Page 1 58104 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR IN VIETNAM Background Paper Prepared by: RCEE Energy and Environment JSC (Vietnam) and Full Advantage Co., Ltd. (Thailand) Submitted to the World Bank Carbon Finance Assist Program – Vietnam May 2009 Page 2 WBCFA Vietnam - Sector Notes in Energy Sector | Page 2 Contents Acronyms and Abbreviations ................................................................................................5   1 BRIEF DESCRIPTION OF THE ENERGY SECTOR.............................................6   2 RESOURCE EXTRACTION....................................................................................7   2.1.1 Coal .............................................................................................................................7   2.1.4 Renewable Energy Resources.................................................................................10   2.2 Greenhouse Gas Emissions........................................................................................11   3 POWER GENERATION FOR ELECTRICITY.....................................................12   3.2 Electrical Generation Using Renewable Energy......................................................14   4 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015............................................................................17   4.1 Typologies of Potential CCM Projects in the Energy Sector .......................................17   4.1.1 Project type E1: Renewable energy use for power generation............................18   4.1.2 Project type E2: Recovery and use of gas from oil fields.....................................22   4.1.3 Project type E3: Recovery and use of methane gas from coal fields...................24   4.2.4 Project type E4: Energy efficiency improvements in coal-fired power plants...26   Annex 1: Selected Bibliography..........................................................................................29   Annex 2: Summary of Potential Emission Reductions from interventions........................30   Note: Estimates based on annual reductions during 2010-2015.........................................30   Annex 3: Potentially Feasible Sector Wide Interventions...................................................31   Page 3 WBCFA Vietnam - Sector Notes in Energy Sector | Page 3 Tables Table 1. Coal Supply and Demand Balance in the Period 2005 –2025..................................8 Table 2. Summary of Oil Refinery Facilities in Vietnam.....................................................9 Table 3. Prospective Natural Gas Supply in Vietnam .......................................................10 Table 4. GHG Emissions by Energy Subsector in 2005 ..................................................13 Table 5. GHG Emission Projections by Energy Subsector, 2005–2020 Table 6. Installed Capacity of Power Plants Table 7. Potential for and Use of Renewable Energy for Power Generation in Vietnam Table 8. Cost of Electricity Production ............................................................................15 Table 9. Anticipated Contribution of Renewable Energy to Total Power Generation in Vietnam................................................................................................................................12 Table 10. CO2 Emissions from Power Plants, 2003............................................................16 Table 11. CO2 Emission Projections from Power Plants, 2005–2020................................16 Table 12. Typologies of Potential CCM Projects Table 13. Potential GHG Emissions Reduction by Renewable-Energy Electricity Generation by 2010..............................................................................................................19 Table 14. Small- and Medium-Sized Hydropower Development Projections, 2008– 2020 .....................................................................................................................................19 Table 15. Related Potential GHG Emissions Mitigation Projections from Small- and Medium-Sized Hydropower, 2008–2020 ............................................................................19 Figures Figure 1. Emission Sources (Supply and Demand Sides) from the Energy Sector .......6   Figure 