South Africa's Equitable Energy Transition Investment Plan (JET-IP) and experience in preparing for the Vietnam JETP Resource Mobilization Plan
Nguyen Hong Minh, Dang Thi Thuy Hanh, Truong Nhu Tung, Dang Thanh Tung
Email: hanhdtt@vpi.pvn.vn
South Africa JET-IP and some contributions to developing Vietnam JETP
Resource Mobilization Plan
Summary
This analysis contributes to clarifying the characteristics of the three priority sectors identified in the JETP Investment Plan of South Africa, and the contents granted by IPG as well as their proportion of the IPG package, thereby providing some recommendations to develop the JETP-RMP for prioritized sectors of Vietnam and the possibility of extending the grant in the total support to Vietnam. Key words: JETP RMP, grant, JETP IP.
1.Introduction
Vietnam and the International Partners Group (including Denmark, Germany, France, the EU, the UK, Japan, Italy, Canada, Norway, and the US) signed the signing ceremony Just Energy Transition Partnership - JETP on December 14, 2022. The Secretariat will be established in April 2023 and operate under the steering of the parties. Before November 2023, the development of the JETP Vietnam Resource Mobilization Plan (JETP-RMP) must be completed and the financial mobilization will be done after the approval.
Last year, South Africa signed the JETP Agreement on November 2, 2021, and so far, South Africa has completed the Just Energy Transition Investment Plan (JET IP), which identifies projects and activities necessary to achieve just transition and guide the use of funds. The next important step is to develop a JET IP Implementation Plan for the first 5 years (2023 - 2027) which should 'be published by the end of February 2023. Some of the important roadmaps, strategies, and regulations [1] that South Africa has been working on are:
- Developing a Hydrogen Economy Roadmap, in which the development of the green hydrogen export market is the most important;
- Launch of a green financial classification system in April 2022, in which mention clearly assets, projects, and sectors to be identified as “green” in line with international best practices and international standards, national priorities;
- According to the National Treasury, the carbon tax rate will gradually increase every year to reach 20 USD per ton of CO2 equivalent by 2026, at least 30 USD in 2030, and up to 120 USD after 2050;
- Finalizing the National Mine Closure Strategy;
- A master plan for renewable energy is being developed.
The following analysis contributes to clarifying the characteristics of the three priority sectors identified in the JETP Investment Plan of South Africa, and the contents granted by IPG as well as their proportion of the IPG package, thereby providing some recommendations to develop the JETP-RMP for prioritized sectors of Vietnam and the possibility of extending the grant in the total support to Vietnam.
2. Characteristics and potential of electricity generation in South Africa
South Africa has the 7th largest coal producer in the world, and more than 85% of its electricity is generated from coal, making this country of more than 61 million people the 13th largest carbon emitter in the world, about 435 million. tons of CO2, of which, the electricity sector accounts for about 43%.
National Electric Power Corporation ESKOM, founded in 1923, is now South Africa's largest electricity organization generating about 96% of the national electricity, while municipalities and independent electricity plants account for the majority remaining [2]. ESKOM's complex has 15 coal-fired power plants (installed capacity of about 38.8 GW), most of which are concentrated in Mpumalanga province due to coal mines; Africa's only nuclear power plant operated by ESKOM is located in the Western Cape region. ESKOM also operates several hydroelectric and gas-fired power plants.
The current severe power shortage crisis in South Africa has been warned by ESKOM since 1987 and ignoring the warning and not increasing power capacity has led to power shortages since 2007 [2]. Currently, apart from a growing debt of more than $2 billion [3, 4], ESKOM is still not up to the task of providing uninterruptible electricity at affordable prices to all South Africans.
The cumulative installed capacity of the South African electricity market is 64.5 GW in 2021 and is expected to grow by more than 1% annually from 2021- 2035 (approximately 84 GW by 2030 and 133 -174 GW by 2050), with a forecast that the share of capacity from gas and renewable energy will grow rap idly [3].
