By Vijay Jayaraj
Vietnam of the 21st century is completely different from the war-ravaged country of the last century. An industrial hub, Vietnam now is a major exporter of finished goods and has cities that are thriving with economic activities.
The major reason for the economic transformation is the country’s energy sector. However, this is now threatened by international climate policies that seek to transition the country’s affordable and dependable power sector into an unstable and expensive one.
At a crossroads, the country has a choice of opting between increased economic growth and pseudoscientific political agendas that have no regard for the welfare of its citizens. Recent developments in the country indicate that Vietnam will not give up its most reliable and affordable energy source: coal.
Vietnam’s Industrial Growth and Poverty
Vietnam has undergone significant economic progress in recent decades. The poverty rate in Vietnam has decreased significantly since the 1980s, although it remains higher than in many other Southeast Asian countries. Between 2010 and 2020, “the World Bank’s poverty rate ($3.20/day) dropped from 16.8 to five percent, and over 10 million people were lifted out of poverty.
One of the main drivers of economic growth in Vietnam has been a rapidly expanding export sector. Vietnam has become a major producer of textiles, footwear, and other manufactured goods.
In other words, Vietnam depends on its industrial sector for economic progress. In 2021, industry contributed 2.68 thousand trillion Vietnamese Dong to the gross domestic product, the largest contribution among all sectors according to Statista. What fuels these industries?
Coal Drove Economic Progress
Analysis of the economic growth points to a robust energy sector hallmarked by an increasing use of coal. Domestic coal consumption increased from 27.8 million tons in 2011 to 38.77 million tons in 2015 and to 53.52 million tons in 2021, thus doubling between 2011 and 2021. The correlation between coal consumption and poverty reduction is obvious.
This means that the supply of fossil fuels for those industries pretty much decide the degree to which the country’s people prosper. However, the country is far from achieving universal poverty reduction. The World Banks says that “there was significant progress in poverty reduction, but last mile challenges in tackling poverty remain.” For instance, nearly “40 percent of the middle class in 2016 slid to a lower economic group by 2018.” So, Vietnam cannot afford to abandon the energy mix of coal, oil and natural gas that made possible the economic progress thus far.
Hence, the country has made a U-turn from its earlier commitments to reduce coal consumption and is enroute to increasing the importation and use of coal.
Coal Spree to Continue
The Vietnam National Coal and Mineral Industries Group has forecast a growth of 6.1 percent in national coal demand between 2022 and 2025.
Around 90 percent of domestic coal consumption will be for power generation and industries that manufacture cement, fertilizers and metals. Electricity demand is expected to increase from less than 300 terawatt-hours (TWh) in 2020 to a range of 572-632 TWh in 2030. This requires a doubling of the country’s power generation.
The country is on a mission to build nearly a dozen new coal plants. According to Reuters, “Under the government’s latest baseline scenario, coal would remain Vietnam’s most important source of energy until 2030 with more than 36 gigawatts (GW) of installed capacity and up to 11 new coal-fired power plants to be built in coming years, up from about 21 GW in 2020 and 30 GW in 2025.”
Vietnam has entered into a partnership with the U.S., UK, Japan and Europe that seeks to reduce the use of fossil fuels. However, analysts say the $15.5 billion Just Energy Transition project is very vague and lacking information on how it is going to be achieved or what measures will be taken in the short term to have emissions from fossil fuels peak by 2030.
The reality – based on Vietnam’s trajectory of economic growth and its expansion of coal-fired generation – is that the use of fossil fuels will stretch beyond 2030 and far into the future.
This commentary was first published at iPatriot, February 2, 2023, and can be accessed here.
Vijay Jayaraj is a Research Associate at the CO2 Coalition, Arlington, Virginia. He holds a master’s degree in environmental sciences from the University of East Anglia, UK and resides in India.
Tags: Vijay Jayaraj, energy in Vietnam, Vietnam industry
There are no flies on the Vietnamese. They know where Energy comes from and where it does not.
For what it is worth my late uncle Richard Tallboys was British Ambassador to Vietnam from about 1985-1987.
He said the country was going to roar ahead with energy and effort.
He later became CEO of the WCI – World Coal Institute.
—
He had few illusions about where power and influence came from.
—
There is a lot more rivalry between the Vietnamese and the Chinese than most western observers would think given the Chinese support for Vietnam in the 1960s.
—
They are not going to stick with overloaded bicycles and scooters for transport.
—
David Tallboys
Countries such as Viet Nam will sign onto green schemes to collect some foreign currency for “not” emitting halocarbons, planting trees, building combined cycle gas generators, or nuclear plants…. but thinking they will reduce the number of buses, cars, trains or planes they plan on using is a greenie hallucination.
“This means that the supply of fossil fuels for those industries pretty much decide the degree to which the country’s people prosper. ”
This is the money quote for the whole world.
For context the population is now knocking on 100 million, which at least makes per capita calculations easy.
That photo of the Da Nang skyline is very impressive!
I live in a master planned community called Ecopark right outside Hanoi. The speed of development here is truly astonishing. They build new 45 story high rise apartment buildings in months because construction continues 24 hours a day. They reported last week that Vietnam added more cars to the road last year than any country in the world. And they are NOT EVs. In 2009 when I came to Vietnam no one had a car except a few government officials. Now it seems half the population has one.
Power demand in Vietnam grows at the rate of 15% a year. Think about that number for a second. Truly supercharged growth. They understand that burning cheap brown coal from Indonesia is their most economic and reliable option. The one drawback is that brown coal burns fairly dirty and the air quality in Hanoi is quite poor most days. They will need to come up with better scrubber technology to clean up air quality. But I doubt the incredibly pragmatic Vietnamese ever fall for the unreliable and expensive junk the West tries to peddle to them.