2. Outline of Description of Energy System ..........................................................7   Figure 3. Electricity Demand Projections, 2000 –2020 ...................................................12   Figure 4: Trends in emissions from the energy sector.........................................................17   Figure 5. Climate Change Mitigation Options for Hydropower Use ............................19   Page 4 WBCFA Vietnam - Sector Notes in Energy Sector | Page 4 Figure 6. Climate Change Mitigation Options for New Coal-Fired Power Plants (constructed 2010 to 2012)..................................................................................................27   Figure 12. Climate Change Mitigation Options for New Coal-Fired Power Plants Page 5 WBCFA Vietnam - Sector Notes in Energy Sector | Page 5 Acronyms and Abbreviations ALGAS Asia Least Cost Greenhouse Gas Abatement Strategy APERC Asian Pacific Energy Research Centre BAU Business-as-usual CCM Climate Change Mitigation CDM Clean Development Mechanism CO2 Carbon dioxide CH4 Methane DNA Designated National Authority ER [Greenhouse gas] emission reduction EVN Electricity of Viet Nam GHG Greenhouse gas GoV Government of Vietnam GWP Global warming potential HCMC Ho Chi Minh City IE Institute of Energy IEA International Energy Agency IPP Independent power producer JICA Japan International Cooperation Agency LPG Liquidized petrol gas MOIT Ministry of Industry and Trade MONRE Ministry of Natural Resources and Environment PVN Vietnam National Oil and Gas Group [a.k.a. PetroVietnam] REVN Renewable Energy Vietnam R/P Reserve-Production ratio TKV Vietnam National Coal and Mineral Industries Group [a.k.a. Vinacomin] UNEP United Nations Energy Program USD United States Dollar VND Vietnam Dong WB World Bank Units of Measure GWh Gigawatt-hour (= 10 6 kWh) MTOE Megatons oil equivalent (= 10 6 TOE) MVA Megavolt-ampere MW Megawatt km Kilometer kV Kilovolt kWh Kilowatt-hour tCO2-e Tons CO 2 equivalent TOE Tons oil equivalent Page 6 BRIEF DESCRIPTION OF THE ENERGY SECTOR WBCFA Vietnam - Sector Notes in Energy Sector | Page 6 BRIEF DESCRIPTION OF THE ENERGY SECTOR The rapid growth of Vietnam’s economy, industry, and consumption has resulted in unprecedented growth in energy demand, and its infrastructure for extracting, generating, and distributing energy is expanding to try to meet those needs. Between 2000 and 2005, total primary energy consumption in Vietnam grew 10.6 percent per year. Growth in fossil-fuel consumption was correspondingly high, with coal use growing at 14.9 percent per year, oil use at 8.2 percent per year, and natural gas use at 37 percent per year. From 2002 to 2030, Vietnam’s primary energy demand is expected to grow at a rate of 4.4 percent, increasing from 42 megatons oil equivalent (MTOE) in 2002 to 142 MTOE in 2030. Fossil fuels (primarily oil, gas, and coal) are expected to remain dominant, and as a result the sector is the largest and fastest growing source of greenhouse gases (GHG) in the country, accounting for 84 million tons carbon dioxide equivalent (tCO2-e) in 2006 or 53 percent of GHG emissions for the entire country. The largest emissions sources are from power generation for electricity (29 percent) and from industry (37 percent). Figure 1. Emission Sources (Supply and Demand Sides) from the Energy Sector Source: N.V. Hanh, “ Energy Sector GHG Mitigation Study ” (presentation, RRECCS National Consultation, Vietnam, May 19–20, 2008). Energy sector activities consist of the following: (i) resource extraction: activities necessary to harness energy resources for use and as necessary to convert them into usable form; (ii) power generation: activities necessary to produce power; and (iii) end-use demand: activities of energy users, such as households, industries, vehicle owners, and agricultural users. Resource extraction: The major indigenous fossil-fuel energy resources in Vietnam are coal, natural gas, and oil, of which Vietnam produces 29.2 million tons, 6.6 billion cubic Industry 12.9% Agriculture 0.4% Transport 0.3% Residence &Commerce 15.3% Industry 37% Agriculture 2% Transport 19% Coal-oil-gas (exploitation and transport) 3% Residence &Commerce 10% Electricity generation 29% Page 7 RESOURCE EXTRACTION WBCFA Vietnam - Sector Notes in Energy