Climate Change and Vietnam: Right Choices Required

In December 2015 at the Twenty-first Conference of Parties on Climate Change (COP21) in Paris, Vietnam pledged a particularly unambitious “intended nationally determined contribution”:  an 8% cut in its greenhouse gas (GHG) emissions by 2030, not from today’s level, but from a “business as usual scenario” that amounts to an increase of 3.2x between 2010 and 2030 to 787m tonnes of carbon dioxide equivalent. With an unspecified amount of international financial support, it pledged an intended reduction of 25% compared to business as usual.

There are three big problems to overcome in the above, apart from the overarching global one that COP21 was only made possible by making all such commitments voluntary and therefore legally and even morally unenforceable. First, Vietnam’s small and uninspiring proposed 8% “contribution” to climate change mitigation, for a country that is likely to directly bear a large brunt of the consequences of global warming. Second, worrying industrial data points that cast great scepticism on even achieving these very modest reductions. And third, the knowledge gap that palpably exists in Vietnam today on its own environmental self-monitoring: most listed companies do not yet know their own even basic (“Scope 1” in the jargon) GHG emissions, while the nation’s environment minister just a few months ago described environmental monitoring in Vietnam as “untimely, inaccurate and infrequent”.

The weight of evidence firmly ranks Vietnam as one of the main countries in the world to be strongly affected by climate change over the remainder of this century. According to the UN’s Intergovernmental Panel on Climate Change, some 1.2 billion people will be directly affected by rising sea levels by 2060, with Asia being hit hardest. The IPCC cites five major countries in particular in this regard: China, India, Bangladesh, Indonesia, and Vietnam. Major littoral cities in these countries (plus Bangkok and Yangon) are squarely at the centre of the likely economic and social impact.

The impact on Vietnam can, for the purposes of an executive summary, be broken down into three major items: food/agriculture, industrial development, and quality of habitat and the human condition. There is considerable overlap between these categories, but at least this gives us a basic framework for thinking about the issues:-

Fisheries & Agriculture. Some studies rate Vietnam first in the world for its sensitivity to the health of its fisheries. Some 24% of the country’s population lives in coastal districts along its 3,200km coastline, fish is a central part of the nation’s diet, and seafood exports were c. USD 8bn in 2015, 5% of total exports and (including domestic consumption) c. 7% of GDP. Coastal mangroves, salt marshes, and coral reefs are each endangered by rising sea levels and tidal surges associated with increasing frequency of typhoons and cyclones, and these are critical to breeding marine life. The warming ocean temperatures (making for lower oxygenation) and rising acidification (mainly from industrial pollution including acid rain) associated with climate change are already causing a northern migration of fish stocks into colder Chinese or China-claimed waters. In the South China sea, coastal fishing grounds have already been depleted to 5-30% of their unexploited stocks.

Inland, 60% of Vietnam’s total river flow and 95% of the mighty Mekong’s come from outside its borders, with upstream damming in China and Laos affecting flows and sediment deposition. The Mekong’s water level in February this year, during the recent El Niño phenomenon, was at its lowest since 1926, with 40-50% of the 2.2m hectares of arable land in the Mekong Delta hit by salinisation (a result of less river water relative to sea level). This affects river fisheries, and even more importantly rice, which is about 75% of total Vietnamese agricultural crop value, an export worth USD 1.6bn in 2015 and a sector worth about 8% of GDP. Together, agriculture and fisheries in 2015 occupied 44% of the nation’s population and 17% of GDP.

Vietnam’s rice yields per hectare – some 4.7 tonnes pa, a high level globally – have risen four times since the 1970s, amid increasingly intensive use of fertilisers and pesticides, but the outlook over the next 40 years for both yields and total plantation area is worrying. One reason is that fertilisers cannot be used any more intensively than they are already; Vietnam already ranks near the top of the world for the amount of them used per hectare. Another is that, with urbanisation and industrialisation, rice plantation area – currently about 4m hectares – is on a long term decline, perhaps of 10% over the coming 20-30 years. Just 28% of Vietnam’s overall land area is suitable for agriculture, with only two thirds of this capable of high-intensity crop production.

But most alarming of all is rising air temperature, the risk of rising sea level and falling river level, which cause drought, salinisation and sea inundation. Average temperature increases of 2-3 degrees centigrade over large parts of Vietnam are forecast over the coming half century, with the frequency of over-35 degree days rising strongly, raising the risk of drought. The risk of too much precipitation during the monsoon is also forecast to rise, as well as extreme weather events – especially in the vital Mekong Delta which produces typically over half of the nation’s rice. The low, flat topography of this region – including half of Ho Chi Minh City itself – means that a one metre rise in sea level would cause the inundation of up to 2m hectares or 33-50% of the region, flooding perhaps 14m residents.

Industrial (and therefore overall economic) development. Vietnam has been an economic development success story since the early 1990s, with the fall in its World Bank-measured poverty rate from 60% in 1993 to 13.5% in 2014 being one of the world’s fastest declines over this period. Like other successful Asian economic developers before it, this has been driven by the strong development of export-driven processing and manufacturing. The majority of Vietnam’s manufacturing capacity is in the southeast of the country, in and near the areas that could be so seriously affected by the phenomena already mentioned. Facilities in these 20 of Vietnam’s 64 provinces could be inundated by that one metre sea level rise, causing not only great economic damage but also environmental, in the form of toxic contamination. Proportionally to its own economic size, when added to the agriculture and fisheries impacts discussed above, Vietnam may thus be the single most badly affected country in Asia by a modest rise in sea level over the coming decades.