To phase out coal power while still lack of electricity, South Africa considers other energy sources to increase electricity supply and intends to increase gas power capacity to maintain the electricity supply. However, as South Africa does not have sufficient gas reserves, it is proposed to find additional gas supplies from the member states of the Southern African Development Community (SADC) and connect the large grid with the member states. This leads to dependence on other countries for electricity or gas. Therefore, renewable energy development is considered to control this dependence [3].
Although the final goal is to completely replace fossil fuels, since solar and wind power are weather dependent and intermittent, it is possible to initially replace coal with natural gas (emissions CO2 per unit of energy is only about half), especially for base load generation capacity [5].
In addition, storage technologies are not yet sufficient to be able to increase renewable energy supplies without new investments in gas or other reliable backup sources. Therefore, if economic and policy conditions permit, partial replacement of coal-fired power plants with gas-fired power plants can still significantly reduce greenhouse gas emissions [5].
2.3. Renewable energy- electricity that does not emit greenhouse gases
Abundant wind and solar renewable energy sources, along with biomass and hydropower, are the basis for the development of renewable electricity technology in South Africa. Nuclear power uses uranium as a non-renewable mineral source, this technology does not emit greenhouse gases but contains radioactive substances in the waste, so there is still controversy about whether nuclear power is considered a source of renewable energy or not [2]. Koeberg's only nuclear power plant, using locally produced uranium, with a capacity of 900 MW contributes about 2% of the total energy supply.
Investment in renewable energy in South Africa has primarily taken place through the Renewable Independent Power Producers Procurement Program (REIPPP, since 2011), in which the winning projects will enter into purchase and sale agreements. Long-term electricity (20 years) up to the present time is still guaranteed by the Government [6]. So far, new capacity from the first 5 rounds of bidding and 1 round of small projects is in operation, including 18 MW of landfill gas, 52 MW of biomass production, 80 MW of small hydropower, and 600 MW of concentrated solar power (CSP), 2.37 GW of photovoltaic (PV) and 3.47 GW of wind power. The results of the 5th round of bidding have been announced, including 1 GW of solar power and 1.6 GW of wind power, and the capacity to be auctioned in the 6th round has doubled from 2.6 GW to 5,2 GW [8].
Thanks to REIPPP, the share of renewable electricity capacity in South Africa's electricity mix has increased from 0.8% in 2010 [3] to 10.5% in 2020[5], and 15.1% in 2021[3]. Renewable power capacity is expected to reach 40.6 GW by 2035, which will account for 48.3% of the country's total installed capacity [3].
The two most important renewable energy sources for the energy transition in South Africa are wind energy (windpower) and solar energy (photovoltaic and concentrated solar power) [2]. With an average of 2,500 hours of sunshine per year and radiation levels from 4.5 to 6.6 kWh/m2, South Africa is in the top 3 in the world. The total wind power potential of South Africa is estimated at 6,700 GW and it can be competitive with the potential of solar energy [7]. Along with large-scale solar photovoltaic projects, the rooftop solar market has continued to grow in some parts of South Africa, largely due to the increasing affordability of the technology. Besides, there are currently 6 concentrated solar power plants (CSPs) with a total installed capacity of more than 500 MW and others are still being deployed. As can be seen, the full potential of CSP technology has not yet been fully exploited.
Hydropower is not suitable for countries in dry climates because in times of drought, water needs to be retained in dams so it cannot produce electricity. Because South Africa is prone to drought, local hydropower production (currently at 3% of the total) cannot increase much [2]. Energy from biomass and landfill gas makes up only a very small proportion of South Africa's energy supply mix.
The limitation of solar energy and wind energy is that it is completely dependent on the weather, the solar energy production process has a day and night cycle, with maximum efficiency around noon, not coincident with the time of demand. Electricity demand is highest in the early morning and early evening. Therefore, the renewable electricity system cannot become the main source of electricity in South Africa until electricity storage technologies become practical and economical.
