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	Index_Viet Nam CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 DOCUMENT	Biofuel Research and Development (R&D) in Vietnam CHAPTER 1. Energy Consumption Nature endows Vietnam with an abundance of energy resources, but the domestic capability of tapping, processing and using these resources remains limited. Analyses of economic development and energy supply sources until 2020 indicate that the country will continue to import oil products whose prices always have an impact on its economic development. The volatility of oil prices already caused a global economic crisis in the 1970s and another in the 1980s. Oil prices stay volatile at the moment and once shot up to an all-time high of more than US$75 per barrel, directly affecting global economic growth. Due to remaining constraints in technology and socio-economic development, the country still has difficulty developing new energy resources that can replace conventional ones, as well as diversifying energy supply sources. 1.1 Energy Supply Sources 1.1.1 Coal Mining and Production In 2005, coal output amounted to 32.4 million tons, almost four times over 1995. Coal production in 1995-2005 grew an average of 10% a year. See Table 1. Table 1. Coal production in 1995-2005 Unit: million tons Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Output 8.4 9.8 11.4 10.7 9.63 11.6 13.4 16.4 19.3 27.3 32.4 Source: Vinacoal-Statistics Directory 1.1.2 Oil and Gas Exploitation In 2005, crude oil output reached 18.5 million tons. Exports of crude oil in 1995-2005 rose more than 16% a year on average. The country exports all of its crude oil output. See Table 2. Table 2. Crude oil production in 1995-2005 Unit: million tons Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Output 7.67 8.8 10.9 12.5 15.2 16.3 16.8 16.8 17.7 20.05 18.5 Source: PetroVietnam- Statistics Directory In 2004, gas output amounted to over 17 million cubic meters. Average gas production growth in 1996-2005 was put at 36.1% a year as shown in Table 4. Table 3. Gas production in 1996-2005 Unit: million cubic meters Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Output 290 540 1018 1414 1580 1720 2161 3720 6262 6890 Supply for power industry 281 532 900 1027 1224 1229 1550 2983 4218 5054 Source: PetroVietnam 1.2 Import-Export of Coal, Crude Oil and Oil Products Vietnam’s coal and crude oil exports have grown significantly since 1995, leading to considerable changes in the balance of energy import-export. Energy import-export in 1995-2005 is shown in Table 4 below Table 4. Energy import-export in 1995-2005 Unit: million tons Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Oil product import 5.004 5.899 5.958 6.852 7.426 8.747 9.083 9.970 9.936 11.049 11.48 Crude oil export 7.65 8.70 9.64 12.14 14.88 15.42 16.73 16.87 17.14 19.50 17.97 Coal export 2.821 3.647 3.454 3.162 3.260 3.251 4.291 6.047 7.261 11.64 17.99 Source: General Statistics Office, General Department of Customs 1.3 Use of Energy 1.3.1 Primary Energy Consumption Commercial demand for primary energy has steadily grown, from 13,110 KTOE in 1996 to 30,516 KTOE in 2005. Consumption of primary energy in 1996-2005 increased 8.9% a year on average, with demand for gas rising at the highest rate of 71.6% a year. Consumption of each type of primary energy is shown in Table 6 below. For commercial energy, gasoline and oils make up a majority, around 40% of the total demand for primary energy, and are mostly used in the transport, power generation, manufacturing and household sectors. The proportion of coal ranges from 23% to 32%. Table 5. Primary energy consumption by type Unit: KTOE Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Coal 3579 4544 4577 4277 4372 5024 5517 6562 7088 7082 Gasoline, fuel oil 5420 5630 6576 6938 8004 8271 9493 9915 10259 1859 Gas 282 506 935 1292 1440 1563 2845 2877 5279 6201 Hydro-power 3829 3625 3281 4157 4314 5573 5569 5831 5417 5374 Total 13110 14305 15369 16664 18130 20431 23423 25185 28044 30516 Source: Institute of Energy - 2006 Hydroelectric power accounts for 21.35% to 31.66% of total primary energy consumption. The proportion of gas has leapt steadily over year, from 2.1% in 1996 to 20.3% in 2005. 