4. Energy and Environment

This section covers the following topics: energy infrastructure, air quality, water, waste and soil

Indice

• 4.1. Energy
• 4.2. Air
• 4.3. Water
• 4.4. Waste
• 4.5. Soil

4.1. Energy

Vietnam still relies on coal and natural gas as its main sources of electricity. However, in 2021, renewable energy capacity increased, contributing 15% of the national capacity, or 13.15 billion kWh.

The Politburo issued Decree No. 55-NQ/TW on the National Energy Development Strategy by 2030, with a Vision to 2045. The decree aims to boost the renewable energy sector while maintaining the country's energy supply, to make Vietnam a leading ASEAN country in energy. The estimated shares of energy sources in Vietnam as of 2021 are as follows:

Table : Estimated shares of energy sources in Vietnam as of 2021

The objectives set for 2030 include:

Table : objectives energy by 2030

As of 2020, 100% of the Vietnamese population has access to electricity in both rural and urban areas 1. Vietnam Electricity Corporation (EVN), a state-owned enterprise, is the main electricity supplier and operates the national power grid across the country.

According to data published by the Global Infrastructure Hub (https://outlook.gihub.org/), a non-profit organization formed by the G20, there is still a small gap between investment needs and actual coverage, the difference is mainly due to the need to adapt to the sustainable development goals.

4.2. Air

Vietnam is struggling with alarming air pollution. In 2021, Vietnam ranked 36th out of 118 countries with the most polluted air. Its two largest cities, Hanoi and Ho Chi Minh City, are now among the top 15 most polluted cities in Southeast Asia.

Fine particulate matter (PM2.5) is a particular concern in Vietnam. In 2019, Hanoi had only eight days with PM2.5 below the national standard of 50 micrograms per cubic meter (µg/m3). Meanwhile, air quality in Ho Chi Minh City recorded only 36 days below the standard. For the remaining days of the year, more than ten million people in these cities were exposed to heavily polluted air.

According to the Ministry of Natural Resources and Environment, the main sources of urban air pollution are transportation, industrial activities, construction, agriculture and cottage industries, and poor waste management practices.

Vietnam passed a national action plan on air quality management in 2016 to manage and minimize air pollution. The plan includes stricter regulations on new vehicle emission standards, better traffic control, enforcement of dust management measures for construction sites and truck transport, enhanced monitoring of industrial emissions, and a ban on coal-fired stoves in cities.

While these measures may help partially address Vietnam's pollution, long-term national policies and greater enforcement of existing policies are urgently needed.

The National Air Quality Management Plan Action Plan includes a 20% reduction target for NOx , SOx and particulate matter emitted from cement, chemical, fertilizer and petroleum manufacturing plants. Separately, a draft national technical regulation on emissions for the steel industry is in the works. Vietnam's environmental law also contains air quality management requirements, including point source registration, emission inventory and installation of continuous emission monitoring systems for major stationary source emitters. Improving air pollution control will also require industrial parks to install emission treatment systems

4.3. Water

4.3.1. Water system and sanitation

Viet Nam has made progress in increasing water supply and sanitation coverage. National access to improved water supply increased from 65% in 2017 to 95% in 2020, while access to basic sanitation increased from 52% to 84% over the same period. However, disparities between rural and urban areas and between rich and poor continue to prevail 2.

The country continues to face inequitable access to water and sanitation, with water service coverage declining in remote and mountainous communities. The severe drought of 2019-2020 and saltwater intrusion in the Mekong Delta region have caused daily water shortages for 439,000 people in some rural communities. Open defecation is still practiced by an estimated 10.7 million people in Viet Nam 3.

Among the infrastructure sectors, this is the one with the largest gap between actual investments and investment needs including those deriving from the sustainable development goals, a gap that could be between US$ 830 and 1,780 million in 2025 and between US$ 965 and 2,050 million in 2030, for an overall need that would range between US$ 2 and 4 billion (depending on the inclusion of the sustainable development goals).