Sector | Page 7 meters, and 20 million tons, respectively. While current use amounts to only a small percentage of total energy use, Vietnam has potentially exploitable renewable energy resources amounting to 18,000-30,000 megawatts (MW) of hydropower; 6-10 MW of solar energy; 1,680 MW of wind energy; 600 to 800 MW of biomass energy; and 200-300 MW of geothermal energy. The greenhouse gas emissions associated with resource extraction and conversion relate mainly to the energy derived and methane released from coal, gas, and oil exploration and processing, while harnessing renewable energy resources requires little energy and few processes resulting in GHG emissions. Power generation: Power generation covers the use of coal, gas, oil, renewable resources, and other energy resources to produce power for transport, electricity, industrial processes, households, and agriculture. The major power generators are industry, which depends largely on coal; transport, which depends on petroleum; and the electricity grid, 63 percent of the power for which is generated from fossil fuels. Other generators, although less significant, include agricultural, household, and small commercial users of fossil-fuel energy. Power generation is the largest greenhouse gas emitting activity in Vietnam due to the combustion of fossil fuels from nonrenewable energy sources. End use: The most important energy user in the country is industry, which, between its own-generated power and its use of electricity from the national grid, accounted for 36 percent of the total energy used in 2000. The major users of electricity are residences and businesses, which when combined with industry account for nearly all electricity use. Energy users in the transport sector include approximately nineteen million motorcycle owners and one million owners of cars, railways, boats, and commercial airliners. While the act of power generation is the physical source of GHG emissions, end users affect emissions levels through the extent of their demand for energy and the degree of efficiency with which they use it: the higher the volume of activity and the more inefficient the energy use, the greater the net increase in greenhouse gas emissions. Figure 2. Outline of Description of Energy System This note will focus on Vietnam’s potential GHG emission reductions and possible interventions associated with resource extraction and power generation for grid electricity. Emissions from power generation in industry and transport are covered under the respective sector notes, and reduction of greenhouse gases through management of end-use demand is covered in the context of industry (as the largest energy user) in the industry sector note. RESOURCE EXTRACTION 2.1 Overview 2.1.1 Coal Coal is the most abundant mineral in Vietnam; with large production potential and proven reserves, it is important both to meeting growing domestic energy demands and as an export product. The country has two major coal reserves: Quang Ninh Province and the Red River Delta. Quang Ninh, an anthracite deposit with potential reserves of 10 billion tons of coal has been mined for more than 100 years, and development of its mining facilities has accelerated rapidly over the last 10 years. The Red River Delta, a recently Page 8 RESOURCE EXTRACTION WBCFA Vietnam - Sector Notes in Energy Sector | Page 8 discovered deposit of lignite coal, has potential reserves on the order of hundreds of billions of tons; studies have been ongoing, but no mining activities have begun in this area. As exploration surveys in the country have only covered a portion of the total reserves, proven reserves in Vietnam are much smaller than potential reserves; in 2006 potential reserves were estimated to be 5.8 billion tons and economically recoverable reserves to be 2.9 billion tons 1 . Vietnam’s coal production exceeds domestic demand, and exports have grown dramatically over the last decade, with the exported proportion of produced coal increasing from 36 to 65 percent. Total production for 2009 is estimated to be 41 million tons, 22 million tons of which will be exported. Since 2007, because of increasing domestic demand, the amount of exported coal has been maintained at a relatively constant amount. Domestic consumption of coal has increased an average of 17.4 percent over the last decade. The major domestic coal consumers are thermal power plants (31 percent); construction materials (brick, tile, lime, and ceramic) producers (25 percent); cement plants (13 percent); households and other consumers (28 percent); and other industries (4 percent). 