The case for Vietnam’s Mekong energy diplomacy
Vietnam needs to complement water diplomacy with energy diplomacy to curb the unsustainable exploitation of the Mekong for hydropower. Hanoi should promote the development and cross-country trade of non-hydro renewables, especially wind and solar power.
Despite mounting evidence of social and environmental harms associated with Mekong hydropower dams, hydropower remains a key component of Southeast Asia’s energy security and green transition. However, through energy diplomacy, Vietnam can lead the way in promoting commercially viable and sustainable non-hydro renewables.
In recent years, Vietnam has pursued Mekong water diplomacy by increasing cooperation with regional actors and development partners to address the issues of climate change, sustainable development, water resource management, and data sharing. Notably, Vietnam advocates the principles of rules-based and equitable cross-border water resource management with the aim of preventing other riparian countries from exploiting the Mekong at Vietnam’s expense.
However, upstream Mekong dam projects often disregard such principles. Notwithstanding the recent collaborations between China and the Mekong River Commission (MRC) on transboundary water governance, Beijing’s unilateral dam development remains a serious concern for Hanoi. For example, China recently completed the construction of the Touba dam ⸺ its 12th Mekong mainstream dam ⸺ and began filling its reservoir without informing the MRC. Vietnamese media subsequently highlighted how Chinese dams like the Touba dam are exacerbating the plight of Vietnam’s Mekong Delta.
Dam development in Laos and Cambodia has also exerted pressure on the Mekong River. In 2019, Laos completed the construction of two Mekong mainstream dams, despite calls by Vietnam and Cambodia for a comprehensive study of the cross-border and cumulative effects of these projects. Moreover, Laos has seven more mainstream dams in the pipeline and is pushing forward with the construction of the controversial Sekong A dam on the Mekong’s last free-flowing tributary. While Cambodia has halted the construction of Mekong mainstream dams until 2030, its plans for additional dams on vital tributaries remain. All these dams would disrupt migrations of numerous fish species and deprive the Mekong Delta of essential sediments.
Vietnam’s water diplomacy has also been somewhat undercut by its own and regional countries’ continued reliance on hydropower. Vietnam has built several dams in the Mekong’s vital tributaries, and also invests in Laos’ hydropower facilities and purchases electricity generated from them. Such policy aims to promote diplomatic ties with Laos in addition to mitigating Northern Vietnam’s power shortage. Laos’ hydropower industry has also been supported by other Southeast Asian consumers, including Cambodia, Thailand, and Singapore.
Given the water-energy security nexus in the Lower Mekong region, Vietnam needs to complement water diplomacy with energy diplomacy to curb the unsustainable exploitation of the Mekong for hydropower. In particular, Hanoi should encourage the development and intra-regional trade of non-hydro renewables, especially wind and solar power.
Eventually, an agreement to transition to non-hydro renewables among the Lower Mekong countries could pave the way for a unified stance on transnational water governance.
There are two conducive trends for Vietnam’s Mekong energy diplomacy. First, the costs of wind and solar power have dropped significantly over the past decade, making them economically competitive alternatives to hydropower. For example, in Cambodia, the solar power price at auction plummeted almost 60 per cent, from US$ 0.091/kWh for a pilot project in 2016 to US$ 0.0388/kWh in 2019 for a larger solar park. Wind developers in Laos have agreed to sell wind power to Vietnam at prices that do not exceed the ceiling price set by the Vietnamese. (This ceiling price is US$0.065/kWh and is the same for Vietnam’s import of electricity from Laos.)
Second, climate change-induced water scarcity has rendered many Mekong dams unproductive, prompting Laos and Cambodia to diversify their energy sources. Cambodia is seeking to supplement hydropower with solar and wind power, leveraging interconnection with Laos and Vietnam. Cambodia also expects to export solar and wind power surplus to Singapore through Vietnam and Malaysia.
Similarly, Laos has stepped up the construction of solar and wind power plants to address electricity shortages during the dry season. Notably, Laos is constructing its first wind power farm, with all of the electricity produced being sold to Vietnam. Seven wind power investors in Laos have also proposed to export electricity to Vietnam. Floating solar has also gained traction in Laos, with plans for a complementary floating solar project on the Nam Theun 2 dam’s reservoir.
To a certain extent, Hanoi has already begun promoting a shared vision for green energy transition with its two neighbours. At the 13th Meeting of the Joint Coordination Committee on Cambodia-Laos-Vietnam Development Triangle Area (CLV-DTA) in early 2024, Vietnam proposed that the three countries should coordinate efforts to attract renewable energy investments and create favourable conditions for solar and wind power projects. Vietnam could suggest the creation of an energy working group within the CLV-DTA to formulate specific action plans for this path.
A major challenge facing the CLV countries is inadequate power infrastructure to unlock the potential of non-hydropower renewables. Vietnam’s weak grid capacity has hindered its ability to absorb and transmit solar and wind energy. Cambodia and Laos have a long way to go in developing the necessary infrastructure to diversify away from hydropower. Thus, a priority for the CLV-DTA energy working group would be mobilising domestic and international resources and expertise to overcome these infrastructural limitations.
If the wind and solar power potentials of the CLV countries are fully realised, it will reduce the need for Vietnam and other ASEAN states to rely on Mekong hydropower. Eventually, an agreement to transition to non-hydro renewables among the Lower Mekong countries could pave the way for a unified stance on transnational water governance. This could empower the MRC to engage in more effective negotiations with China on dam operation and data-sharing issues.
Par Phan Xuan Dung – Fulcrum.sg / Yusof Ishak Institute – 17 avril 2024