A Letter from EuroCham to the Government (COP26): An Introduction of EuroCham and GGSC’s Values to Existing and Potential Members

Vietnam has committed to reaching zero emissions of GHG by 2050. It has also joined other 40 countries in joining the “Global Coal to Clean Power Transition Statement” at the international climate talks underway in Glasgow. They committed to cease new construction and issuance of new permits for “new unabated” coal-fired plants and end “new” direct government support for unabated international coal generation. In addition, the countries are committed to “rapidly scaling up deployment” of clean power generation and boosting energy efficiency measures. They will also work to “rapidly scale up technologies and policies” over the next ten years to support a transition away from coal in the 2030s for major economies and in the 2040s globally. 

Earlier this month, EuroCham Vietnam Chairman Mr. Alain Cany and Vice-Chairman Mr. Nguyen Hai Minh were honored to join the Vietnam delegation, lead by Prime Minister Pham Minh Chinh, for the official visit to the United Kingdom and France; and joining the 2021 United Nations Climate Change Conference (COP26). 

Being part of the Vietnam Delegation and being fully aware and supportive of the Government’s ambitious plan for a sustainable development and an effective enhancement of renewable energy deployment in Vietnam, EuroCham Chairman Mr. Alain Cany has delivered the Green Growth Sector Committee’s Green Position Paper to the Prime Minister and relevant Ministers regarding European Business Community’s perspectives and recommendations to the Vietnam Delegation to the 2021 United Nations Climate Change Conference COP26 for accelerating actions towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. 

First of all, EuroCham and the Green Growth Sector Committee applaud the ambitious plan towards renewable energy development and additional emphasis on clean energy in Resolution 55 of the Politburo of the Central Committee of the Party. We highly appreciate the visionary stance that is described in the Resolution 55 and relentless efforts of the Government in building solid legal framework by introducing the new Law on Environment Protection 2020, relevant regulations including the Power Development Plan VIII, Draft Decree guiding the Law on Environment Protection, especially the integration of the concept of Extended Producer Responsibility and Environment Impact Assessment into existing laws.

In this regard, we were writing to the Government providing our European Business Community’s perspectives and recommendations for the Government and relevant authorities to take into consideration to achieve commitments of Vietnam towards global Climate Change actions as of following:

1. Vietnam’s revised Greenhouse Gases GHG emission reduction plan is insufficient to meet the Paris Goals and would contribute to global temperature increase. While there have been positive renewable energy policy developments in Viet Nam, but this does not outweigh carbon intensive plans. 

We strongly recommend the Government to introduce a clearer policy regarding commitment to investment in Energy Efficiency and Clean Energy with more ambitious GHG emissions reduction goals which are sufficient to support the 1.5 degree C Paris Agreement goal.
 
EuroCham would like to urge Ministry of Planning and Investment (MPI) to seek funding support from the global climate finance organisations by adopting a new partnership model of public, private sector joint engagement with the Climate Investment Funds (CIF) and the Green Climate Fund (GCF). We highly advise the Government to grant the acceptance of EuroCham and other private sector representatives as partners in low carbon economic development supported by international climate finance. EuroCham would like to support the MPI and the Vietnam Delegation in facilitating bilateral meetings between MPI, the Government and CIF at COP26 to promote greater cooperation for mutual benefits in the near future.
 
Reference https://climateactiontracker.org/countries/vietnam/

2. The Draft of Power Development Plan VIII (PDP VIII) for energy vastly increases the amount of fossil fuels to be burnt and reduces the goals for wind power 

While the Resolution 55 sets the right direction by prioritizing renewable and clean energy resources, the latest draft of PDP VIII appears not to be in compliance with the visionary objectives described in the Resolution 55 towards a sustainable energy transition and lacks a sufficient policy commitment to wind power, especially a commitment to the development of offshore wind power.
We recognise that wind power could become the largest and cheapest source of indigenous clean energy in Vietnam and we strongly recommend the Government to

  • Adopt a clear and long-term policy commitment in the draft PDP VIII to onshore and offshore wind since many investors currently fear that policy changes will undermine their investment plans in Vietnam
  • Deploy urgent development and implementation of the Power Purchasing Agreement PPA auctions for onshore wind following the end of the current Feed-in-Tarif (FIT/PPA) on 1st November 2021. Uncertainty currently surrounds the date for implementation of auction processes in wind and solar power. We would like to draw your attention to some concern that the impact of auctions in other clean energy markets has been to drive local companies out of the market and concentrate market control in a very small group of global companies. 