2 Table 1. Coal Supply and Demand Balance in the Period 2005 to 2025 (ktons) 2005 2010 2015 2020 2025 Domestic production 29,200 32,906 41,425 60,246 64,545 Export -12,619 -10,500 -7,500 -10,081 -8,243 Import 0.352 0.043 0.352 12,782 43,830 Total supply 16,582 22,406 33,926 62,947 100,133 Power generation 4,323 10,899 16,872 39,676 74,718 Others 9,294 11,507 17,054 23,271 25,415 Total demand 13,617 22,406 33,926 62,947 100,133 Source: IE 2006. Vietnam National Coal & Mineral Industries Group (Vinacomin) is solely responsible for the country’s coal industry (under the management of the Ministry of Industry and Trade). Vinacomin’s services include coal exploration and surveys, exploitation and processing, sale of coal products in domestic markets, and export and import of coal products. 3 Their facilities in Quang Ninh Province are 64 percent open-pit mines; and the remainder are underground mines. The mining technologies used are generally old, and safety and environmental standards are low. Currently no facilities collect and use coal-bed methane. The Government of Vietnam (GoV) has outlined its plans for the coal subsector in the “Draft Master Plan on Coal Development for Vietnam for the 2006–2015 Period, with Projections to 2025,” approval of which is pending. In this Master Plan, the development strategy of the coal sector includes maximizing production, transporting coal produced in the North to the South, and introducing new technologies through research and development and diversified ownership, including foreign investments. Vinacomin’s development strategy (2004) includes increasing coal output to meet domestic demand; opening new underground mines and deepening existing ones in Quang Ninh; carrying out 1 IE, 2006. 2 . Ministry of Industry, Department of Energy, Oil, and Gas, “Clean Supply Outlook in the APEC Region,” 2007. 3 . Additional information on Vinacomin can be accessed through its website at http://www.vinacomin.vn/wm/public/vinacomin_func_eg.jsp. Page 9 RESOURCE EXTRACTION WBCFA Vietnam - Sector Notes in Energy Sector | Page 9 studies and setting up experimental mines in the Red River Delta; increasing productivity through long-wall mining; and improving environmental and safety performance. 2.1.2 Oil Crude oil is produced in Vietnam from 10 offshore areas, including one jointly held by Malaysia and Vietnam. Crude oil production grew from 16 million tons in 2000 to 20 million tons in 2004. Since 2005, output has decreased due to the decreasing productivity of the main field, Bach Ho. Plans based on recent exploration indicate that crude oil production is expected to increase in the future. Projected average production rates are 25 to 40 million tons per year through 2020 (World Bank 2006). Vietnam has had no refineries within the country, and as a result almost all crude oil produced there has been exported, earning some $5.7 billion in foreign exchange revenues and accounting for about 21 percent of the country's total export earnings. To meet the increasing domestic demand, Vietnam imports 11 million tons of petroleum products at a cost of $3.6 billion. Vietnam Oil and Gas Group (PetroVietnam or PVN) — a group of state-owned enterprises — is responsible for all oil and gas exploration, exploitation, and processing activities. They have signed more than 50 contracts (27 were still valid as of 2005) with foreign companies to undertake oil exploration, production, and processing. Vietnam’s oil production facilities are relatively modern. Excess methane gas from production is flared for safety at these facilities, with the exception of Rang Dong, which has a Clean Development Mechanism (CDM) project to compress the gas and use it in local power plants and a fertilizer plant. PetroVietnam is currently constructing petroleum refining facilities, with the first scheduled to be commissioned in February 2009 at Dung Quat (Quang Ngai Province). Two other refineries (Nghi Son and Southern) are still in the planning stages, but are expected to begin operations in 2015. The three refineries are expected to deliver a total of 15 million tons of petroleum products. Table 2. Summary of Oil Refinery Facilities in Vietnam Capacity Status Dung Quat Refinery Plant 6.5 mil. tons/yr Commissioned Feb 2009 Nghi Son Refinery Plant 7-8.4 mil. tons/yr Partner selection Long Son Refinery Plant > 7 mil. tons/yr Start construction Source: PetroVietnam, http://petrovietnam.com.vn . 