With Japan’s help, is Vietnam headed for a flawed energy transition?

Ngo Thi To Nhien was not an activist or a dissident, but “a government insider,” according to The 88 Project, a group tracking political prisoners in Vietnam.

This did not prevent her from being arrested by the Vietnamese authorities in September and accused of “stealing, buying, selling or destroying” state seals or documents — charges for which she faces up to five years in prison.

Nhien’s most recent job was as director of a Hanoi-based sustainable energy think tank, and at the time of her arrest, she had been advocating for an end to the building of coal-fired power plants. Before then, she had worked as a consultant for projects with international partners such as the World Bank, many involving the Vietnamese government.

The 88 Project views her arrest — and that of five Vietnamese climate activists since 2021 — as “politically motivated.”

The work of Nhien and other civil society players — including those arrested — is credited with having paved the way for a $15.5 billion investment package to help Vietnam reach its goal of being carbon neutral by 2050. As part of the Just Energy Transition Partnership (JETP) agreed to in December 2022, a consortium of governments called the International Partners Group (IPG), which includes all Group of Seven members, is mobilizing to provide the sizable sum.

Japan has committed $342.4 million, almost all in the form of commercial loans. The rest is being supplied by other IPG members — with the United States committing the highest sum at over $1 billion — and financial institutions such as the Asian Development Bank, which has committed $2.1 billion.

But the JETP’s “resource mobilization plan” states that “for the transition to be just and equitable, regular consultation is required, including with media, NGOs (nongovernmental organizations) and other stakeholders.” Only a few JETP supporter nations have expressed concerns about the arrests, and even then they haven’t tied funding to the release of the individuals.

At the same time, Vietnam is involved in the Asia Zero Emission Community (AZEC), a separate Japan-led climate initiative that critics say could slow decarbonization efforts. This, combined with the way JETP is being handled, raises questions about the nature of the transition Hanoi is embarking on.

“We realized that what’s happening in Vietnam is part of a pattern … there are larger issues of accountability, transparency and participation within the JETP,” says Guneet Kaur, campaign coordinator for nonprofit International Rivers and coordinator of the Vietnam Climate Defenders Coalition.

A green push ?

Vietnam has made impressive strides in the renewable energy field, and leads Southeast Asia in the adoption of wind and solar. For example, by 2021, the share of solar-generated electricity had increased from almost nothing to over 10% in just four years, one of the fastest growth rates globally.

The country’s “determination to achieve carbon neutrality” is strong, according to Hiroshi Sagawa, a director overseeing new energy and power finance at the Japan Bank for International Cooperation.

JBIC and the Japan International Cooperation Agency have both financed several renewable energy projects in Vietnam as the world shifts away from coal. JICA, for example, has contributed to a pool of $71 million to finance five solar and wind power projects.

However, enthusiasm for Vietnam’s renewables boom is dampened by factors such as its underdeveloped electricity grid and patchy regulatory framework. And the country’s major source of electricity remains coal. In fact, its use has increased, rising to about 45% of electricity generation in 2021 (versus 44% for renewables). Carbon emissions from fuel combustion increased by two and a half times in the 10 years up to 2019, with coal accounting for 88% of emissions from electricity generation.

And as a rapidly growing developing country, Vietnam’s energy demand is expected to increase at least 10% every year up to the end of the decade — adding to the challenge of fueling this expansion with clean sources.

One of JETP’s main goals is to flip the switch on the power system. It is targeting peak emissions in 2030, five years earlier than planned, and to reduce the size of that peak. It also wants to boost the share of renewables to at least 47% by the same year — more ambitious than the government’s initial 36% target. That goal’s proximity to renewables’ existing share is thought to take into account growing electricity demand and how that could limit that share.

The plan also references the closure of “old, inefficient unabated” coal facilities — referring to those that do not capture and store emissions — and halting investments in coal plants that “do not have emission reduction technology.” It also envisages the conversion of coal-fired plants to plants that use biogas, green ammonia and other clean fuels instead, although the green version of ammonia is not yet being mass produced, and experts have questioned whether this fuel is actually a viable climate solution.

However, this process of retrofitting existing coal plants will lead to an extension, rather than a phasing out, of Vietnam’s coal fleet, according to the Center for Energy, Ecology and Development (CEED), a Philippines-based think tank. Another “concerning” aspect is “the inclusion of the ‘development of mixed gas turbine using LNG (liquefied natural gas)’” in coal power units, according to the CEED. In fact, Vietnam is one of the countries in Southeast Asia most aggressively expanding gas and LNG infrastructure.

This gray area on the decarbonization palette — repurposing fossil-based infrastructure and relying on what some label “transition fuels,” such as gas — has a strong advocate among developed nations: Japan.

Tokyo has, in fact, created its own carbon neutrality framework for Vietnam and other Southeast Asian countries as well as Australia: AZEC. While the JETP’s focus is on boosting renewables — though converted coal plants and gas continue to play a part — AZEC sees a more prominent role for substituting some coal with other fuels, such as ammonia or hydrogen, to reduce emissions, as well as biomass and carbon capture and storage (CCS). The rationale, as outlined by an AZEC statement in December, is “that there are various and practical pathways towards carbon neutrality” that depend on an individual country’s circumstances.

Those pathways continue to involve fossil fuels.

Research by Oil Change International has found that Japan is the world’s No. 1 provider of international public finance for gas and the second-largest for fossil fuels. And in Southeast Asia, according to a CEED report, JBIC is the biggest financier of gas projects.

