Climate Protection through Sustainable Bioenergy Markets in Viet Nam (BEM)

Project description

Title: Climate Protection through Sustainable Bioenergy Markets in Viet Nam
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Country: Viet Nam
Lead executing agency: Ministry of Industry and Trade (MOIT)
Overall term: 2019 to 2023

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Context

Viet Nam has a strong potential for bioenergy as the available biomass resources in the country include post-harvesting and post-processing agroforest residues and waste such as bagasse, straw, rice husks, coffee husk, coir, wood residues and other agricultural/industrial by-products. To facilitate this, the Vietnamese Government has promulgated key policies and support mechanisms on biomass energy development.

According to the revised National Power Development Plan VII and the Renewable Energy Development Strategy, Viet Nam aims to increase its biomass energy share in power production substantially: 1 per cent in 2020 to 2.1 per cent in 2030 and to 8.1 per cent in 2050. In 2015, the Government issued the Circular 44/2015/TT-BCT to regulate the project development, methodology for an avoided cost tariff calculation and Standard Power Purchase Agreement for grid-connected biomass energy projects.

However, the installed capacity of biomass energy in Viet Nam is only 352 megawatts (MW). The use of biomass energy does not increase because:

  • Investors lack access to information and evaluations of experts of the full potential and feasibility of biomass energy projects
  • A capacity shortage of provincial governments for timely planning and licensing procedures 
  • Inadequate capacity of financial institutions in evaluating biomass energy projects, as well as access to (re-)financing mechanisms. 
  • Insufficient knowledge on state-of-the-art technologies and respective technology transfer partnerships to catalyse market development.

Objective

The preconditions for a sustainable use of biomass for electricity and heat generation in the country are improved. The country is increasingly focusing on the improvement of planning, technical and financial capacities of respective actors in the biomass energy sector to realise bankable investment projects.

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Approach

The project has three main action areas. 

  • Legal and Regulatory Framework 
    This action area will facilitate and support adjustments to the regulatory framework on planning and licensing of biomass energy projects, in particular at provincial level. The project will update or assess governmental stakeholders’ needs to facilitate the development of biomass energy; develop strategies for provincial biomass development plans and draft recommendations for the improvement of the approval process of biomass energy investment projects.
  • Capacity Development 
    The project will improve private sector capacities for the development of biomass investment projects as well as enhance financial institutions’ capacities to finance biomass energy investment projects. Activities will include the conduct of a capacity-need-assessment for biomass energy consultants, developers and investors; consultation on the design of criteria to assess the bankability of biomass energy investment projects; and the design for a financing mechanism based on biomass energy financing needs and official development assistance (ODA) / climate funding sources.
  • Technology Cooperation
    The project will facilitate technology cooperation and networks between Vietnamese and international enterprises, research institutions and universities on the use of biomass for electricity and heat generation. Activities will be match making events, the analysis of subsectors (e.g. in industry, agriculture, food processing), study trips and symposiums.
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