Vietnam deals with energy crisis risk

Natural resources in Vietnam may be exhausted in the next 20 years, according to the Central Institute for Economic Management (CIEM). Arguably, energy security is being seriously threatened while Vietnam does not have a specialised national energy management and regulation agency or a consistent national energy policy.

Risks of energy import

According to the national energy development plan, in the 2010-2020 period, Vietnam may see an imbalance of supply of and demand for energy resources. Therefore, Vietnam will become an energy importer and the volume of imports will increase steadily while its energy sources will become scarce.

Currently, in our country, renewable energy sources are almost untapped while non-renewable energy sources like coal, crude oil and natural gas will be used up in the next few decades. According to the Energy Investment Construction Association, Vietnam ranks third in ASEAN and the 31st in the world in oil production but the output is shrinking. Bach Ho oil field is expected to be closed in 2020. If no new sources are found, Vietnam will basically run out of oil and gas resources by 2025.

The construction of oil refineries is too slow and Vietnam has to import all petroleum products from foreign countries for domestic consumption. Thus, when world oil prices escalate or oil crisis occurs, Vietnam will be largely affected. Vietnam also has a reserve of 3.8 billion tonnes of coal but the fossil fuel will soon wear out at the current speed of exploitation. Then, the country has to import coal. In 2020, it is forecast to import 80 – 100 million tonnes to feed thermal power plants.

Regarding renewable energy, the Electricity of Vietnam (EVN) predicted that Vietnam will still be an energy importer by 2020. With respect to electricity source, the country will need 201 billion kWh of electricity in 2020 and 327 billion kWh in 2030. However, Vietnam will be able to turn out only 165 billion kWh at its highest capacity in 2020 and 208 billion kWh in 2030. As a result, Vietnam will lack 36 billion kWh in 2020 and up to 119 billion kWh in 2030. The shortage will be worse given that water sources for hydropower generation are not enough. If these forecasts become true, Vietnam has to import electricity at 2-3 times prices compared with domestic production.

In short, the availability of energy sources in our country is in inverse proportion to the demand of socioeconomic development. Energy is being wasted in all sectors from industry, transport and services to livelihood, public lighting and public workplaces. The excessive use not only weakens the competitiveness of the economy and increases energy security risks but also causes adverse effects on the environment. In many countries in the world, energy efficiency and conservation have been legislated. Meanwhile, in Vietnam, although there is a decree on this effect which came into effect since 2003, contents mainly aim at encouragement, not sanctions to regulate behaviours. Thus, Vietnam lack proper measures to deal with current wastefulness, it will fall into an energy crisis in the next 20 years. According to the national energy development planning, in the 2010 – 2020 period, Vietnam may see a supply – demand imbalance of domestic primary energy sources. After 2020, Vietnam will become an energy importer and the reliance is on the rise.

Solution

Arguably, with relatively high economic growth at present, the energy sector of Vietnam is struggling to meet the consumer demand whereas energy source exhaustion is very close. Reports on Vietnam’s energy realities show that to ensure energy supply, the country needs be a long-term development plan to meet socioeconomic development requirements and national energy security. In the near future, the power savings in production and daily life are playing an extremely important role. Agriculture needs to promulgate a law on energy efficiency and conservation as other countries has done.

But in the long term, Vietnam needs to have an energy security guarantee strategy by exploiting traditional energy sources efficiently and developing new energy sources like clean and renewable energies. In the context that non-renewable fuels are increasingly running out, and fuel prices constantly increase, the discovery of a new clean and renewable energy to replace conventional energies is very urgent. Currently, renewable energy accounts for a very low proportion in Vietnam. Expectedly, clean and renewable energies will account for 5 % of the power output by 2020 and 10 % in 2040.

But this is merely a goal. If there is no action plan, it will hardly become true because the development of clean, renewable energies to replace traditional energy sources is encountering numerous difficulties due to limited technological capabilities and financial strengths. Besides, Vietnam does not have sufficient legal framework to encourage the use of renewable energy for operations of businesses and the business community. Thus, to exploit these sources of energy effectively and sustainably, Vietnam needs to measure clean, renewable energy potentialities as well as outline new energy using plans. Besides, the State should encourage exploiting and using new, renewable energies by funding survey, research, testing programmes.

More importantly, the State should create conditions for the presence of market-based energy prices. At the same time, it will speed up energy import from long-term stable supplies like hydropower from Laos, Cambodia and China, boost up the production and use of domestic energy sources, reduce dependence on imported energies, especially oil, cooperate with Laos to develop hydroelectric, coal mining and coal-fired power plants to supply electricity for Vietnam.

In addition, we also need to build up strategic reserve depots for coal, electricity, oil and gas and other energy sources. According to recommendations of strategists, reserves must be equal at least 30 days of consumption. Energy subsectors need to introduce individual security energy security programmes. – VCCI

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage