Biomass Opportunitiesin Vietnam

Focus on energy and climate change

2 | Biomass Opportunities in Vietnam

Source: This factsheet outlines the mid-term outlook for biomass exploita-tion in Vietnam for entrepreneurs and other agents. Unless otherwise specified, all information was drawn from the recent Report commissioned to SNV Vietnam by NL Agency, downloadable at www.agentschapnl.nl/biomass, see under Publications > General Reports.

Business case for biomass in a nutshell• Economicgrowthrateincreasesprojecteddemandforenergy• Vietnamesegovernmentfearsdependencyonfossilfuels:new

policysetstargettoincreaserenewableenergyshareintotalcommercialprimaryenergyfrom3%in2010to5%in2020and11%in2050.Electricitymarketisslowlyadaptingtothisnewreality.

• BusinessopportunitiesareopenforcollaborationbetweenVietnameseandDutchbusinessintheseareas:

• Knowledgetransferandcapacitybuilding• Managementandconsulting• Biogasandlandfillgas-relatedprojects• Technologicalexpertise• Biomass-relatedprojects• Financialservicesandexpertise

Potential feedstocksThesourcereportbyNLAgencyfeatures15feedstockssubjectedtofurtherresearch.Thisfactsheetsummarizesfindingsfortheeightfeedstocksmostelaboratelyreviewed.Moreinformation(andinformationconcerningbracketedfeedstocks)youwillfindinthereport.

1. Bamboo2. Cassava3. Coconut4. Coffee (Corn) (Manure) (Organic municipal solid waste)5. Jatropha

6. Rice7. Sugarcane8. Wood (Fish waste) (Tea) (Miscanthus) (Algae)

1. Bamboo• Among10fastestgrowingexportproducts• Demandcurrentlyexceedssupply• Potentialforbiomass:varied.Inindustrialsector,bambooisused

asfuel,butlargelyinefficiently.Inhandicraftsector,volumesaretooscatteredanderratictovalidateinvestment.

2. Cassava• Rapidlydevelopingsector• Rapidtechnicalprogressintheareasofselectionandbreeding• Largedemandforcassavachipandcassavastarch• Starchprocessing,animalfeedandbio-ethanolhavecreated

jobs,increasedexports,attractedforeigndirectinvestmentandcontributedtoindustrializationandmodernizationinsomeruralareas.

• Cassavastemholdspotentialasbiomassfeedstock• Wastewaterholdsbiogaspotential• CleanerDevelopmentMechanismhasasmallgrowingfoothold

inindustry

In FocusLocation on globe: South-east Asia, bordering the Gulf of

Thailand, Gulf of Tonkin and South China Sea as well as China, Laos, and Cambodia

Land area: 331,210 km2Population: 91,519,289 (July 2012)Age demography: Youthful (69,3% between 15-64 yrs,

median age 7,8yrs)Economy: Vietnam’s GDP over de last decade

was a spectacular 7% average per annum, though the global recession

has dampened this somewhat.

In 2011, exports increased by more than 33%, year-on-year. The trade deficit, while reduced from 2010, remained high. This prompted the government to maintain administrative trade measures to limit the trade deficit. Vietnam’s managed currency, the dong, continues to face downward pressure due to a persistent trade imbalance. (CIA Factbook)

3 | Biomass Opportunities in Vietnam

3. Coconut• Vietnamisthelargestexporterofnutsforfreshconsumption• Huskandshellholdlimitedpotentialasfeedstock

4. Coffee• Secondlargestexportproduct• Threedifferentproductionprocesses:wet,semi-wet,dry• Wetandsemi-wetholdpotentialforbiogas• Stakeholdersaremanyanddiverse

5. Jatropha• GrownsmallscaleandtestscaleinVietnamsince2006.• Industryreadyforscalingup,butrequiresassistance:

-Supportandknowledgeexchange-Financialsupport-Technicalsupportforconversionintooil

6. Rice• Vietnamissecondbiggestriceexporterintheworld• Ricestraw,unlikericehusk,isnotutilised.Thishaslarge

potential.• Ricehuskburningiscurrentlyacountrywideenvironmentalhazard.

7. Sugarcane• Sugarproductionisdeclining,whiledemandincreases• Usingbagasseasafuelforprimaryprocessheatand/orelectricity

generationismaturetechnologyinthesugarindustry.Cogenerationholdsmuchgrowthpotentialaswellasmoreefficientconversiontechnologies.

