Administrator Power rides on the back of an e-motorbike
March 10, 2023 - USAID Administrator Samantha Power took a ride through Hanoi, Vietnam, on a Dat Bike, a USAID-supported Vietnamese startup working to replace gas-powered bikes with greener e-motorbikes. | Photo Credit: USAID

The Transition to Clean Energy: A View from the Vietnam Urban Energy Security (VUES) Project

By Georgia Iordanescu

Vietnam is known for many things–the ecologically and economically important Mekong Delta, the emerald waters of Halong Bay, and delicious pho, to name a few.

Unfortunately, Vietnam is also one of the world’s five most vulnerable countries to climate change. Steady economic growth over the past four decades has pulled Vietnam out of poverty, but development has come at a price. While Vietnam, like most low and middle-income countries, have polluted the least on a global scale historically, industrialization powered by fossil fuels has still fed climate change, leading to increased temperatures, unpredictable rainfall patterns, and frequent and severe natural disasters.

At COP26 in 2021, Vietnam committed to net-zero carbon emissions by 2050. With ambitions of becoming a high-income country by 2045, the country faces a familiar challenge: grow the economy quickly but do no harm to the environment. The solution is multifaceted, but fundamentally it must entail a transition to clean energy.

USAID’s Vietnam Urban Energy Security (VUES) project supports the Government of Vietnam’s transition away from fossil fuels by improving energy policies and regulations, mobilizing public and private investments, and increasing the adoption of innovative energy solutions. Read about three ways USAID is putting these strategies into action below.

Advancing Green Hydrogen: Emissions-free Energy

Green hydrogen–unlike gray hydrogen, which is derived from fossil fuels–can be generated using an electric current from renewable sources to split water into its component elements of hydrogen and oxygen, producing no CO2 emissions. It can be used to power vehicles, machinery, and even homes. Green technologies like green hydrogen are rapidly advancing to optimize energy use and hopefully capital costs, too.

USAID supported renewable energy company The Green Solutions Group (TGS) and ThyssenKrupp, a world-leading electrolysis technology provider, to partner in opening the first green hydrogen manufacturing plant in Vietnam. USAID provided transaction advisory support to help launch the plant, including financial advice for TGS’ loan application, a market assessment of green hydrogen and ammonia in the region, and technical expertise on the facility’s carbon footprint.

The plant will produce 24,000 tons of green hydrogen per year. If scalable, this innovative solution positions Vietnam on a path to join the global hydrogen supply chain.

Going Electric

In 2023, there were an estimated 70 million registered motorcycles in Vietnam, not to mention cars, taxis, and buses. Motor vehicles are one of the leading contributors to greenhouse gas emissions, but they are also crucial to economic activity. To reach net-zero emissions, Vietnam is dramatically reforming its transport sector with an ambitious plan for every vehicle on the road to be electric or use green energy by 2050.

This shift is going to necessitate a nationwide electric vehicle (EV) charging infrastructure with predictable, sufficient charging speeds. EVs are increasingly competitive with gasoline-powered vehicles in many aspects of performance, but they are in short supply.

USAID is enabling EV adoption in two ways: funding smartphone-based charging infrastructure and supporting domestic manufacturers of electric motorbikes. For example, the project helped Dat Bike and Selex Motors become more attractive to investors by developing an Environmental and Social Management System that meets international standards and evaluating the companies’ electric vehicle manufacturing facilities.

With VUES’ assistance, Dat Bike formed a partnership with ride-hailing company Gojek and signed an agreement with HSBC Bank to digitize financial operations, which will unlock opportunities for foreign investment.  Selex Motors successfully mobilized a capital investment of $3 million from the Asian Development Bank’s venture arm to set up innovative battery swapping systems in key cities in Vietnam.

Promoting Energy Efficiency

Energy efficiency is critical to energy security and a clean energy transition because it helps reduce costs, improve competitiveness, and promote the sustainable use of energy.

USAID promoted the adoption of energy efficiency solutions by organizing the first energy efficiency awards in Vietnamese cities, recognizing 29 enterprises that have demonstrated outstanding energy saving practices and innovative approaches. These enterprises developed solutions like automated energy management systems, installation of inverters that save 20 to 30 percent of electricity consumption, improved cooling and heating systems, and harnessed renewable sources such as biomass and solar. The awards encourage energy users in the industrial and commercial sectors to adopt solutions that are not only good for business but also good for the environment.

What’s Next?

As Vietnam experiences steep increases in energy demand and rising air pollution, there is a growing need for cleaner, more efficient use of energy and more reliable energy sources. Developing renewable energy sources requires greater capital investment. USAID will continue to work closely with the Government of Vietnam to catalyze clean energy solutions for urban energy challenges to meet its goals. This work will have a positive impact on other serious problems in the region too, such as improving health, increasing economic growth, and strengthening food security.

Strategic Objective
Adaptation, Integration
Climate Finance, Digital technology, Clean or Renewable Energy, Energy Efficiency, Energy Technologies for Deep Decarbonization, Transportation, Private Sector Engagement, Urban

Georgia Iordanescu

Georgia Iordanescu, Sr. Lead Specialist, Clean Energy for DAI, provides strategic vision and leadership for DAI’s global portfolio of clean energy and climate projects, energy sector security, governance, and private sector engagement.

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