3. JET IP for 3 priority areas [6]
According to the JET IP Investment Plan, South Africa intends to phase out coal power plants (and coal mines) and develop three areas: (1) strengthening transmission and distribution grids, increasing new renewable electricity (from wind, solar, etc, and battery storage); (2) new energy vehicles (NEV); (3) green hydrogen.
Coal power plants in South Africa will be shut down for the next three decades when they reach the end of their life or sooner, except the two newest plants, one of which is still not fully operational. This closure will reduce ESKOM's overall capacity from approximately 38.8 GW in March 2021 to 33.9 GW in early 2030 and 29.3 GW by the end of 2030, to 16.8 GW by 2035. GW. By the end of 2050, only the two youngest coal power plants (Medupi-4.76 GW and Kusile- 4.8 GW) and one unit of the older Majuba-4.1 GW plant, will still operate as currently expected [8].
As such, cheap renewable electricity must be added as quickly as possible, along with CO2-zero electricity, which can be supplemented by open-cycle gas turbine plants, combined-cycle gas turbines, and/or storage plants to support the grid. This will require a huge expansion of the transmission grid, as these renewable energy sources are located all over the country, especially in the remote provinces of Mpumalanga, where electricity generation is mainly concentrated today.
New open cycle gas turbine (OCGT)/combined cycle gas turbine (CCGT) plants, although planned, are not included in the JET IP investment plan.
As the first contributor to South Africa's JETP, the Reconstruction Credit Institute (KfW, Federal Republic of Germany) has provided a concessional loan of EUR 300 million for the South African Ministry of Finance to comprehensively reform the domestic energy sector [9], performed at the energy company ESKOM. In addition to the separation of companies, these reforms also ended the energy monopoly by allowing private commercial power producers [9,10].
The first coal power plant to be decommissioned in 2022 is the Komati Power Station in Mpumalanga, seen as an example of JETP by the government. The 1 GW coal-fired plant will be replaced by a 70 MW wind generator and a 150 MW solar generator with 600 MW battery storage capacity. The old power plant is reused to produce small grids for rural areas, plan agricultural activities, and install hydroponic systems, providing added value.
3.2. New Energy Vehicle (NEV) [6,10]
South Africa's auto industry is devoted to internal combustion engine vehicles (ICE), and a small part produces hybrid EVs (HEVs). The sector contributes 5.7% to South Africa's GDP in 2020; Exports of vehicles and components from South Africa account for about 15% of total export revenue. More than 60% of South Africa's production is exported, and 77.1% of that (in 2021)is exported to the UK and EU, which are introducing legislation banning the sale of significant emissions-causing internal combustion engine (ICE) vehicles, to quickly move into NEV-only and zero-emissions markets, putting the sustainability and competitiveness of South African car production at risk. South Africa's transport sector is the third highest contributor of emissions (57 million tonnes of CO2/year or 10.8% of national greenhouse gas emissions) in South Africa, of these emissions, road traffic accounted for 91.2%. Therefore, an investment plan focusing on the local automotive production value chain is a requirement for a just transition, and the transition to NEV production is an inevitable requirement.
The UK and EU are also considering imposing a cross-border carbon tax (CBAM) on imports, CBAM targets imports of carbon-intensive products, which continues to be a challenge for the industry, so, means exported to those markets may be subject to a higher tax. This further necessitates the decarbonization of South Africa's auto industry towards green production. Emissions from the production of a typical mid-size family car (ICE) will emit about 5.6 tons of CO2 equivalent and producing 1 battery electric vehicle emits about 8.8 tons of CO2 equivalent, mainly from steel and batteries. With over half a million vehicles produced in the previous year, emissions from vehicle production are lower than emissions over the whole vehicle life cycle, lower than annual emissions from traffic [11].Producing battery electric vehicles is more wasteful than petrol cars, but taking into account full life cycle emissions, battery cars emit less, and when the power supply for the production process is replaced by renewable electricity, that process will decrease emissions.