2.1.3 Natural Gas Vietnam has abundant natural gas reserves. Proven reserves in eight fields totaling 192 billion cubic meters have been found, and recent offshore explorations in the Red River Delta indicate even higher levels of potential reserves. 4 Natural gas production in Vietnam has become substantial, growing from 0.5 billion cubic meters in the early 1990s to 6.6 billion cubic meters n 2005. Production is expected to increase to some 15 to 20 billion cubic meters by 2015 5 . All natural gas produced is used for domestic consumption. More than 80 percent is used for power generation, primarily in three facilities (Phu My, Camau, and Omon), and to produce fertilizer. Vietnam’s only gas processing facility, the Dinh Co Gas Processing Plant in Ba Ria Vung Tau Province, was built in 1998 by PetroVietnam Gas (PVGas), a 4 PetroVietnam reported a discovery in the Hac Long field on April 20, 2009, that is speculated to contain up to 50 billion cubic meters of natural gas. 5 World Bank 2006 Page 10 RESOURCE EXTRACTION WBCFA Vietnam - Sector Notes in Energy Sector | Page 10 subsidiary of PetroVietnam. It has a capacity of 13.2 million cubic meters of LPG per day. The Rang Dong CDM project mentioned above is located at this facility; it recovers gas from the oil field and processes it into dry gas used for power production and into LPG for household use, Table 3. Prospective Natural Gas Supply in Vietnam (billion m3/year) 2010 2015 Cuu Long Bach Ho pipeline 1-2 2 New pipeline 0-3 Nam Con Son Existing pipeline 7-8 7-8 Southwest PM3 PV pipeline 1.4 1.4 Pipeline for Chevron fields 0-3 2-4 Total 10-12 12-18 Gas from other fields & new discoveries 5-10 Source: World Bank 2006. 2.1.4 Renewable Energy Resources Hydropower. Vietnam has approximately 2,360 rivers, ranging from 10 kilometers to hundreds of kilometers in length, many with waterfalls, providing a total technical potential for hydropower estimated at approximately 120 billion kilowatt-hours (kWh), with an equivalent capacity of about 30,000 MW. Considering the socioeconomic and environmental issues, Vietnam’s techno-economic potential for hydropower is about 83 billion kWh (IE 2006). About 1,050 potential sites for small hydropower facilities (ranging from 0.1 to less than 30 MW) have been identified, for a total capacity of 4,044.5 MW, equivalent to 16.7 million gigawatt-hours (GWh) per year (IE 2008). Solar energy. Most of Vietnam is situated in the tropical zone, which receives up to 5,000 hours of sunshine per year. This sunlight can generate power and total solar-heat energy up to 1,744.5 kWh/m2 a year. The total theoretical potential is estimated at 43.9 billion TOE per year. Insolation is not uniform throughout the country, however: it is higher and more stable in the highland, central coastal, and southern provinces. Wind energy. The density distribution of wind energy is estimated at 800 to 1,400 kWh/m2 per year on Vietnam’s islands and 500 to 1,000 kWh/m2 per year in the central highlands and central coastal areas and in the Mekong Delta. In other areas, the density distribution of wind energy is less than 500 kWh/m2 per year. According to a study conducted by the World Bank, the total potential of wind energy in Vietnam is around 510 GW, but only 1.78 GW can be produced steadily. 