Salute!
As a three time “visitor” to the arena from 1967 to 1975, I never got the feeling that the folks there were dedicated Maxists or socialists or anything except entrpenuers or farmers.
Gotta find the reference, but I thot that until that terrible war that VietNam was a very large exporter of rice. Manufactured good was not on the table. Tourism in a view places was so-so before I got there the first time, but crashed by end of 1968 or so. Sad, as the place had some of the most scenic venues upland and along the coast.
The north country reminds me of north Alabama with both coal and iron close to each other. But from dealing idh those folks more than many here, I feel they will do better on non-smokestack industry.
Gums opines…
“Domestic coal consumption increased from 27.8 million tons in 2011 to 38.77 million tons in 2015 and to 53.52 million tons in 2021, thus doubling between 2011 and 2021. The correlation between coal consumption and poverty reduction is obvious.”
Developed countries have achieved their prosperity through the unabated use of fossil fuels in the past. There’s no doubt about that, so it’s understandable and reasonable that undeveloped, or less-developed, countries will increase their use of fossil fuels in order to reduce the amount of poverty and increase living standards in general.
However, we should consider the consequences, world-wide, of there being no movement to discover and develop alternative sources of energy.
Vietnam has doubled its consumption of coal during the past decade, despite a world-wide fear about the climate consequences from fossil fuel use. If there were no concern about CAGW, would Vietnam (and China and India) have increased their use of fossil fuels to an even greater extent?
Also, is it not reasonable to assume that developed Western countries would increase their use of fossil fuels to a much greater extent, without the fear of CAGW?
Whilst it’s true that dire poverty in developed countries is not a major problem, most people still want to become wealthier, and that requires an increase in the use of energy, from whatever source.
In other words, whilst the less-developed countries strive to reach a standard of living comparable to the current developed countries, by using more fossil fuels, the current developed countries would also strive to increase everyone’s living standards by using more fossil fuels, if there were no scare about CAGW.
I’ve read frequent comments on this site that we have hundreds of years of fossil fuel reserves, so there’s no need to reduce consumption right now. But do such statements take into account the continuous increase in the use of fossil fuels as everyone in the world strives for a higher living standard? Whilst it might be true that ‘at the current rate of usage’ we have a hundred years of fossil fuel reserves. However, if the world consumption of fossil fuels were to double in a decade, as it has in Vietnam, then we would have much less than a hundred years of reserves.
Now, I hope no-one is jumping to the conclusion that I’m advocating a reduction in the use of fossil fuels. A continued increase in the use of fossil fuels, at least in the near future, is unavoidable, until we develop reliable alternatives. However, a portion of the current use of fossil fuels should be directed towards the discovery, and development, and construction of alternative sources of energy.
When such alternative sources of energy are demonstrated, over time, to be unreliable and too expensive, and/or cause more problems than they solve, then this should either be fixed with improved technology, if possible, or abandoned.
A major breakthrough in renewable energy will be ‘safe and affordable’ batteries that do not rely upon scarce and expensive materials, as well as safe and reliable nuclear power that does not frighten people, creating the NIMBY syndrome.
Vijay Jayaraj is the best author in the world for honest articles on Asian climate and energy news. Every article of his that I read gets recommended in my daily list of the best articles I read each day. Keep up the good work.
Honest Climate Science and Energy
Two lessons here:
(1) CO2 emissions are strongly correlated with economic growth, and
(2) Over seven billion people of all eight billion people in the world, live in nations with no interest in Nut Zero. Therefore, Nut Zero will fail to stop the rise of CO2 emissions. …
And that’s a good thing, because C3 plants would love double to triple the current ambient CO2 level. And any global warming that results with CO2 above 400ppm will be small and harmless.
Beneficial for colder nations.
Barely affecting the tropics.
And not affecting Antarctica at all.
More CO2 and more global warming in the future will be good news, just as it has been here in Michigan for the past 50 years, The leftist Climate Howlers have this CO2 enrichment of the troposphere bass-ackwards (scientific term).
Interesting piece, the Director of American Chamber of Commerce (AmCham Hanoi)
was a shipmate of mine from the VN era . Apparently he’s been in Saigon since ’92 and is married to a local. There are some stories/photos of him and John Kerry meeting and working on renewable energy projects…He’s a very capable guy,. I see VN going the
BRICS route not the current green path we are on.
Without energy there is no wealth.
King coal was a description of the obvious. It evolved, from the basic realisation of what ultimately creates wealth. The sad lives of self denial adopted by the Climate Alarmists, well some alarmists in the lower orders of the movement, anyway. is completely at odds opposite to the energy consumers at the top of the Alarmists food chain. The likes of Gore, Kerry, DiCaprio, Emma Thompson et al, they do not limit their energy consumption. The top names in the alarmist’s camp know, energy is the essential difference between their unending wealth/freedoms and poverty..
The movement’s poor foot soldiers, gluing themselves to the roads or some other pointless activity, will one day realise what chumps they have been.
NB Mick the Mann could find his hockey stick comes in useful for something after all….
According to the IEA’s SE Asia Energy Outlook 2022 coal provides over 50% of Vietnam’s energy supply with oil and gas taking fossil fuels up to just over 80%.
Across SE Asia as a whole power generation has almost tripled over the last two decades driven by a six fold increase in coal fired generation which accounted for more than 40% of total generation in 2020. They estimate that 5% of people in SE Asia (33m) still do not have access to electricity.
Then they go into a lot of wishful thinking about “clean energy”