According to JET IP, the scope of NEV (BEV) use will be private cars, public buses, mini-taxi buses, government vehicles, and light commercial vehicles. Heavy commercial vehicles are not included in the investment plan due to uncertainty about optimal technologies (BEV, FCEV, green fuel ICE), and industrial vehicles due to their relatively low contribution to transportation emissions freight, railway, air transport, and sea transportation.
In the world, green hydrogen and its derivatives are increasingly seen as an important part of the solution to reduce greenhouse gas emissions in sectors that are difficult to mitigate, including the transportation industry, the petrochemical industry, and the iron and steel industry, cement industry, and in the long term, the power sector, at the same time bring new export potential. According to the International Energy Agency (IEA), for the world to limit global warming to below 1.5°C, green hydrogen needs to account for 10-20% of the global energy mix.
In the green hydrogen sector, investment is focused on measures to make South Africa the world's leading exporter of green hydrogen by incubating local green hydrogen ecosystems; planning, feasibility, and proof of concept, and developing the necessary skills. This will support the creation of new jobs, valuable exports, and the decarbonization of industries in the long term.
Green hydrogen has a key role to play in South Africa's new transition, with important linkages across the economy that can create new decent jobs. This includes increased production of renewable energy and related components; manufacture of electrolyzers for domestic use and export; growth and maintenance in platinum mining; transport, storage, and distribution of products; operation, maintenance, and servicing of equipment.
However, with the proposed green hydrogen production, the IRP will need to add renewable electricity when developing the relevant energy plan for green hydrogen.
South Africa's competitive advantages in the production of green hydrogen and its derivatives include:
- High-quality, large-scale renewable energy potential.
- South Africa's geographically central global location allows exports to both Europe in the West and Japan, Korea, and other markets in the East.
- There is enough land, it is non-competitive agricultural or residential land to accommodate this scale of renewable energy.
- The production of green hydrogen is not competitive 'but has a synergistic effect on water security, since using seawater desalination plants accounts for only a small fraction of the cost of the final product (less than 0.01 USD)/kg H2 produced).
- South Africa has the technology to convert green hydrogen into a zeroemission produced fuel based on Sasol's proprietary Fischer-Tropsch, coal- to-liquid (CTL) technology in Secunda.
- It is necessary to plan the coordination of supply and demand hubs, at the intergovernmental level.
- Need to approach innovative, low-cost green financial solutions.
- Establish a globally relevant regulatory and policy framework. This can be supplemented by developing internationally compatible “assurance of origin” schemes and clarifying “green” requirements.
- Build sustainable and lasting competitive advantage through skills development and localization.
- Green hydrogen pricing: By 2030, the associated cost of green hydrogen is expected to be around $4/kg, $2-2.5/kg more expensive than gray hydrogen. Despite projections of reductions in the cost of renewable electricity and electrolyzers, until this materializes, government support, subsidies, and incentives will be required to address the disparity. arbitrage and cost of capital.
Recent green hydrogen initiatives
- The Ministry of Science and Innovation has developed the Hydrogen Society Roadmap and is launching a study to identify the skills needed for green hydrogen industrialization.
- DTIC has established a Green Hydrogen Council and conducted a study on the commercialization of green hydrogen to make recommendations to the Cabinet by 2022.
- Infrastructure South Africa (ISA) recognized green hydrogen as a priority opportunity for industrialization and dedicated a new port at Boegoebaai as a potential strategic infrastructure project to enable exports from the Northern Cape in long term.
- South Africa and Germany have formed a bilateral relationship to recognize South Africa's green hydrogen potential. In an effort to find green hydrogen sources and support South Africa's development, the German government, through KfW (Reconstruction Credit Institute) and GIZ (German Agency for International Cooperation), is providing co-financing for selected green hydrogen projects in South Africa in the form of grants, technical assistance, project development funds, and concessional debt.
- South Africa's private sector has been quick to act on the green hydrogen opportunity, with both local and multinational stakeholders conducting feasibility studies and developing pilot programs. Anglo American introduced the world's largest green hydrogen truck at the Mogalakwena mine.