• TwoMtonnes(=milliontonnes)ofbagasseareusedannuallybysugarplantsforburninginsteamboilerstoproduceatleast560millionkWhofpower

• Thehighestfeed-intariffreceivedbytheseplantsis4UScents/kWh• Wastewaterfromsugarprocessingcanbeusedforbiogas

production• OnefactoryinPhuThoprovincepresentlyusesmolasses,

incombinationwithcassavatoproduceethanol.

8. Wood residues• Woodprocessingindustryhasdevelopedrapidly.• 90%oftimberwasharvestedfromplantationforest.• Stillapotentialopportunityforconversionofwoodresidues

intoenergycarriersorenergy.• Threecategories:• Residuesfromlogging:2.2Mtonnes• Sawmilling:2.35Mtonnes.• Scatteredtrees:50,000tonnes

Conversion technologies Awiderangeofconversiontechnologiesisusedforbio-energyproductioninthecountry.Mosttechnologiesarestillinastart-upphase,andinvolvepilot-scaleprojects,atvaryinglevelsofcommer-cialisationanddeployment.

Biomass-to-electricitycontinuestobeachallengingarena,withpersistentlowelectricitypricesandtheabsenceoffeed-intariffs.

OpportunitiesKnowledge transfer and capacity building

Thereisageneralneedforknowledgetransferandcapacitybuildinginallbio-energyrelatedtechnologies,alsoregardingR&D.

Management and advisory skillsInternationalManagementandAdvisoryisalsorequested,especiallywhenitcomestolargescaleindustrialprojects.EventhoughtherearealreadyseveralsuchDutchcompaniesactiveinVietnaminthisfield,thebio-energysectorisnotyetawareofwhatDutchbusinesshastoofferinthisarea.

Biogas and landfill gas-related expertiseBiogasisoneofthefastestgrowingandboomingsectorsinVietnam.Thisautomaticallyresultsinalargerdemandforupstreamanddownstreamequipment.Gasrecoveryfromlandfillisnotyetintroduced,andisahighpotentialareaofcooperation.

Technological expertise

• Densification Densification(pelleting,briquetting)technologies,aswellas

combustionand(co-)generationtechnologiesarenotwidelyavailableinVietnam.Supplyoftechnologyaswellasknow-ledgeisdesirable.

• ImprovedCookstoves Onahouseholdlevel,theintroductionofImproved

CookstovesisabusinessopportunityforbothNGO’saswellascommercialparties.

Biomass-related projectsManyofthefeedstocksmentionedinthereportarenotonlyavailable,butalsocurrentlyrepresentathreattotheenvironment.Ricehusk,ricestraw,coconutpith,sugarcanebagasseandcoffeewaste:thesewasteflowsarecurrentlynotbeingdealtwithinanenvironmentallysoundmanner,ie.directlyflushedintowaterwaysordumped.Theutilizationoftheseresourcesisthereforeabusinessopportunityaswellasanenvironmentalbenefit.Ricestrawcanbesaidtohavethelargestpotentialinthisrespect,butatthesametimealsoposesthegreatestchallenge.

Financial expertiseThereisaneedforfinancialconsultinginawidevarietyofareas.ManyofVietnam’sfinancialinstitutionsarecurrentlydevelopingandlackthesophisticationandexperienceavailableinotherregions.Creatingamorefavourablecreditenvironmentforentrepreneurs,forexample,ishighonthelistofpriorities.

4 | Biomass Opportunities in Vietnam

ChallengesSustainability-specific challenges

DeforestationInthecaseofcassava,sugarcaneandbamboo,evidencesuggestsdeforestationoccurstofreeuplandforcultivation.Boththemarketforcassavaandforcanesugararecurrentlystretched,soanyinitiativesintheseareaswilldowelltotakethisintoconsideration.

Policy-related challenges

Electricity sales to the netRegardingelectricityproductioninVietnam,alackofadequatepoliciesandregulationstoevenallow,letaloneencouragethepurchaseofenergyfrom(small)energyproducers.Thisvacuumincurrentlegislationmakessingle-feedstockpowerplantsfiredwithbagasseorricehusklargelyuneconomical.

Slow change Anotherissueistheongoinggovernmentsupportforconventionalfuels.Whenitcomestoelectricityproduction,thecurrentpricingsystemfavourscoaloverrenewablesorbio-energy.Unfortunately,comingtofavourableagreementsonfeed-intariffsfornon-stateownedenterprisesandinitiativeshaveuntilnownotbeensuccessful.