6 Biomass energy. The potential of biomass energy (firewood, garbage, agricultural by- products, etc.) in Vietnam is about 43 to 46 MTOE per year, equivalent to 600 to 800 MW. It mainly includes rice husk from paddy milling plants and stations, bagasse from sugar factories, coffee husk from coffee-processing factories in the Central Highlands, and wood chips from wood-processing industries, which represent a total energy potential of more than 10 MTOE per year. The theoretical biogas energy potential is estimated at 6.4 MTOE per year, 61.4 percent of which is from agricultural by-products and 28.7 percent from 6 . IE, 2008; N.D. Cuong, “Renewable Energy in Vietnam” (presentation, Workshop on Energy and Environment Partnership in the Mekong Region, October 28–29, 2008). Page 11 RESOURCE EXTRACTION WBCFA Vietnam - Sector Notes in Energy Sector | Page 11 animal manure. The most realistic source of biogas energy would be animal manure, which accounts for 1.95 MTOE per year 7 . Geothermal energy. Vietnam has more than 300 natural hot water wells with surface temperatures ranging from 300 to 1,050 ° C. They are situated mainly in the northwest and central areas. No detailed data is currently available on the potential of these geothermal reserves for power generation. A rough estimation showed that a total capacity of 200 MW could be reached in 2020. Government plans. Despite the richness and diversity of renewable energy resources in Vietnam, development of those resources has been limited to medium- and large-scale hydropower projects. Other forms still face many obstacles and contributed only 2.5 percent to the total power supply in 2005 8 . GoV plans for renewable energy are outlined in the Sixth Power Master Plan and include increased exploitation of a variety of renewable technologies. Proposed projects include small-scale hydropower and wind power facilities; biogas-dependent power-generating facilities using agricultural by-products, waste, and garbage; machinery powered by solar energy to supply heat, dry farm products, purify water, and provide other services in public, civil, and agricultural settings; and mechanisms to use biogas in rural areas for domestic cooking. 2.2 Greenhouse Gas Emissions GHG emissions from resource extraction occur primarily in the coal, oil, and gas subsectors. Exploitation of renewable sources of energy causes negligible amounts of greenhouse gas emissions. 2.2.1 Coal Many coal mines contain methane. From an operational perspective, methane presents a hazard to coal miners, and it is commonly removed or vented to avoid explosions. Methane is emitted at various points in the mining process: degasification of the mine occurs before mining begins when methane is released into the atmosphere; methane is ventilated during mining; it escapes through seepage from abandoned mines; and it is released directly from coal in open-pit mines or from coal already mined. Currently Vietnam ’s coal industry does not undertake any practices to recover and use this methane, and it is released as a GHG emission. Other GHG emissions result from energy use during the mining process and from transportation of the mined coal. 2.2.2 Oil The major GHG emissions during oil production result from the release of natural gas containing methane. In oil production, the major sources of methane are from venting or incomplete flaring of the natural gas associated with oil wells and storage tanks or during the production process. Common practice in Vietnam oil production is to dispose of excess gas by flaring, as direct venting is prohibited under Vietnamese law. Some gas is used on-site for power generation, but only on a small scale. In the Rang Dong oil field, a CDM project is underway to transport and process the gas for use elsewhere. Other GHG emissions result from the energy used during oil production and processing and emissions from transportation. 2.2.3 Natural Gas 7 IE, 2008. 8 IE, 2006. Page 12 POWER GENERATION FOR ELECTRICITY WBCFA Vietnam - Sector Notes in Energy Sector | Page 12 The major source of greenhouse gas emissions in natural gas production is the natural gas itself, which contains methane. Leakage occurs during handling, processing, producing, transporting, storing, and distributing the natural gas. The degree of leakage has not been well studied in Vietnam. Other GHG emissions result from the energy used in the producing, processing, and transporting the gas. Table 4. GHG Emissions by Energy Subsector in 2005 (ktCO2-e) Subsector Activities Emissions Coal ƒ Coal mining ƒ Coal transportation 1,514.2 Oil ƒ Oil exploitation ƒ Oil transportation 59.6 Gas ƒ Gas exploitation ƒ Gas transportation 974.1 Source: MONRE 2004b ; Includes only direct emissions (CO2 and CH4). Table 5. GHG Emission Projections by Energy Subsector, 2005 –2020 (ktCO2-e) Sub-sector 2005 