Study on private funding opportunities for renewable energy and energy efficiency investments in Vietnam

Vietnam’s dynamic economy continues on a solid growth path, driven by robust domestic demand and export-oriented manufacturing. At the same time, Vietnam ranks among the countries most vulnerable to climate change impacts. The rapid increase in GHG emissions is driven by Vietnam’s very high energy intensity, and especially electricity intensity, which continues to grow rapidly compared to other Asian countries. In view of the high and increasing energy intensity and climate change concerns, the Government of Vietnam has established a variety of policy and regulatory instruments aimed at encouraging investments in EE and RE, such as the Law on Economical and Efficient Energy Use. However, past studies have shown that private investment in EE and RE remains limited; green finance represented only 1.7% of the total credit provided by public and private banks in Vietnam for the national economy in 2017. Therefore, a combination of a conducive legal and enforcement framework, and available suitable incentives is required to attract private finance for climate change response activities in Vietnam.

Econoler was commissioned as a climate finance specialist to map private funding opportunities for EE investments available to be mobilized in Vietnam and determine key conditions for reducing constraints and attracting private-sector engagement and investments. As part of this assignment, Econoler carried out the following tasks:

• analyzing available opportunities for financing EE in Vietnam;
• identifying the types of instruments offered (grants or resources available for project preparation, loans, and equity);
• assessing the key constraints hindering private investment in EE;
• estimating the total volume of private funding currently and potentially available if key constraints are removed;
• comparing Vietnam’s situation with that of two comparable countries;
• describing the necessary conditions and enabling environment to attract private investment in EE and making recommendations.

  Econoler provided the key findings of the study to Vietnam’s senior policy-makers in an executive summary report and a PowerPoint presentation.