High investment costs equipmentWhenitcomestoinvestmentin(energy)technologymanyorganizati-onsarereserved.Severalreasonsareidentifiedforthisattitude:• Vietnamesecompaniesofteninvestincheaptechnologies,which

areofteninefficient.Furthermoretheyoftenchoosetorepairmachinesendlesslyratherthanreplacewithnewer,moreefficienttechnologies.Outdatedtechnologythereforehasalonglifetimeandnewtechnologyisslowtogainground.

• Manyoftheagriculturalprocessingfactories-ie.theownersofresidues-arestateowned.EnergypricesinVietnamarelow,andstill(in)directlysubsidized.Energycostsaspartofoperationalcostsarerelativelylow,whichdrainsincentivetoinvest.

• Furthermorebusinessestendtofocusonmaintainingandimprovingtheircorebusiness,likericeorsugarproduction,withoutmuchincentivefortheinnovativeapproach.

Biomass availabilityResiduesaremostlyscatteredandnoreliablewastecollectionsystemsexistyet.Inmostcases,onlylarge-scaleexportoffeedstockiseconomicallyviable.Absenceofpolicyforwastecollectionisathereforeachallenge.

Knowledge levelsInthefieldandinruralareasthereisalackofcurrentinformationonbio-energytechnologies.Biomassorresidueownersdonothaveupdatedinformationorknowledgeonsuppliers.Thereisstilltheperceptionthatinvestmentcostsofbiomasspowerplantsarealwaysveryhigh.

LogisticsLand

RoadThetotallengthoftheVietNamroadsystemisabout222,179kmwith19.0%paved,mainlynationalroadsandprovincialroads.ExpresswaysareratheranewconceptforVietnamese,trafficisgrowingrapidlybutthemajorroadsaredangerousduetoinappro-priatedesignandaninappropriatetrafficmix.

RailTheVietnameserailwaynetworkhasatotallengthof2,600kilometres,dominatedbythe1,726kilometressingletrackNorth-SouthRailwayrunningbetweenHanoiandHoChiMinhCity.TheoverallconditionofrailwayinfrastructureinVietnamvariesfrompoortofair;mostofthenetworkremainsinneedofrehabili-tationandupgrading,havingreceivedonlytemporaryrepairfromdamagessufferedduringdecadesofwar.NationalrailwaycompanyVietnamRailwayshasproposedahigh-speedraillinkbetweenHanoiandHoChiMinhCity,capableofrunningatspeedsof300km/h.Vietnam’sNationalAssemblyrejectedthehighspeedrailproposal,citingitshighcosts;NationalAssemblydeputieshaveaskedforfurtherstudyoftheproject.

AirVietnamoperates24civilairports,includingthreeinternationalgateways:NoiBaiservingHanoi,DaNangservingDaNangCity,andTanSonNhatservingHoChiMinhCity.TanSonNhatisthelargest,handling75percentofinternationalpassengertraffic.VietnamAirlines,thenationalairline,hasafleetof30aircraftthatlinkVietnamwith19foreigncities.

SeaThreemajorharboursinVietnamare:• HaiPhong(10–20.000DWT)• DaNang(upto45.000DWT)and• HoChiMinhCity(upto20.000DWT).ThismeansVietnamcancurrentlyonlyreceiveMediumRangeTankersorSmall/HandysizeBulkCarriers.(Source:Wikipedia)

5 | Biomass Opportunities in Vietnam

Relevant ministries and policiesRelevant ministries

Ministry of Industry and Trade (MOIT)Ministry of Natural Resource and Environment (MONRE) Ministry of Construction (MOC) Ministry of Agriculture and Rural Development (MARD)

Policies Decision 1208/QDTTg, by Prime Minister 21/07/2011

Title: National Power Development Plan period 2011-2030 (Master Plan VII)Objectives and targets:• Increasetheshareofrenewableenergyintotalcommercial

primaryenergyfrom3%in2010to5%in2020and11%in2050• Increasetheshareofelectricitygeneratedfromrenewableresources

from3.5%oftotalelectricitygenerationin2010to6%in2030

Decision 2149/QDTTg by Prime Minister 17/12/2009Title: National strategy on comprehensive management of solid wastesfor period up to 2025, vision to 2050Objectives and targets concerning recycling, reuse and energy recoveryof solid waste:• By2015:60%;by2020:85%;by2025:90%;by2050:100%

