This research conducts an in-depth analysis of the long-term impacts of alternative energy options for Vietnam up to 2050, with a view to identify an energy pathway that would meet the country’s energy needs in a sustainable manner. Three scenarios (Base, MOD and ADV), developed in this research, represent a range of energy policy measures that Vietnam could adopt in order to achieve its economic, energy and environmental goals. The Base scenario reflects a continuation of the current policy trends while the MOD and ADV scenarios represent higher levels of commitment to economic growth, energy diversity and reduction of energy import dependency and CO2 emissions.
The impacts of these scenarios are analysed in this research using a comprehensive framework that consists of an energy optimization model (MARKAL model) and energy-oriented input–output model. The energy impacts are analysed in terms of how the country’s primary and final energy requirements would evolve in response to alternative energy policies. And, the analysis of economic impacts focuses on how such evolution would affect sectoral outputs, income, employment, and energy and CO2 intensities.
The analysis suggests that if the current policy trends (as represented by the Base scenario) continue, by 2050, Vietnam would experience a fifteen-fold rise in primary energy requirements, and twenty-six-fold increase in CO2 emissions. The country’s import dependency will increase to about 84% in the case of primary energy requirements and 100% in the case of oil. This would potentially invite insecurity of energy supply and cause serious environmental pollution due to the high share of fossil fuels (more than 90%) in total energy consumption. The severity of these impacts could, however, be reduced by adopting appropriate policy measures as demonstrated in the MOD and ADV scenarios. These measures include energy savings and renewable energy promotion and CO2 restrictions. This would result in a reduction of primary energy requirements (by 6.6 and 9.3%), imported energy (by 14 and 18%), in the MOD and ADV scenarios, respectively, as compared with the Base levels, and CO2 emissions to the 1990 Kyoto level. Further, the analyses suggest that the economy-wide impacts of these policy measures are likely to be rather benign at the aggregate (national) level –
equivalent to a decrease in total output, wages and salaries, and employment in 2050 of merely 0.03%, 1% and 0.39%, respectively, in the ADV scenario as compared with the Base scenario. These impacts at disaggregated levels would, however, be more diverse and rather significant for some sectors. In 2050, for example, the main beneficiaries, which are cultivation, manufacturing, and construction sectors, would enjoy 1.4, 1.8 and 1.6% increase in total output, wages and salaries, and employment, while the main losers which are the conventional energy sectors (coal, oil and electricity) would suffer a decline in total output, income and employment of 14.6, 13.8 and 8.2%, as compared with the Base scenario.
Further, this research is a good example that demonstrates the importance of undertaking comprehensive analyses (both at macro- and micro-levels) in formulating energy policies. The disaggregated analyses could help avoid the pitfalls of basing policy decisions on aggregate analyses alone. Such disaggregate analyses also make transparent the sectoral linkages and provide more robust bases for developing trade-offs and compromises to achieve desirable policy outcomes. That is a novelty and one of the main contributions of this research to strengthening the energy policy settings in Vietnam.