1.3.2 End-user Demand for Energy Total commercial energy consumption in 1996 amounted to 8849 KTOE, with coal making up 30.4%, gasoline and oils 56.3% and electricity 13%. The 2005 figure rose to 20950 KTOE, with coal accounting for 23.6%, gasoline and oils 54.3%, and electricity 18.9%. End-user consumption of energy is shown in Table 6 below. Table 6. Commercial energy consumption by type Unit: KTOE Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Coal 2692 3327 3302 3166 3223 3743 4017 4337 4851 4950 Gasoline, fuel oil 4986 5001 5538 6222 6759 7456 8761 9661 10317 11864 Gas 21 20 19 19 18 15 19 20 21 100 Electricity 1150 1316 1524 1681 1927 2214 2586 3002 3437 3967 Total 8849 9664 10383 11088 11927 13428 15383 17019 18626 20950 Source: Institute of Energy -2006 The average annual growth rate of end-user consumption of commercial energy in 1991-2003 was 11.21%, while GDP growth was 7.5%. Therefore, energy-GDP elasticity, the ratio of the growth rates of the two, was 1.49 in 1991-2003. Over the past three years, commercial energy demand has had a higher energy-GDP ratio than the average in the 1991-2005 period. (Table 7). An analysis of energy consumption in 2005 shows that the manufacturing sector accounted for a majority, 40%, of total commercial energy demand, followed by transport with 33.9%, services and households with 22.44%, agriculture with 2.9%, and others the remainder. Table 7. Statistics of energy demand in 1996-2005 Unit: KTOE Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Commercial energy 8849 9664 10383 11088 11927 13428 15383 17019 18626 20950 Non-commercial energy 12942 13206 13734 13965 14196 14526 14633 14694 14734 14778 Total energy demand 21791 22870 24117 25053 26123 27954 30016 31713 33360 35728 - Commercial energy 11.56 9.21 7.44 6.79 7.57 12.58 14.56 10.6 9.4 12.4 - Total energy demand 4.72 4.95 5.45 3.88 4.27 7.01 7.38 5.6 5.2 7.1 Source: Institute of Energy - 2006 Table 8. Imports of gasoline and oils in 1996- 2005 (Figures from Statistics Directory) Unit: million tons Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Gasoline, fuel oil 5.93 5.96 6.85 7.43 8.75 9.08 9.97 9.94 11.05 11.48 of which: - gasoline 1.09 1.08 1.20 1.33 1.48 1.73 2.11 2.18 2.60 2.63 - diesel oil 2.79 3.10 3.53 3.48 4.13 4.08 4.43 4.65 5.47 5.89 - heavy fuel oil 1.07 1.02 1.32 1.88 2.37 2.37 2.58 2.38 2.11 2.19 - kerosene 0.38 0.24 0.27 0.27 0.38 0.42 0.41 0.41 0.35 0.33 1.4 Forecasts and Balance of Energy Supply and Demand 1.4.1 Energy Demand Forecasts until 2030 Based on socio-economic development scenarios, energy demand is forecast with three plans (high, basic and low) for the 2000-2030 period by type of fuel and by economic sector. End-user energy demand by 2020 and 2030 in line with the basic plan will be 58.9 and 95 million TOE respectively. Respective growth in energy demand with the basic and high plans will be 8.1% and 8.7% in 2001-2020 and 4.9% and 5.4% in 2021-2030. Table 9. End-user energy demand forecasts by type until 2030 Unit: TOE Year 2000 2005 2010 2015 2020 2030 Plan   low/ basic/ high low/ basic/ high low/ basic/ high low/ basic/ high low/ basic/ high Coal 3223 4378/4644/ 4687 5430/5821/ 6020 6234/6743/ 7067 7122/7723/ 8289 9028/9790/ 10507 Elec-tricity 1927 3865 6610/6922/ 7368 9937/10799/ 11933 13497/15355/ 17533 19988/24908/ 30164 Oils 6559 9713/11182/ 11451 14365/17402/ 17785 18533/23898/ 25445 24910/32615/ 36363 42599/55621/ 64995 Gas 18 434/500/ 1080 743/900/ 1900 1396/1800/ 2650 2291/3000/ 3230 3584/4680/ 4781 Total 11927 18391/20191/ 21083 727148/31044/ 33074 36101/43241/ 47095 47821/58693/ 65415 75200/95000/ 110447 Source: Institute of Energy - 2004 With the energy demand forecasts and population growth shown above, the country’s per capita commercial energy consumption (concerning basic and high plans) is projected as follows Table 10. Average per capita energy consumption Year 1995 2000 2010 2020 2030 Average commercial energy consumption (kgoe/person/year) 107 155 354-377 600-668 901-1048 The above forecasts indicate that the country’s average per capita commercial energy consumption by 2020 is still lower than Thailand in 1996 and Malaysia with 688 and 1139 kgoe/capita/year respectively. By 2030, this indicator of Vietnam will almost the same as Malaysia’s current level. 