4.3.2. Surface Water Resources

Vietnam has a dense river network: 2,360 rivers with a length of more than 10 km, eight of which have large basins with a drainage basin of 10,000 km² or more. This river network includes many international rivers that originate in the drainage basins of other countries. About two-thirds of Vietnam's water resources originate outside the country, making Vietnam susceptible to water resource decisions made in upstream countries.

Vietnam, Cambodia, Laos and Thailand are the constituent members of the Mekong River Commission (MRC), which also includes China and Myanmar as dialogue partners.

The total annual runoff is 835 billion m³, but the water shortage is aggravated in the 6-7 months of the dry season, when the runoff is only 15 to 30% of this total. All rivers flowing through Vietnam provide an abundant water supply (310 billion m³ per year). About 7,500 water storage facilities are located in ten major river basins across the country.

However, inadequate physical infrastructure results in low utilization of only 53 billion m³ per year. In addition, the uneven distribution across Vietnam of the average annual rainfall of 1,960 mm and the prolonged dry season cause severe water shortages in many areas.

4.3.3. Groundwater

Groundwater resources are abundant with total potentially exploitable reserves estimated at nearly 60 billion m³ per year. However, despite the abundance of groundwater reserves, less than 5% of them are exploited overall. In some areas, overexploitation has led to lowering of water tables which contributes to further land subsidence and salinity intrusion, particularly in the Mekong River Delta. Groundwater is emerging as an important source of water for domestic, industrial and agricultural uses.

4.3.3. Irrigation

Due to the economic importance of agriculture, which accounts for 30% of exports and 60% of total employment, nearly 80% of all water resources in Vietnam are used for irrigation, which is managed by about a hundred state-owned companies, using almost exclusively surface water, through a network of over 8,000 systems connected to about 750 reservoirs with over 1,000 low dams and 2,000 large pumping stations. The country's 900 large and medium-sized hydraulic systems have been distributed across its 63 provinces (a large system serves an area of nearly 2,000 ha).

The Vietnamese part of the Mekong Delta (about 40,000 km2) produces 90% of the country's rice exports and 60% of the country's fish exports. This unique waterscape consists of a dense labyrinth of canals, vast rice paddies and orchards. The canalization process is limited by flooding, erosion, poorly placed dams, sediment flow deficiency 4, sea level rise and other factors. Hence, the current trend towards precision agriculture with efficient irrigation and higher yields, which is driving a demand for more flexible and resilient and modern water measurement and control equipment and irrigation technologies.

Top industry opportunities include water quality and safety engineering, resource management expertise, water and wastewater treatment technologies, water efficiency and recycling products and equipment, flood management, leak detection, laboratory and field testing.

4.3.4. Water pollution

Rapid economic development has been one of the reasons for the growth of its wastewater treatment market, as well as the boom in urbanization and the construction of many industrial zones across the country, with growing concern over the wastewater treatment capacity in urban and industrial areas.

Untreated industrial water from industrial parks, export processing zones and hospitals is the main source of water pollution in Vietnam.

With only about 15% of wastewater adequately treated in the 33 wastewater treatment plants in urban areas, most domestic wastewater is discharged back into the environment, resulting in pollution. The current treatment capacity of 850,000 m3 per day is expected to increase by another 1,600,000 m3 per day with over 40 new wastewater treatment plants under construction.

The National Strategy for Green Growth (Prime Ministerial Decree 1658/QD- TTg ) envisages achieving, by 2030, the collection and treatment of 50% of wastewater in Tier II cities and 20% for other types of cities.

Nearly 78% of industrial zones have already started operating with dedicated wastewater treatment plants.

Due to two accidents, one in 2016 which involved the pollution of 100 km of coastline due to a chemical spill, another in 2017 due to the spill of 200 litres of oil from a tanker in the iconic Ha Long Bay, the demand for rapid response technologies to accidental spills has grown.