- There are 18 more projects under development, with an estimated total feasible cost of ZAR 4.5 billion ($250 million) and ZAR 163 billion ($9 million) required for investment costs. These projects expand use cases and require significant capital deployment for early incubation of South Africa's green hydrogen ecosystem.
4. Grants and Loans to South Africa
The financial need for JET IP over the next 5 years (2023 - 2027) is estimated at $98.7 billion. However, IPG is committed to raising initial funding of approximately $8.5 billion over the next 3-5 years, to create a catalytic impact that will accelerate the decarbonization of the South African power system in a way that ensures a just transition, including grants, concessional loans, loans, guarantees and private investment at market rates.
Table 1 estimates the distribution of IPG incentives across sectors and JET priority programs. These loans are likely to be adjusted after the conclusion of negotiations, regarding concessional and commercial loans and guarantee terms.
Table 1.Distribution of IPG incentives across sectors and priority programs of JET
| Electricity | New energy vehicle | Green Hydrogen | |
| Total investment under JET IP (98.7 billion USD) | 68.7 | 8.5 | 21.3 |
| Allocation for JET IP from IPG ($8.5 billion) |
| Infrastructure | 6.9 | 0.2 | 0.5 |
| Ability to plan and implement | 0.7 | 0.2 | |
| Skills development | 0.012 | ||
| Economic diversification and innovation | 0.022 | ||
|
Social investment and inclusion
|
0.016 |
Table 2. Sources and financing methods of IPG incentives (million USD)
|
Million dollars |
Grants |
Preferential loans |
Commercial loan |
Guarantee |
Total |
|
From the CIF/ACT program |
50 |
2.555 |
0 |
0 |
2.605 |
|
EU - EIB |
35 |
1,000 yen |
0 |
0 |
1.035 |
|
France |
2.5 |
1,000 yen |
0 |
0 |
1,002.5 |
|
Virtue |
198 |
770 |
0 |
0 |
968 |
|
UK |
24 |
0 |
500 |
1,300 |
1.824 |
|
America |
20.15 |
0 |
1,000 yen |
0 |
1,020.15 |
|
Total |
329.7 |
5.325 |
1,500 yen |
1,300 |
8,455 |
Currently, the total grant is 329.7 million USD (3.9%), of which 35 million USD is from the EU, and 2.5 million USD from France for long-term strategic planning for JET, translation consulting services, local government support, and research, such as energy poverty assessments. Grants from Germany ($198 million) are for policy and regulatory reforms related to energy transition; assist local governments in preparing for the transition; promote renewable energy, including green hydrogen, and train new and re-skill the workforce in the decarbonizing energy sector. United Kingdom ($24 million) for research and development related to decarbonization, green transport, and feasibility studies on energy storage. United States ($20.15 million) for technical assistance, feasibility studies, and pilot projects.
JET IP also specifies South Africa will seek to increase the share of grants in the IPG package with future bilateral and multilateral partnerships. Charitable funds will be an important source of funding for JET IP.
5.Priority areas under Vietnam's JETP
- Increasing investment in renewable energy and storage; wind and solar energy, (including but not limited to the development of renewable energy centers, the production of storage batteries and renewable energy equipment, the production of green hydrogen, the development of rigs offshore wind combined with marine aquaculture and fisheries logistics);
- Improving power generation technology, expanding and modernizing the transmission and distribution grid, using the latest technology to increase energy efficiency, negotiating phase-out of old coal-fired power plants, inefficient to facilitate access to clean energy;
- Electric vehicles
5.1. Status of electricity production in Vietnam
Vietnam's electricity output in 2021 reached 256.73 TWh, of which hydropower (28.5%), other renewable energy sources (12.27%) natural gas (9.3%), and coal (32.2%)[13]. Vietnam does not have nuclear power like South Africa, but the proportion of hydropower is much larger.
