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Vietnam Environment Spotlight - December 2022
Freshfields' Vietnam Environment Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive our Vietnam M&A Spotlight, Vietnam Infrastructure Spotlight or Vietnam Competition Law Spotlight.
MARKET UPDATES
JET. The Group of Seven (G7) industrialised nations have pledged US$15.5 billion to help Vietnam transition away from coal. The deal will be the third agreement of this type reached by G7 nations, as pressure mounts on rich, heavy-emitting nations to help poorer countries cope with climate change and transition to cleaner energy. The group signed similar deals last year with South Africa and last month with Indonesia. Source: Reuters
VET. The energy elasticity coefficient in Vietnam for the 2016-2020 period averaged 1.67, a relatively high figure compared to some other countries, which could prompt the need for more drastic remedy measures. Experts pointed out four challenges facing Vietnam's energy sector, ensuring the security of supply, reasonable and competitive prices, sustainability, and mitigation of environmental challenges. Source: Vietnam Investment Review
Ballooning hydrogen. The global shift to purchasing environmentally-friendly hydrogen is gaining momentum. Numerous nations have identified growth prospects, including those with the ability to export green hydrogen, such as Vietnam. In 2040, the price of green hydrogen in Vietnam is anticipated to be between US$1.75 and US$2 per kg, compared to US$1.25 to US$1.5 in Morocco, Australia, Chile, and South Africa. Moreover, Vietnam’s land resources are scarcer than many other nations. Source: Vietnam Investment Review
Be prepared. The Ministry of Finance (MoF) has put forward several proposals for environmental taxes on fuel and lubricants in 2023. The MoF stressed the importance of staying prepared in dealing with the effect of global oil prices, which are predicted to stay volatile in the foreseeable future on domestic industries and commercial activities. Starting next year, the National Assembly (NA) Standing Committee's decrees on lowering environmental tax on fuel and lubricants are set to expire. Source: Vietnam News
New year wishes. During a trip to the southern province of Bac Lieu, the Prime Minister (PM) has requested cuts in solar and wind energy prices in Vietnam as they are higher than in other countries. Vietnam has over the past few years issued mechanisms and incentives to promote the development of renewable energy, but the prices are still too high. Source: The Investor
Cart before horse. Vietnam Chamber of Commerce and Industry (VCCI) has proposed a pricing mechanism with preferential electricity prices for electric vehicles (EVs) to encourage the use of EVs. EVs could help reduce pollution in urban areas, but the price for electricity is high. Some companies have introduced EVs to domestic consumers, but only VinFast is developing public charging stations and an ecosystem to serve users. Source: Vietnam Net
Clear wagons. The State and transport enterprises need to conduct detailed studies on challenges in replacing petrol and diesel-powered public buses with EVs. According to the national public passenger transport development plan, Vietnam targets to replace up to 5,800 petrol and diesel-powered buses with electric and clean fuel vehicles by 2025 and a further 6,000 buses by 2030. Source: Vietnam News
Bandwagons. Temasek-backed Fullerton Fund Management is raising a new carbon fund focused on Asia. It will focus on growth-stage companies that will help achieve “net-zero emissions”. Some sectors which fall within Fullerton’s carbon fund mandate will include EVs, renewable energy, infrastructure, and agriculture. Source: Deal Street Asia
Toy story. 11 months after signing a memorandum of understanding (MoU), Denmark’s LEGO Group kicked off its US$1.3 billion factory in Binh Duong province on 3 November 2022, the largest foreign-invested project to pour capital into the province since the pandemic. This is the first LEGO factory to be designed as a carbon-neutral facility and is the group's most sustainable factory globally. Source: Vietnam Investment Review
Drawing board. Marubeni Corporation has signed an MoU on collaboration with Electricity of Vietnam (EVN) to develop its green energy projects. The two parties will jointly study a wide range of decarbonization projects, including the carbon emission reduction of existing thermal power plants in Vietnam and the development of renewable energy and sustainable green energy such as biomass, ammonia, and hydrogen. Source: Vietnam Investment Review
Colouring book. Solar company GreenYellow Vietnam recently acquired the Vietnamese subsidiary of Qair, a French independent renewable energy producer, as well as its 70 per cent stake in Binh Dinh solar farm, a 49.5MW asset in operation in Binh Dinh province. This is GreenYellow's first large-scale investment in ASEAN. To date, GreenYellow Vietnam has a total asset portfolio of 150MW of solar power generation capacity in the country. Source: Vietnam Investment Review