4.3.5. Decentralized wastewater treatment

The number of dispersed and small-scale wastewater collection and treatment systems serving the community has increased significantly in recent years. Some dispersed wastewater treatment systems have applied low-cost technologies as community and household sanitation systems. These systems use a septic tank with thin partitions, BASTAF air filter, and horizontal underground flows. Unlike centralized processing systems with large-scale investments, stakeholders involved in the management of these wastewater treatment systems include non-governmental organizations, local communities, and local governments.

Decentralized wastewater treatment mode has become increasingly popular in residential, manufacturing and medical facilities due to the need to meet increasingly stringent environmental standards for wastewater, advantages of cost deduction on sewer construction and flexibility in investment and management.

The most popular sanitation facilities in urban areas are septic tanks, which cover over 90% of households. This rate varies across urban areas, for example, many households with septic latrines are not yet connected to the sewerage system. Some households with flush toilets can discharge waste into the general sewer system without going through septic tanks or other local treatment plants.

The market volume of wastewater treatment systems, both imported and locally developed, is constantly growing. Such systems and equipment include prefabricated thin-walled reinforced concrete septic tanks, prefabricated tanks for anaerobic and aerobic treatment made of composite materials based on AFSB and BASTAFAT technology, wastewater treatment tanks with activated sludge technology.

4.3.6. The need for private investment and the challenges for its promotion

On July 5, 2022, Vietnam International Arbitration Center (“VIAC”), in collaboration with Vietnam Chamber of Commerce and Industry (VCCI) and the United States Agency for International Development (USAID), held a workshop on “Public-Private Partnership (PPP) Models for Construction and Operation of Wastewater Treatment Plants and Solid Waste Disposal Facilities in Vietnam” 5.

According to the presentations at the seminar, between 10 and 20 billion dollars will be needed in the next 10 years to achieve the objectives of the National Strategy for Green Growth; it will also require the introduction of new technologies and the development of a strengthened social role of the community.

However, private investment and investment in urban wastewater treatment, such as pesticides, are still limited. Although more projects have been implemented using the Build -Transfer (BT) model, the assessment of the Ministry of Natural Resources and Environment (MONRE) indicates that the actual needs have not yet been met.

According to Nguyen Thuong Hien , Deputy Director of the Environment Directorate of MONRE, in the implementation of the current national PPP policy targeting the sectors of municipal solid waste treatment and urban wastewater treatment, the following issues need to be improved in order to encourage investment in new projects and attract private sector financing.

• the technological infrastructure does not match reality. The unit cost of treatment services is still low and the cost of managing and maintaining treatment systems is high.

• The system for attracting private funds is not yet effective and there is a lack of guarantees and specific support for a smooth and safe investment environment.

To solve these problems, the Vietnamese government is expected to develop appropriate strategies and plans to establish a legal framework for infrastructure systems and Public Private Partnership.

4.4. Waste

In May 2018, the Netherlands Ministry of Foreign Affairs, CREM and Partners for Innovation published a concept study on the circular economy in Vietnam 6. Statistics showed that Vietnam’s annual waste generation exceeded 27.8 million tonnes (up from 15.6 million tonnes in 2004), with 46% coming from municipal sources and the rest from agriculture and industry. The five largest cities – Hanoi, Ho Chi Minh City (HCM City, formerly Saigon), Haiphong, Da Nang and Can Tho – accounted for around 70% of total waste generation.

In terms of composition, solid waste in Vietnam is characterized by high moisture (between 65 and 95%), high ash content of about 25-30% (dry weight) and low calorific value (900-1100 Kcal/kg wet weight) 7. The main composition of waste is organic waste (67%) and other recyclable materials such as paper (6%), metal (6%), glass (4%) and plastic (12%). In household MSW, organic matter (food waste) is the major constituent, with a decreasing trend. Since 1995, the composition of food waste has accounted for a very high percentage (80-96%), but by 2017, this figure had decreased to about 50-70%, indicating that changes in the lifestyle of urban residents are rapid and more sustainable 8.