3. Forest Protection and Carbon Market Development can promote emission reductions while achieving double-goals outcome 

We note that the protection of the natural forests is a key element of the emissions reduction strategy and EuroCham supports the principle that the largest GHG emitters should pay to mitigate their emissions. This includes the innovative regional scale pilot scheme by US AID of Carbon Payment for Forest Environmental Services (C-PFES). In this context we would like to suggest the Ministry of Agriculture and Rural Development (MARD), Ministry of Natural Resources and Environment (MONRE) and Ministry of Industry and Trade (MOIT) following recommendations:

  • Expand the pilot scheme to a national scale incorporating all “large emitters” within the scheme mentioned above by US AID C-PFES
  • Expand the remit to include the planned Liquefied Natural Gas and Natural Gas burning power plants.
  • Signal and inform the public that the cost per unit of GHG emitted will increase in the future with a transparent schedule and rate of increase until it reaches accepted international level of costs, in consultation with the large emitters and the representative business organisations. 

4. Supporting more Competitive and Diverse Clean Energy Markets will secure investment by Vietnam and foreign investors 

We well acknowledge that the greatest investment and cost benefits come from promoting a deep, wide and well-financed private clean energy sector. And from our opinion, short term policy switching, narrowing of market access caused by the introduction of auctions and heavy-handed regulation may push Vietnamese and foreign investors out of the clean energy market.
 
With this respect, we highly recommend the Government following policies:

  • Support the current Rooftop Solar (RTS) Market by ending the current curtailment of RTS power exports to the grid with Electricity of Vietnam EVN honouring all its obligations to buy excess power from rooftop systems.
  • Reduce the regulatory barriers to large power consumers making on-site “behind the meter” clean energy plants in line with EuroCham GGSC’s recommendations to MOIT (June 2020) and the Central Economic Commission (September 2021).
  • Promote private sector investment in energy storage at all clean energy power plants as a priority.
  • Finalise the planning and investment by EVN needed to secure transmission and distribution of all clean energy resources in the national power network without future curtailment of supplies.
  • Implement the Direct Power Purchasing Agreement pilot scheme project urgently in 2021 to allow large power consumers access to clean energy up to 100% of their needs, ensuring that the costs and regulation of the scheme bring benefits to both buyers and sellers of clean energy and that EVN has a role to support the diversification of the energy market as we prepare for the implementation of a competitive retail power market. 

5. Promote energy efficiency to further reduce the need for new sources of power 

Vietnam’s energy intensity is still one of the highest in the region and the world. The relatively low price of electricity does not help companies focus on the need for efficiency, A 10% to 30% reduction in currently expected demand growth can be achieved, depending on the level of commitment of Vietnam to this policy.
We recommend that Ministry of Construction (MOC), Ministry of Science and Technology (MOST), MOIT promote:

  • The diffusion of modern technology and practical know how, also though the authorization process. Insisting that new investments, both local and international, be more efficient than existing ones. In particular artificial intelligence AI can be used to monitor the performance of complex measurements.
  • The implementation of modern information technology to drive as much data as possible towards the clouding systems, to reduce the fragmentation and proliferation of energy expensive data storage facilities.
  • Seeking approval of relevant large industrial mergers to the commitment to improve energy efficiency.
  • The generalized adoption of (green) building certifications.
  • Implementing a gradual and transparent correction of energy tariffs for business, that will have the further benefit of increasing revenues for EVN and other electricity companies to invest in transmission and safety.
  • New rules promoting cooperation of companies in sharing heat and steam for their production processes.

6. Introduce new rules to reduce the impact of traffic on the GHG emission 

It is a welcome change that Vietnam is transitioning to adopt Euro 5 standards while further reducing emissions. The recent decisions on implementing a revamping of the railways are fundamental to a fast reduction of emissions and increase in logistic efficiency. We predict that the world will welcome some plan to gradually introduce electronic-vehicles into Vietnam. In this prospect, we would like to recommend that:

  • All Vietnamese car companies be involved in this new standard as soon as possible.
  • The Government introduces relative standards, regulations and infrastructure to allow vehicles to circulate, and to recycle used and obsolete products.
  • The Government considers all options of financing for the construction and operation of railways, including private ownership of trains. 

7. Adapt to protect communities and natural habitats: Protect and restore ecosystems 

We notice that Vietnams natural wetlands, lagoons, rivers, lakes and forests are highly vulnerable to climate change, a process that potentially threatens water supply, biodiversity and carbon sequestration abilities.
In this regard, we strongly recommend the MONRE following policies:

  • Improve the protection of surface water bodies
  • Stop encroachments of “wild” settlements and illegal logging, harvesting and poaching
  • Stop illegal sand mining in rivers
  • Fully protect wild-life reserves
  • Emphasise the important functions of forests for the protection of water resources through appropriate regulations and law enforcement

Reference. https://ukcop26.org/cop26-goals/ COP26 Goals - UN Climate Change Conference (COP26) at the SEC – Glasgow 2021
 
Finally, EuroCham and its Green Growth Sector Committee congratulate the successful mission of the Vietnam Delegation and once again reiterate our sincere appreciation to the Government for this opportunity to provide the perspectives of the European business community. We remain committed to working with the Central Committee of the Party, the National Assembly, the Government and relevant public authorities in building a solid legal framework in the future for a more sustainable development with durable Green Growth.

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