VCCI Launches the Project “Promotion Energy Efficiency in Supporting and Food Processing Industries in Vietnam”

The Vietnam Chamber of Commerce and Industry, together with the Southeast Asia Energy Transition Partnership (ETP) and other partners organized a inception meeting to launch the project " Promotion Energy Efficiency in supporting and food processing industries in Vietnam".

On July 25, 2022, the Prime Minister issued Decision No. 888/QD-TTg, approving the Scheme on tasks and solutions to implement the outcomes of the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26). The project aims for Vietnam to align with the global trend of low-carbon development, mobilize resources, and innovate technology to transform the growth model, restructure the economy, and contribute to the global effort in responding to climate change. This includes transitioning to renewable energy sources to fulfill the commitment of achieving net-zero emissions by 2050.

According to Mr. Bui Trung Nghia, Vice President of VCCI, as per Decision No. 888/QD-TTg, the Vietnam Chamber of Commerce and Industry has been entrusted with the responsibility of coordinating with the Ministry of Natural Resources and Environment to enhance connections with international and national business associations in Vietnam. The objective is to rally support, encourage participation, offer financial and technological assistance to fulfill the commitment of achieving "zero" net emissions by 2050. Additionally, this entails mobilizing associations and enterprises to actively engage in commitment implementation. Propaganda activities aimed at fostering changes in habits and enhancing employees' awareness regarding energy conservation, as well as technical support initiatives to facilitate the adoption of modern technology and the automation of production processes, along with the utilization of energy-efficient consumer equipment. This could potentially result in electricity consumption savings ranging from 20% to 40%, contingent upon the size and technological sophistication of the manufacturing enterprise. The promotion of energy-saving solutions in production by enterprises holds significant importance in the trajectory of socio-economic development, while concurrently safeguarding national energy security.

As the project sponsor, the Southeast Asia Energy Transition Partnership (ETP) Fund was established and officially commenced operations on November 20, 2020, under the management of the United Nations Office for Project Services (UNOPS) Inter-Services Office for Projects. It stands as a multi-stakeholder fund with the objective of uniting global donors and government partners to expedite the energy transition in Southeast Asia and achieve the objectives outlined in the Paris Agreement on climate change. Presently, contributions to the ETP are being made by the governments of France, Germany, the UK, Canada, as well as other organizations.

John Robert Cotton, the Senior Program Manager of ETP, stated that the fund is presently directing its efforts towards Indonesia, the Philippines, and Vietnam. These countries exhibit high energy demands and a considerable number of energy projects reliant on fossil fuels. They also harbor substantial, cost-effective potential for renewable energy and energy efficiency projects.

In Vietnam, enterprises in the food processing and supporting industries are experiencing rapid industrialization and hold substantial potential for energy conservation and greenhouse gas emissions reduction. However, these industries encounter various challenges in adopting energy-saving solutions due to insufficient information on energy efficiency, sustainability, and green production. Furthermore, manufacturers tend to overlook energy-efficient and cost-effective solutions due to financial and technical constraints, limitations in energy consumption auditing capabilities, and the ability to formulate projects to secure appropriate investment financing sources. The Energy Services Company (ESCO) business model is relatively novel and has yet to be widely adopted by manufacturing enterprises in Vietnam.

The primary objective of the project "Promoting Energy Efficiency in the Supporting and Food Processing Industries in Vietnam" is to enhance awareness within these two industries. The project aims to assist businesses in gaining access to financing for investments in energy-efficient practices, fostering network connections among manufacturers, financiers, and Energy Services Companies (ESCOs). It also involves piloting the evaluation of energy efficiency standards for both industries and outlining a roadmap for the establishment of the ESCO Association in Vietnam. This goal will be achieved through a blend of technical assistance, capacity-building in energy efficiency, and training in the preparation of proposals for financially viable energy efficiency projects. The project is expected to contribute to the more efficient utilization of resources, the adoption of responsible practices in the manufacturing supply chain, improvements in social and environmental conditions, and the reduction of carbon emissions within these two energy-intensive industries.

The seminar saw the participation of state management organizations, partners, and solution providers in the realm of assisting businesses in achieving economical and efficient energy usage. Notably, a representative from the Department of Climate Change under the Ministry of Natural Resources and Environment elucidated the regulations and policies governing energy consumption and greenhouse gas emissions within Vietnam's industrial sector.

Yuko Vietnam Co., Ltd., a subsidiary of Yuko Keiso established in 1963 in Japan, stands as the technical partner for the project. This entity supports businesses by guiding them through the implementation process of energy efficiency measures. They achieve this by furnishing project participants with analyses of energy usage and reports on potential energy savings. Moreover, they provide recommendations for the execution of energy-saving solutions and aid in constructing projects that can access investment capital.

A representative from the French Development Agency in Vietnam (AFD) presented information regarding AFD's Preferential Financial Solutions for Vietnamese businesses. According to the provided information, AFD has allocated over 2.3 billion EUR for more than 100 programs and projects dedicated to sustainable development. AFD's operational strategy aligns with a singular goal: to aid Vietnam in achieving green and sustainable growth. Ms. Nguyen Thi Thanh An, Head of the Energy Transformation Department at AFD, expressed the agency's aspiration to expand funding opportunities for green projects through Vietnamese commercial banks. AFD extends green credit lines to these banks, which, in turn, offer credit to enterprises. Additionally, AFD can extend guarantees to banks to share risks associated with these endeavors.

During the event, Mr. Kentaro TAKAHASHI, the representative from Office of Director for International Cooperation for Transition to Decarbonization and Sustainable Infrastructure, Global Environmental Bureau, Ministry of the Environment, Government of Japan, provided updates on the Joint Credit Mechanism (JCM) and shared experiences in executing Energy Efficiency projects. The JCM serves as a carbon emission reduction mechanism conceived by Japan to foster bilateral collaboration with developing countries, including Vietnam. Its purpose is to encourage actions aimed at diminishing greenhouse gas emissions through the transfer of clean and advanced technology from Japan to these nations. A collaborative agreement was reached between the Governments of Vietnam and Japan to establish the Joint Credit Mechanism (JCM), formalized by the signing of the Japan-Vietnam Cooperation Memorandum of Understanding on low-carbon growth on July 2, 2013. Presently, the JCM encompasses 27 partner countries and has undertaken numerous projects in various countries, including Vietnam, Chile, Thailand, the Philippines, Indonesia, Myanmar, and Mexico.

The project "Promotion Energy Efficiency in Supporting and Food Processing Industries in Vietnam" in conjunction with its partners, is slated for a two-year pilot phase (2023 - 2025). This initiative targets 2 industries in Vietnam: supporting industries and food processing. The anticipated outcomes of the project encompass the propagation of awareness among 100 manufacturers within these industries, fostering improvements in management techniques for energy efficiency, supporting 10 factories in the development of viable energy efficiency projects, facilitating the application of energy-efficient technology to 3 factories within supporting industries and food processing, establishing a network focused on economical and efficient energy use that includes manufacturers, ESCOs, financial institutions, and relevant stakeholders. The project also aims to provide consultation on the roadmap for establishing the ESCO Association and to pilot a benchmarking tool for economical and efficient energy utilization.

Thu Ha (Vietnam Business Forum)