According to the draft Power Development Plan VIII (version in December 2022), there are 39 coal power plants as of September 2022, with a total capacity of 24.7 GW. In addition, there are 13.8 GW from projects that are not yet in operation, 7 projects/7 GW are under construction, 5 projects/6.8 GW are about to be invested but have difficulty in the capital, 600 MW are transferred to LNG, the rest still keep or can reserve the option to switch to wind power, biomass. Coal-fired power will be converted to co-firing NH3 and biomass before 2050. Gas-fired power will convert GH2 to co-firing GH2, completely before 2050 (need 23 million tons of GH2 in 2050)[13]. Unlike South Africa, Vietnam's coal power plants are still relatively young, as of 2022, about 90% of newly installed capacity will start operating this century, and the average age of private facilities is about approx. 5 years and the state is about 14 years, still likely to operate in the next few decades. Thus, stopping coal power early to achieve Net Zero by 2050 will'be much more expensive than in South Africa. Currently, there are no plans to decommission any factories before 2040, even the old ones that have been in operation since the 1970s [12].
The proportion of electricity capacity expected in 2030: coal-fired power 29.8%; domestic gas electricity 12.3%; LNG power 12.6%; on-shore wind power 9.8%; solar power 7.2%; biomass, garbage, and other 1%; hydropower and battery storage 1.2%; the share of renewable electricity capacity is 18% (22.5% of hydropower alone) [13].
According to the Nationally Determined Contribution (NDC), it is estimated that Vietnam's total emissions in 2020 will be 528.4 million tons of CO2 equivalent. The energy sector accounts for 66% (347.5 million tons) and electricity produces 39% (207.5 million tons)[14].
5.2. Vehicles using fossil fuels
Emissions from the transport sector in 2020 are 45.5 million tons of CO2 equivalent, accounting for 8.6% of the total estimated emissions [14] in the country. Road transport is the largest source of emissions as it generates 79.5% of total emissions, followed by inland waterway and sea transport with 9.6%, and by air with 5.9%. Railways produce the smallest emissions of 0.4% [15].
Thus, measures to reduce emissions for traffic should include improving the fuel saving of vehicles, changing the mode of freight transport from road to the waterway, from using motorbikes to public transport and using electric vehicles, including motorbikes, cars, and buses.
Motorbike production output in Vietnam before the Covid-19 pandemic reached 4 million vehicles/year in 2021, it fell sharply to only 2.5 million vehicles/year, Vietnamese enterprises participated in the supply chain. In 2022, vehicle output reached 3.3 million vehicles. The automobile industry is also prioritized for development in Vietnam, which has been established and developed since 1991 while countries in the region, Thailand, Indonesia, and Malaysia have developed the automobile industry since the 1960s, Currently, this industry has very low output. Output in 2020 is only 323,892 vehicles [16]. The participation of Vietnamese enterprises in this chain is also low, the main areas that Vietnamese suppliers supply to automobile manufacturers in Vietnam are mainly plastic and rubber because those components are bulky, and the enterprises are forced to localize in the country [17].
Regarding electric car production, the fact that Vietnam has not yet produced ICE auto parts is an advantage because the switch to production for electric vehicles will be much faster than other countries that are making ICE cars. Currently, the production of gasoline cars is so low, it is the right time to switch to electric cars, and at the same time with the beginning of the "automation" phase of Vietnam. This phase takes place in each country when there are over 50 cars per 1,000 people on average and is expected to happen in Vietnam between 2020 and 2025 when the GDP per capita is bigger than 3,000 USD. By 2025, the market size will reach a high level of about 800-900 thousand vehicles/year [18].
Currently, a large-scale complete hydrogen market has not been formed in Vietnam. Hydrogen is primarily produced from fossil sources (petroleum, natural gas, coal) and used on-site in oil refineries and fertilizers. Very small amounts of hydrogen are used in the steel, glass, electronics, and food industries and are partly supplied by domestic hydrogen producers such as Vietnam Air Liquide and Vietnam Linde gas... The rest is imported by the aforementioned units from countries such as Singapore, Thailand, Taiwan, and China. Country.