In July, Vietnam became the first government to launch an AZEC framework involving the Japanese public and private sectors, says JBIC’s Sagawa. This involves 40 Japanese companies and is divided into three subgroups: transition energy, renewables, and the energy grid and markets.

Susanne Wong, Asia program manager at Oil Change International, sees the embrace of AZEC’s transitional strategies as “pushing technologies that are risky, expensive, unproven (and) fueling the climate crisis.”

Low-emission hydrogen, for example, accounts for less than 1% of production and use, according to the International Energy Agency, and “new projects face rising costs, at least temporarily, that threaten long-term profitability.” Meanwhile, CCS does not exist at scale, and neither does the burning of ammonia.

At the same time, renewables such as wind and solar have seen massive declines in prices over the past decade.

So why is Japan doing this ?

“Japanese companies are less competitive in the renewable energy sector and still want to keep stakes in the fossil fuel sector,” says Ayumi Fukakusa, deputy executive director of Friends of the Earth Japan’s fossil fuels and climate campaign.

Indeed, Japanese giants such as JERA, IHI and Mitsui have placed strong emphasis on technologies such as CCS and coal co-firing.

But Yoshitomo Kubo, the senior representative at JICA’s Vietnam office, says there has to be a balance between striving for a long-term net-zero goal and “how to ensure a stable power supply in the short term.” His colleague Bui Thanh Xuan, JICA Vietnam’s senior officer for energy, agrees that there must be a “transitional period” in which Vietnam continues to rely on “conventional” energy — that is, nonrenewables — while it builds up its renewable energy capacity.

This vision is also in line with Hanoi’s own roadmap: Power Development Plan VIII, approved in May last year. According to the plan, Vietnam will stop developing new coal-fired power plants after 2030 and phase out existing ones through decommissioning or replacement with other sources — including LNG — by 2050.

In particular, plants over 20 years old will start converting to biomass and ammonia, but the plan concedes that more research is needed in this area. In addition, gas will remain an important component and is projected to account for 13% of installed capacity by midcentury.

Overall, the roadmap’s goal to reduce power sector emissions shows that Vietnam’s decarbonization goals are real. Yet the extension of fossil fuel infrastructure’s lifespans and the fact that JETP is a mere drop in the ocean of the $650 billion needed for a successful transition, according to consulting firm PwC’s estimates, pose huge hurdles.

A just transition ?

The resource mobilization plan acknowledges that there are “currently no existing mechanisms” for representatives of different groups, including young people, women and the elderly, to take part in “dialogues” about the energy transition — and urges the Vietnamese government to create such forums.

“The just aspect, it seems like an afterthought. … There is very little investment” in it, says Kaur. If the space for civil society is being reduced, so is the possibility of consulting with its representatives, including on whether the resource mobilization plan is living up to its objectives.

The arena in which civil society can operate has tightened in recent years as the government has exerted more control, and “not only in the environmental sector,” says a local journalist, who asked not to be named for fear of reprisal.

In the climate sphere, Nhien’s incarceration was the latest in a series, preceded by that of Dang Dinh Bach, Bach Hung Duong, Mai Phan Loi, Nguy Thi Khanh and Hoang Thi Minh Hong, all on tax evasion charges. Only Khanh, Loi and Duong are currently out of jail — the first two were charged but released early, while Duong has finished his sentence.

The first four arrests were of people “who were actually doing (the) job of accountability,” says Kaur. They had pointed out that a previous draft of PDP8 included a lot of investment in coal.

“It seems that what followed were reprisals on them. Even though today they stand vindicated because the PDP8 actually moves away from coal in significant ways,” Kaur says.

The Vietnam Climate Defenders Coalition to which Kaur belongs was set up to lobby for the release of the imprisoned environmentalists. It brings together Vietnamese and international NGOs — including International Rivers — as well as concerned individuals.

United Nations independent experts have labeled Hong’s arrest as “politically motivated,” and cited the imprisonment of the four activists before her as part of “a wider crackdown.” Several JETP donors have also raised concerns, including the United Kingdom, Germany, France and the European Union. Washington has released statements describing “a concerning pattern of arrests” and called on Hanoi to release those detained.

Japan’s Foreign Ministry declined to comment on the issue.

Tokyo should “convey to Vietnam that the arrests are incompatible with genuine and socially-just progress toward a clean energy future,” says Masayoshi Iyoda, Japan campaigner at international environmental organization 350.org.

Yet, despite some donors’ concerns, “they have yet to condition disbursement of funding on the release of climate activists,” writes The 88 Project.

As ties between Vietnam and Japan grow stronger, Tokyo can play a key role in supporting its partner. The challenge, though, is matching the diverging goals of JETP and AZEC, and proving whether technological fixes can really breathe new, carbon-neutral life into fossil fuel infrastructure at scale.

This all comes at a delicate time for Vietnam, with the World Bank ranking it as one of the five countries likely to be most affected by climate change.

The “broad social consensus” the JETP strives for seems far-fetched if the decarbonization push becomes yet another area in which people are squeezed. And its citizens have limited access to information on energy projects without civil society groups trying to make it more easily available, says the local journalist.

“Activists and journalists just want to share the truth,” but Hanoi sees them as undermining the country’s reputation, the journalist says. “I’m scared that one day no one will want to speak out.”

By Mara Budgen – The Japan Times – March 25, 2024