Taking notes

It goes without saying that energy security is fundamental to economic stability

Taking notes

I would argue that, as far as investments go, a recent two-week trip to Vietnam with my husband and adult sons must be one of our best yet least quantifiable investments in years. Aside from filling my heart, the exposure to a rapidly developing Southeast Asian country with 5 000 years of history was intensely stimulating.

Sightseeing in the capital, Hanoi, and Ho Chi Minh City (formerly Saigon, and the largest city in the country) was an electrifying experience. Life happens on the pavement, while on the street fruit and flower vendors jostle with pedestrians and an endless stream of scooters, cars and Vietnamese-made electric vehicles.

The country is growing fast – really fast – 8% in 2022 and on average 7.1% between 2016 and 2019, according to the World Bank. It’s a place in which anything feels possible – incredible in a country where the memories of the successive waves of war are very much alive. A mere 30 years ago, Vietnam was one of the poorest in the world – war does that to a nation. So how did this nation grow to become a middle-income country, with aspirations to become an upper-income country with a modern industrial base by 2030?

The solution appears relatively simple on paper… The government introduced economic and political reforms aimed at steering the country to a ‘socialist-oriented market economy’. It lowered the cost and complexity of doing business and invested heavily in human and physical capital. Vietnam also has two big advantages – it has lots of water and massive rivers; and it is strategically situated within a fast-growing region.

It also has power. A full 100% of the country has access to electricity – including in the deepest of rural areas. However, this has come at a cost. In 2021, Vietnam ranked 36th out of 118 countries with the most polluted air. Hanoi and Ho Chi Minh City are among the top 15 most polluted cities in Southeast Asia, the big culprits being a ring of coal-fired power plants around both cities that spew forth plumes of smoke as they struggle to meet the growing demand for electricity.

Another culprit is the exhaust fumes belched from the more than 65 million motorcycles, as well as millions of trucks, buses and cars. Yet, here again, is an amazing story. In 2018, Vietnamese solar generation was close to zero, but by 2022 solar accounted for 11% of electricity supply, or 16 GW. By way of comparison, in SA, installed renewable power increased from 467 MW in 2013 to 6.2 GW in 2022.

Vietnam’s ability to rapidly scale up solar generation over the past decade is down to a combination of factors, including supportive government intervention, international collaboration and a positive policy environment. For instance, in 2020, the government offered generous incentives to households and businesses to instal rooftop solar. By the end of the scheme, 9.3 GW of extra generating capacity had been added. The country’s stated aim is to achieve carbon neutrality by 2050. This goal goes beyond the threat of climate change to include the economic cost of inaction. Vietnam is now an intricate part of global supply chains, and its economic growth is largely predicated on exporting manufactured goods around the world. Therefore, attitudes among Vietnam’s key trading partners may also be contributing to the country’s need to decarbonise.

Vietnam’s transition to cleaner energy won’t be easy. The country faces several challenges in its effort to become carbon neutral – its manufacturing base is expanding rapidly and the thirst for cheap energy seems almost unquenchable; there are clashing interests within government; the power grid urgently needs modernisation; and pricing issues for solar and wind power are holding back the renewables sector. (Sound familiar?) However, I got the sense that, despite the ideological differences that linger just below the surface, the Vietnamese are determined to go forwards rather than backwards. The price of not doing so is just too high.

In SA we’re blessed with blue skies, clean seas and so much more. Now if we could all just pull in the same direction, perhaps we could achieve a similar economic miracle.

By Sasha Planting

JSE MAGAZINE