1.4.2 Balance of Energy Supply and Demand Vietnam’s total primary energy demand will range from 44.3 to 46.8 million TOE by 2010 and from 89 to 100 million TOE by 2020. Regarding the balance of energy, the structure of primary energy supply sources will undergo changes, with new and recycled energy, and nuclear power contributing a larger part. Changes in the structure of energy supply sources are as follows: - The current proportion of new and renewable energy is insignificant but it is forecast to rise to around   2% by 2010 and 3% by 2020; - The proportion of nuclear power will be about 5% by 2025 and 10-11% in 2040-2050; - The proportion of hydropower will decline from the current 20% to 15% by 2010 and 14% by 2020; - The proportion of oil products will fall from the current 37.5% to 33.2% by 2020; - The proportion of coal was 20.4% in 2004 but it will soar to 25-26% in 2015-2020, the highest rate compared   to other types of energy.   The balance of energy imports and exports will change as well. Vietnam is now an energy exporting country   but by 2014-2015 it will become an importer, with imports accounting for about 26% (basic plan) to 33%   (high plan) of total consumption by 2020. 1.5 Overview of Vietnam’s Energy System 1. In the process of reform, industrialization and modernization, Vietnam has made remarkable achievements in socio-economic development, with annual economic growth ranging from 7% to 8%. Energy demand has grown substantially, with the energy/GDP elasticity reaching 1.49 on average in the last 10 years of the 20th century and the first few years of this century. However, total energy consumption is not yet big given the small size of the economy. Basically, domestic energy resources meet the demand for economic development and contribute partly to the country’s export revenue. 2. Primary energy production has been developed strongly in recent years, but the energy system is faced with a number of issues that remain to be solved: (i) lack of energy processing and recycling facilities; (ii) outdated technology of energy exploitation and recycling that leads to low production efficiency, big losses in the exploitation and processing stages; (iii) high proportion of non-commercial energy, mainly biomass energy, at about 47% of total demand, which is primarily self-sufficed by people and unplanned. Therefore, it is necessary to study energy development orientations for rural areas and environmental protection. 3. Vietnam is an energy exporting country but only primary energy is shipped abroad, thus bringing in small economic value. Almost all oil products must be imported while they make up around 60% of the country’s total energy demand. 4. Technology applicable to a lot of energy-consuming equipment is outdated, resulting in low efficiency of energy consumption that in turn causes losses. There is great potential for cutting down on energy consumption in the manufacturing sector as well as people’s daily activities. Some research projects into and surveys of enterprises representing a number of selected sectors, which were undertaken in coordination with international organizations, show that up to 20% of energy could be potentially saved. 5. Environmental issues involving the energy sector are not actually somber but they really need due attention and solutions for timely resolution.
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