Quality of habitat and the human condition. Resulting from the climate and sea level changes are a host of negative effects on human life directly: involuntary migration, pressure on food and land resources, injury, death, malnutrition, disease (including from an expanding habitat area of malaria and dengue), intense heat up and air quality down. Such phenomena, apart from their innate tragedy and badness, could be expected to cause political and social discontent and instability, removing a key enabling factor behind Vietnam’s strong economic growth record and outlook and replacing it with a disabling one.

Vietnam’s contribution to GHG: the cynic and the “poor me” versus the sage

Vietnam’s global contribution to GHG emissions is small: in 2010, some 247m tonnes of carbon dioxide equivalent versus, for example, the US’s 6.7bn tonnes, the EU’s 4.7bn, China’s 9.7bn, Japan’s 1.3bn, South Korea’s 662m, and Thailand’s 346m. However, they are set to keep growing fast. Estimates for future Vietnamese energy consumption generally have it growing by 6-9x over the next 20 years, with resulting GHG emissions tripling over the same period – note the increased GHG-efficiency, but also the vast increase in energy usage to come.

The cynical or “poor us” Vietnamese policy maker or businessman might say: Vietnam is not a major GHG emitter, it is still way too undeveloped, we won’t worry about our GHG amounts at all except for paying the necessary diplomatic lip-service, we know well how to get bilateral and multilateral development aid for any GHG reducing we do – and to supplement the money we will anyway have to spend on mitigating the effects of climate change and adapting to it.

But the sage retorts: what an opportunity for us as Vietnamese policy makers. First, to maximise the assistance we receive on this matter from abroad, we should throw ourselves into GHG reductions; we will receive all the more assistance if we are sincere in our zeal.

Second, this is a classic opportunity for a developing country with abundant wind, solar and hydro resources to perform a leapfrog of its energy sector to a low GHG one. In this respect, the prospect of Vietnam’s demand for coal increasing at a CAGR of 23% over the period 2015-20 (VNHAM’s current forecast) needs to be squeezed dramatically downwards, via an effective package of incentives to promote low-GHG energy (including natural gas) and to dissuade investment in coal-fired energy. Such a policy could lead to a Vietnamese internationally competitive low-GHG energy equipment industry with export potential. As any good schoolboy knows, developing competitive exports in high-growth industries is the holy grail of superior economic growth.

Third, the sage well remembers that autocratic government retains an important advantage in its ability to conduct far-reaching policy change, that most democracies can only dream of. Vietnam has the institutional capacity to direct the country forcefully in such a direction. Additional budgetary costs could be amply met by a radical acceleration of privatisation of the remaining 1000-plus state owned enterprises. For a nervous state apparatchik, it might be worth recalling the recent record: over 70% of GDP is not generated by the state or state-owned enterprises these days, and nearly 90% of the national workforce are not employed by it/them. And hey presto: no counter-revolution has threatened to ensue from already-undertaken privatisations, in fact the reverse. Communist party membership is more a hyper-premium LinkedIn account or Rotary Club membership these days than it is a betrothal to the quixotic theorems of Messrs Marx and Engels.

Fourth, China has been moving towards GHG-mitigating industries in recent years, and the sage remembers: we’ve done well by shadowing China, and positioning ourselves as the lower-cost alternative. For this to remain a potent factor, Vietnam needs to continue to move up the value curve industrially, just as China and the prior Asian developers have done. With respect to China, it might also strike Vietnamese policy makers that avoiding the recent horrific environmental stresses of that nation would be wise.

Make the right choices via government fiat and fiscal incentives

Attracting investment in solar panels, large-scale batteries, electricity storage, wind turbines and so forth should be the overriding focus of the Vietnamese government over the coming decade. A country with only 2% automobile penetration should easily be aiming for a majority of such vehicles in 10-15 years’ time to be electrically powered; in the meantime it should be overseeing a programme to electrify half of the existing motorcycles in the country, a measure the German development institution GIZ says would cut Vietnam’s current overall GHG emissions by 4.2m tonnes of carbon dioxide equivalent, or c. 2%. A significant shift from private vehicles to walking, cycling, trains and buses, and from buses to water transport, would cut 13.6m tonnes, or 7%, estimates GIZ. The urban rail projects underway in Hanoi and Ho Chi Minh City will cut 1.6m tonnes, just under 1%. An energy sector set to grow more than sixfold over the next 20 years should be aiming for a vast majority of it to be low-carbon, including a place for gas and nuclear. Mandatory fuel economy standards for passenger cars should be introduced immediately, following on from the new labelling requirement brought in last year. A nation with a flood of enthusiastic inward foreign direct investment should be insisting on best-in-class environmental standards for the new factories being built.

The above measures, and others, should receive top priority. Vietnamese middle class people are reasonably environmentally minded and there is now a critical mass of opinion for such measures to be adhered to and supported. Many of these measures will not only generate better achievement in the rather abstract matter of GHG reduction, but they will also generate noticeable improvement in here-and-now urban pollution levels, including from particulates, benzine, and nitrogen oxides, and sulphur dioxides.

Vietnam’s government has an impressive record of mobilising its people towards shared or imposed objectives, from war victories against the odds to overnight observance of helmets being required whilst on motorcycles. In the interests of sustainable and rapid economic advancement, we urge it to devote policymaking priority to becoming a leading, clean-energy emerging economy. At present, it is poised at a crossroads and could easily go either way, down Cynic Alley or Sage Boulevard.


Mekong Man


Data in this article was sourced from the World Bank, IMF, Asian Development Bank, German development institution GIZ, World Resources Institute, the General Statistics Office of Vietnam, McKinsey, Global Insight, and the Center for Climate and Security.

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