Decision 1855/QDTTg 27/12/2007Title: National energy development strategies for Vietnam up to 2020,outlook to 2050Objectives and targets:• ShareofREis3%oftotalprimaryenergysupplyin2010;5%

(2020),and11%(2050).• CompletionofRE,mountainousprogram.Shareofhouseholds

usingREincookingis50%(2010)and80%(2020).By2020,100%HHshaveelectricity

• ConsideringestablishmentofREdevelopmentfund

Decision 177/2007/QD-TTg 20/11/2007Title: Bio-energy development study report for period up to 2015,outlook to 2025Objectives and targets:• 2010:developmentofmodelsforexperimentingandusingof

bio-energy,meeting0.4%ofgasolineandoildemandincountry• 2015:productionofethanolandvegetableoilis250,000tonnes,

meeting1%ofgasolineandoildemandincountry• 2025:productionofethanolandvegetableoilis1.8million

tonnes,meeting5%ofgasolineandoildemandincountry

Stakeholders & Relevant contactsNational management & policyMOIT Policy & National plan on Trade and IndustryMOC Policy & National plan on ConstructionMARD Policy & National plan on Agriculture - Bamboo, CoconutDepartment of Crop Production Policy & National plan - under MARD - crops, treesLivestock production Department Policy & National plan - under MARD - livestockVietnam Administration of Forestry Policy & National plan - under MARD - forestMONRE Policy & National plan on EnvironmentVietnam Environment Administration Policy & National plan - under MONRE - waste

Research and DevelopmentBioseed Vietnam Part of DCM Shriram Consolidated Ltd., Research and developed bioseedFSIV (forest science institute) Part of MARD - forestHanoi University of Agriculture Rice and other cropsHoa Sen University Cooperates with Vietnam Biogas Association on BiogasIPSARD Basic science research for agri. development - bambooISPONRE Relates to environment policyNational Maize Research Institute Part of Vietnam Academy of Social Science, Research on gene and type of maizeNong Lam University Rice and other cropsThanh Tay University Pilot/research planting JatrophaVietnam Academy of Science and Technology Research & projects on bioenergyVietnam Institute Of Agricultural Engineering And Post-Harvest Technology Research & projects on policy, strategy, post graduation;

technology transfer related to riceFurther readingThe source report commissioned by NL Agency contains many more stakeholders in the biomass arena including state-owned companies, NGOs and private companies.

Thisisapublicationof:

AgentschapNLNLEnergieenKlimaatCroeselaan15POBox8242|3503REUtrechtt+31(0)886029200www.agentschapnl.nl/biomass

©AgentschapNL|July2012Publicationno.2DBMX1204

Although this publication has been created with the greatest possible care, Agentschap NL rejects all liability for possible errors.

AgentschapNLisanagencyoftheDutchMinistryofEconomicAffairs,AgricultureandInnovation.AgentschapNLimplementspolicyforvariousministriesintheareaofsustainability,innovationandinternationalissues.AgentschapNListhefirstpointofcontactforcompanies,knowledgeinstitutesandgovernments.Forinforma-tionandadvice,funding,networks,legislationandregulations.

TheNLEnergieenKlimaat(DutchEnergyandClimate)divisionsupportssocialdevelopmentbyworkingonenergyandclimatesolutionsforthefuture.

Support for Dutch entrepreneursNL AgencyNL Agency is a great place to start if you’re interested in building a bio-energy project in Vietnam. We offer:

• business partner scans to assess suitability for collaboration • trade missions to join• sector-specific information in factsheets, reports and other

resources • trouble shooting and other expertise

The Dutch EmbassyThe Embassy of the Kingdom of The Netherlands is your local partner in establishing reliable connections to Vietnamese businesses and public agencies. The Embassy is located in Hanoi:

Daeha Office Tower, 6th floor 360, Kim Ma Street, Ba Dinh districtHanoi

Telephone: (+84) (0)4 - 3831 56 50E-mail: han@minbuza.nl

Trade mission in November 2012

You are invited!

Would you like to gain first-hand knowledge of the Vietnamese biomass arena? Join the trade mission hosted by NL Agency and Cleantech Holland to Ho Chi Minh City and Hanoi from 12th until 17th of November, 2012. Participation costs are 1395 excl. travel, transfer and expenses.

More information is available from William Sanchez at FME, email william.sanchez@fme.nl or phone +31 79-3531295.