According to the draft Power Development Plan VIII, the onshore wind power potential is about 221 GW, and the offshore wind power potential is about 165 GW [13]. The wind power capacity factor in Vietnam is estimated to average around 36% onshore and 54% offshore. The total preliminary solar power technical potential is as follows: 48 GW of rooftop solar power, 837 GW of ground solar power, and 77 GW of surface water solar power. Along with seawater thanks to its geographical position stretching along the coast of about 3,260 km, Vietnam can consider the possibility of becoming a green hydrogen export center
The use of domestic green hydrogen for areas that are difficult to reduce emissions such as transportation, the petrochemical industry, the iron and steel industry, cement or electricity industry requires large investment costs for transport, storage, distribution infrastructure, and changes to appropriate technology and equipment (except for the petrochemical refining and chemical fertilizer industry, which are using gray hydrogen), while other conversion technologies are also not optimal. In addition, as mentioned in Section 3.3, the associated cost of GH2 is expected to still be more expensive than that of gray hydrogen. Until projections of reductions in the cost of renewable electricity and electrolysis become a reality, consumption of green hydrogen is unlikely to be affordable for countries with low per capita incomes as Vietnam (3,730 USD in 2021).Prioritizing exports will attract early investment and help Vietnam keep abreast of the development of green hydrogen.
Vietnam's policies have also focused on hydrogen. Resolution No.55-NQ/TW has set out goals and solutions for Vietnam in terms of renewable energy, in which it is clearly stated: “Perform technology research, develop several production test projects and encourage the use of hydrogen energy is suitable to the trend of the wo；ld” [19].
Vietnam Oil and Gas Group (Petrovietnam) together with its research base is the Vietnam Petroleum Institute (VPI) and its member units, with strengths and resources (people and equipment) available in the survey, monitoring, consulting, construction, installation, maintenance, repair and investment in offshore projects will have great advantages to participating deeply in the value chain of offshore wind power and from there, producing green hydrogen. Moreover, Petrovietnam already has existing infrastructure and experience in producing "gray" hydrogen at refineries and petrochemicals. There have been researched projects on green hydrogen production being carried out such as “Floating wind turbine for oil and gas production & offshore hydrogen production” between Vietnam Petroleum Institute and GICON GroBmann Ingenieur Consult GmbH, Germany.
6. Conclusions and recommendations
South Africa's JET IP is not yet an exact detailed plan and it is too early to evaluate its success 'but will be useful lessons for later countries. Because each country has different conditions and is in different energy transition stages, Vietnam can consider the model of developed countries (with many resources) and South Africa as a reference model not be a template.
In the period from 3 to 5 years, to use all capital from IPG for an energy transition towards the goal of Net Zero by 2050 in the most effective way, a synchronous and comprehensive plan is required, which is built with multidisciplinary participation from the energy sector and organizations with technical capacity. Recommendations and suggestions for the development of JET RMP in particular are:
a. Compared with South Africa's power system, renewable electricity, especially solar power in Vietnam, has developed strongly in recent years, but the storage and transmission system has not kept up. Vietnam needs to give priority to strengthening the storage/transmission system with renewable electricity (storage, transmission, operating batteries...).
b.The trend of phasing out coal power by 2050 is similar to Vietnam, but South Africa's solution does not have a transition step (green hydrogen cofiring, green ammonia, biomass) as envisaged in the PDP VIII of Vietnam, while South Africa stops aging power plants or stops young power plants to replace them with renewable electricity and storage. For a successful transition from coal to clean energy sources, the factors related to that clean energy source need to be studied in detail. An example is the case of replacing with biomass, waste, how are the availability and potential quantification; In the case of using green hydrogen, what is the renewable electricity source (for production), and what is the additional renewable electricity capacity that will need to be included in the planning, will the land-use demand be met, the efficiency of each process? What is the current technological process...? Although South Africa has many advantages over Vietnam in the production of green hydrogen (near major markets, renewable energy, and abundant minerals.), the use of green hydrogen for electricity production is only seen as a possible option in the long term (prioritizing the use of green hydrogen for export and other applications such as in industry and transport first) provided that the cost has been reduced to an acceptable level. Besides the alternative option with biomass and green hydrogen, other options need to be compared, such as using CCUS technology to integrate into coal power plants along with technological improvement methods, saving energy, or replacing with renewable electricity combined with storage technology.