4.4.1. Collection and treatment.

According to the German Agency for International Cooperation (GIZ) 9, Vietnam's collection coverage ranged from 40 to 85% with differences between rural and urban areas, with rates of 95% in Hanoi and Ho Chi Minh City. Waste collected and not disposed of in landfill amounted to 44% with no information on the breakdown between recycling, reuse, composting, biogas and energy recovery.

In 2019, according to statistics from the National Ministry of Natural Resources and Environment (MONRE), there were 1,322 municipal solid waste treatment facilities operating nationwide, including 381 solid waste incinerators, 37 composting plants, and 904 landfills, including a larger number of non-sanitary landfills.

Of the total volume of MSW collected, approximately 71% is treated in landfills, 16% is treated in composting plants and 13% is treated by incineration. Of the largest landfills, which receive more than 20,000 t/day, only 30% are classified as sanitary landfills and only 36% are equipped with bottom linings. Most landfills do not have compactors, gas collection systems, leachate treatment or environmental monitoring.

In January 2020, an article published by the World Economic Forum 10described Vietnam's waste situation as "a combination of rising consumption and poor national waste management." According to the article, only 10-15% of collected waste is recycled or reused.

4.4.2. The problem of plastic waste

Vietnam ranked 7th among the world’s top plastic waste producers, producing over 1.8 Mt/year.

With an average share of 12% of municipal solid waste, the annual per capita production of plastic waste exceeds 30 kg.

Plastic is a growing concern for Vietnam, with a severe negative impact on tourism, so much so that the sector has begun to launch awareness campaigns on the issue and programs to reduce the use of plastic 11.

Considering also industrial uses, from 1990 to 2015 the per capita consumption of plastic went from 3.8 kg to 41 kg, with an increase of 10% on an annual basis, but in 2017 the consumption exploded to 62 kg 12: if the production of plastic waste is a problem, the growing demand could potentially be able to offer the solution.

Until recently, most of Vietnam’s recycled plastic material was imported from other countries such as China and – after China’s 2017 import ban – the United States. Vietnam stopped issuing import licenses for plastic recycling in June 2018 and plans to stop importing plastic waste from the United States in 2025.

Most recycling is done on an artisanal basis by informal enterprises, whether family businesses or small businesses specializing in the recycling of plastic and other waste materials, but it is a rapidly growing and structured sector, with over 2,000 operators spread across the country.

4.4.3. Collection and treatment costs

Households in urban areas pay a waste tax ranging from 0.40 to 1.19 EUR/month, which amounts to an expense of between 4.76 13and 14.30 EUR/year 14.

According to the indications of the intergovernmental body Global Green Growth Institute (GGGI), the landfill fee reaches a maximum of 22US$, equal to approximately 20.53 EURO 15.

The city of Hanoi, the capital of Vietnam, with just over 8 million inhabitants, produces approximately 1.1 kg of municipal solid waste per inhabitant per day 16, or approximately 401 kg of waste per inhabitant per year, equivalent to approximately 3.23 million tons per year.

For the disposal of municipal solid waste, Hanoi dedicates an annual expenditure budget of approximately 47.7 million Euros, consequently the annual per capita expenditure is approximately 5.92 EUROS, while the expenditure per ton is 14.75 EUROS.

The budget of 5.92 Euro is slightly higher than the minimum tax paid by residents, while the budget per ton is almost 6 EURO lower than the maximum recorded by GGGI, indicating that margins are still decidedly low and struggling to cover new investments.

The example of Hanoi shows that current waste management needs to be reorganized with criteria of circularity, reduction of waste production and greater economic sustainability. For this reason, Vietnam is implementing a sector reform, which tends, on the one hand, to introduce separate waste collection and taxation based on the quantities of waste disposed of (the Vietnam Environment Administration hypothesizes a model based on the experience of South Korea, based on the number and size of the bags disposed of), on the other to push for the economic valorization of recycling and, in particular, of energy valorization, for which the entire conferment to Vietnam Electricity EVN is foreseen, with a Feed -in- Tariff of US$10.05 cents/kWh (about 9.38 EUROcents /kWh).

