and domestic small business bear the brunt of cuts, and incidentally pay higher tariffs than industrial users.
Electrical workers in Hanoi. Photo by Michael Coghlan via Flickr.
As sites for big hydro were used up, Hanoi’s attention turned to coal. In 2011, it announced plans to construct 90 new coal-fired power plants by 2025. That forecast has been revised to zero out a plan to build several nuclear power plants and, after Vietnam signed on to the Paris Agreement on CO2 emissions reductions, to promise a substantial role for wind and solar power. However, there’s little doubt that Vietnam will stick to a coal-centered strategy thru 2030 (when coal will supply more than 50 percent of nation’s electric power) and probably beyond.