Environmental Industry and Energy Efficiency: Opportunities and Barriers

Environmental industry was identified as a sector requiring accelerated development under Decision 1043/QD-TTg of 2013, approving Vietnam’s industrialisation strategy within the Vietnam–Japan cooperation framework towards 2020, with a vision to 2030. At the time of this report, however, only just over 1,000 businesses nationwide operated in environmental industry, energy auditing and energy efficiency .

Substantial demand

The Ministry of Natural Resources and Environment projected that, by 2020, urban areas classified as grade IV or higher would generate about 59,000 tonnes of domestic solid waste a day—four times the level reported at the time. Each hectare of industrial park land was expected to discharge around 25–30 m³ of wastewater a day and 200 tonnes of solid waste a year. Medical waste, a hazardous waste stream, was reportedly increasing by approximately 7.6% annually. The article estimated that solid-waste treatment capacity met only one third of demand and that just 14% of hazardous solid waste was treated. Wastewater treatment capacity was described as even more limited, with only 2–3% of urban wastewater treated to the required standard.

According to Nguyen Van Tai, then Director General of the Vietnam Environment Administration, the environmental industry development plan had been submitted to the Government and was awaiting approval. An action plan covering environmental industry, energy auditing and energy efficiency under the Vietnam–Japan industrialisation strategy had already been approved through Decision 1292/QD-TTg of 1 August 2014. The strategy aimed to make environmental industry and energy efficiency key industries by 2020, contributing significantly to the economy and meeting demand for environmental treatment and sustainable energy use. Environmental industry and energy efficiency

Large investment requirements

The Ministry estimated that investment needs for environmental protection across 16 economic sectors and fields could exceed USD 7.6 billion by 2020. Environmental industry had already begun to change as more businesses from different economic sectors entered the market. During 2010–2014, signed official development assistance commitments for environmental protection projects and programmes totalled approximately USD 2.9 billion, including USD 58 million in grants, with the remainder in concessional loans.

The strategy identified investment in urban wastewater treatment plants; waste sorting, composting and waste-to-energy facilities recovering heat and electricity; hazardous waste treatment; and recycling facilities for plastics, waste oil, electrical and electronic equipment, and end-of-life vehicles .

There was also considerable room for development in energy auditing and energy efficiency , including research, technology transfer and support for energy audit procedures and energy-saving technologies in energy-intensive industries such as steel, paper, cement and ceramics. Other opportunities included developing green technologies such as LED lighting and high-efficiency electronics and refrigeration equipment, and reducing greenhouse gas emissions from breweries, seafood processing plants and office buildings.

Why was progress still slow?

The expert cited in the original report considered the policy framework for environmental industry, energy auditing and energy efficiency incomplete. At that time, the Government’s decrees on environmental industry development and supporting industry development had not yet been issued .

Production links and component supply networks had not developed, and markets for products supporting environmental industry and energy efficiency were still limited. Businesses also faced weaknesses in manufacturing capability and competitiveness. Another barrier to investment was society’s limited willingness to pay an adequate price for environmental services. Environmental profiteering remained common and insufficiently penalised. Nguyen Van Tai therefore identified stronger public environmental and energy-efficiency management as an important way to stimulate demand and help businesses develop their markets .

Do Huu Hao, then President of the Vietnam Environmental Industry Association, argued that enforcement needed to be accompanied by more attractive support measures. These included direct assistance with finance, land and infrastructure, as well as workforce training, access to information and databases, and support for technology transfer.

Reference: Decision 1043/QD-TTg of 1 July 2013