4.4.4. Waste to Energy

Global Green Growth Institute supported the construction of a CSS production plant and subsequent waste-to-energy plant in the province of Bac Ninh , demonstrating its economic feasibility, according to the following specifications.

Table : Waste-to-energy plant in the province of Bac Ninh

4.5. Soil

In the context of continued industrialization and urbanization, contaminated site management is an important tool to prevent negative impacts on the environment and human health resulting from soil contamination.

4.5.1. Situation and new legislation

Despite significant progress in developing the legal framework for soil contamination in recent years, only a minority of (potentially) contaminated sites in Vietnam are assessed in detail or remediated.

With the new Environmental Protection Law coming into force in 2022, Vietnam has begun a process of reviewing its environmental regulations.

The legislation on the identification of contaminated sites and their remediation is fragmented and stratified, however the new law on environmental protection begins a serious process of rationalization, in Section 3 (Chapter II) on the Protection of the Soil Environment, which contains an update on the Management of contaminated areas.

In Article 17 on the management of soil environmental quality, contaminated areas must be investigated, assessed, contained, treated, renovated and restored. Article 17 also identifies different levels of soil pollution.

Article 16 on the classification of polluted areas defines the term "polluted land area" and provides criteria for classifying pollution. These criteria include: source of pollution, ability to spread, and who is affected.

Article 18 on the treatment, rehabilitation and restoration of soil environment provides more detailed content on the control and improvement of soil pollution areas and other measures to minimize the impacts on children's health and human health. Article 18 also defines which areas will be given priority in the case of limited resources.

The new Article 19 provides more details on the specific responsibilities of authorities at the provincial and national levels. The main responsibility for managing contaminated sites lies with the provinces: they must carry out investigation, assessment, identification and zoning of areas at risk of soil pollution and deal with areas with soil pollution and areas with serious soil environmental pollution. The provinces must also report to the Ministry of Natural Resources and Environment areas with signs of inter-provincial soil pollution and areas with particularly serious soil pollution and must update the information on areas with environmental pollution in the environmental database on soil contamination and land use.

4.5.2. Agent Orange and the Legacy of War

From 1962 to 1971, the U.S. military sprayed approximately 17.8 percent of Vietnam's total forest area (3,100,000 hectares, 31,000 km2) with Agent Orange, a toxic defoliant with a high concentration of dioxins, leaving widespread contamination that severely affected the health of three generations of Vietnamese and compromised the ecological balance of the environment.

The persistent nature of dioxins, erosion caused by loss of tree cover, and loss of forest seedlings have made reforestation difficult (or impossible) in many defoliated areas, which have been rapidly invaded by aggressive pioneer species (such as bamboo and cogon grass ), making forest regeneration difficult and unlikely.

Animal biodiversity has also been affected; in one study a Harvard biologist found 24 bird species and 5 mammal species in a sprayed forest, while in two adjacent sections of unsprayed forest there were 145 and 170 bird species and 30 and 55 mammal species , respectively 17.

Dioxins from Agent Orange have remained in the Vietnamese environment since the war, depositing in soil and sediment and entering the food chain through animals and fish that feed in contaminated areas, impacting over a million Vietnamese, causing disability and disease.

The areas most heavily contaminated by dioxin are former US air bases, which are currently considered hot spots of current contamination, due to high concentrations of Agent Orange storage and its penetration into soil and groundwater.

After 50 years, the US and Vietnamese governments have reached an agreement for the environmental restoration of the Hot Spots.

In December 2022, the US Government announced an initial contract of US$ 29 million (approximately 27 million EURO) to begin the environmental restoration of the Bien Air Base. Hoa (the largest of the US air bases during the war), near Ho Chi Minh City. The entire project is estimated to treat over 500,000 cubic meters of soil in 10 years and will have a total cost of US$450 million (about 420 million EURO).