c. If the above solutions don't meet technical and economic requirements to reduce emissions for coal power, then accelerating the process of stopping coal power to convert to renewable electricity should be funded from JETP's grants.
d. Vietnam does not have many advantages in minerals like South Africa to develop nuclear power, but with the potential of renewable electricity, Vietnam can consider the possibility of becoming a green hydrogen export hub.
e. The JET IP grants content has been elaborated [Section 3). For Vietnam, this funding can fill gaps in the policy system for energy transition, capacity building, and support for negatively affected workers. Specifically, about policy, up to now, South Africa has been developing important policies for 3 priority areas, including the Hydrogen Economy Roadmap, which has defined the scope of NEVs transformation in transportation, has determined the carbon tax rate, identify “green” sectors/industries; Indonesia, on February 22, 2023, also launched the first phase of mandatory carbon trading for coal-fired power plants, an effort by Southeast Asia's largest economy to materialize the phase down coal power, promote renewable energy, and achieve net zero emissions by 2060 [12]. These are important policies for energy transition but are lacking in Vietnam or not yet clear. In particular, it is necessary to quickly build a Net Zero roadmap in line with JETP.
f. In addition to prioritizing policies and attracting investment, building the development roadmap for each type of renewable energy needs to be correlated with associated industries and determine a roadmap to replace raw materials/ fossil fuels in each industry.
g. For export industries, it is necessary to focus on determining emission ranges with internationally appropriate methods, thereby determining the goal of greening production processes.
h. In addition, it is necessary to develop strategies and roadmaps for the development of ecus technology, which is a technology that JETP has recognized that Vietnam can use.
i.To further expand this share of funding and important preparation for the energy transition in Vietnam, may put additional emphasis on R&D activities, pilot projects, feasibility studies, pilot/demonstration projects, and attention to integrated pilot projects, for each link sector, each field. For example, in the field of green hydrogen, the pilot and feasibility studies that need to be carried out in the first phase are i) comparing the production of clean hydrogen from renewable sources (wind power, solar power, biomass, waste, plastic waste, ...), from fossil sources combined with ecus； ii) transportation and distribution (compressed air, pipelines, seaports, distribution stations...); iii) application of alternative hydrogen in industries in Vietnam. Another example is the field of electricity generation with clean energy sources as an alternative to coal, mentioned in section 5b.
j. In addition, it is necessary to develop and supplement university training programs on the value chain of each type of renewable energy and corresponding technologies, develop vocational training/vocational training plans for the direct or indirect producers and users of renewable energy (such as the production and use of green hydrogen, wind power) comprehensively.
k. Research on the application of clean fuels to replace fossils in Vietnam's transport vehicles (availability of each type of clean fuel, suitability to the requirements of each type of transport), study and develop policies to encourage people to use clean fuel vehicles (such as electric vehicles...), develop charging station infrastructure; policies to encourage and give incentives for the production and import of clean fuel-using means of transport, to set out the roadmap and scope of application of clean fuelusing vehicles, to evaluate the elimination of vehicles using clean fuels. fossil fuel use and its impacts (career transition, training, retraining, etc.)
As forecast by the World Bank (WB) in the recently released Country Report on elimate and Development for Vietnam, Vietnam's total additional financial need to build resilience and mitigate the impact of climate change, towards Net Zero could amount to 368 billion USD in the period 2022 - 2040, approximately 6.8% of GDP per year.