2010 2020 Coal mining 1,514.2 2,106.5 2,656.3 Oil exploitation and transportation 59.6 72.4 60.3 Gas exploitation and transportation 974.1 1,596.6 2,677.8 Source: MONRE 2004b. POWER GENERATION FOR ELECTRICITY Vietnam faces a dramatic increase in electricity demand, with projected growth rates of 16 percent per year from 2006 to 2010 and 11 percent per year from 2011 to 2015. As depicted in Figure 3, the capacity of the entire power system is projected to double in just five years (World Bank 2006). Figure 3. Electricity Demand Projections, 2000–2020 Page 13 POWER GENERATION FOR ELECTRICITY WBCFA Vietnam - Sector Notes in Energy Sector | Page 13 0 20000 40000 60000 80000 1 00000 120000 140000 1 60000 180000 200000 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 G Wh Other Service Lighting Industrial Agriculture As a result of this growing demand, GoV is under significant pressure to build generation capacity rapidly. Power resource development is facilitated not only by the utility Electricity of Vietnam (EVN) but also via power purchase agreements (PPA) with independent power producers (IPPs). PetroVietnam and Vinacomin also actively participate in the power-supply market with four oil- and gas-fired power plants and four coal-fired power plants, respectively. The country’s current mix of generation capacity includes renewable energy, almost entirely hydropower, accounting for 37 percent of the grid generation, and fossil-fuel sources, including gas and diesel turbines (29 percent) and coal and fuel oil (13 percent) 9 . Table 6. Installed Capacity of Power Plants 2001 2002 2003 2004 2005 MW % MW % MW % MW % MW % Hydropower plant 3,883 58% 4,120 47% 4,120 43% 4,120 40% 4,120 37% Coal and oil power plant 845 13% 1,445 17% 1,445 15% 1,445 14% 1,445 13% Gas and diesel turbine 1,477 22% 2,649 30% 2,649 28% 3,117 30% 3,282 29% IPP and others 506 8% 506 6% 1,287 14% 1,596 16% 2,439 22% Total installed capacity 6,711 8,720 9,501 10,278 11,286 Growth rate 6.60% 29.90% 9% 8.20% 9.80% Source: IE 2006. 3.1 Electrical Generation Using Fossil Fuels Generation capacity using the major forms of fossil fuel is growing, with natural gas capacity growing at 44 percent annually and coal capacity growing 14 percent annually 10 . In contrast, plans call for diesel and oil-fired power plants to be closed progressively, leaving only one new oil-fired combined-cycle power project in the central region. With the rapid development of natural gas reserves, the proportion of gas-fired generation is expected to grow in the medium term accounting for 31 percent of generation by 2020. 9 IE, 2006 10 IE, 2006. Page 14 POWER GENERATION FOR ELECTRICITY WBCFA Vietnam - Sector Notes in Energy Sector | Page 14 Considering as well the vast reserves of coal in the country and Vinacomin’s plans to build eight new coal thermal power plants by 2010, coal will continue to expand over time; it is estimated it will account for 46 percent of the generation in 2025 11 . For coal thermal power generation, the most common technology employed is subcritical pulverized coal combustion, and these plants in Vietnam have relatively low efficiencies due to their age and use of anthracite coal, which is more difficult to combust. Modernized process-control and energy-efficient components are being introduced in some plants. Newer plants are more commonly adopting circulated fluidized bed combustion technology. Super critical boilers, which produce steam under higher temperature and pressure conditions, resulting in increased overall efficiency, have been considered an option for new coal plants, but no such plants have been developed thus far. Other clean coal technologies, such as gasification or carbon capture, are not being seriously considered at this point. As the development of natural gas power plants is relatively new, these plants have adopted up-to-date natural gas combined-cycle technologies with correspondingly good efficiencies. Table 7: Projection of power generation sources 2015 2020 2025 MW TWh MW TWh MW TWh Hydropower plants 13,600 53.1 17,200 63.6 21,300 62.8 Oil/gas fired power plants 13,400 66.0 16,300 90.6 17,000 113.8 Coal-fired power plants 12,100 60.4 18,300 101.2 35,800 198.3 Renewables power plants 1,270 3.0 1,800 5.1 2,300 6.6 Nuclear power plants 0 0.0 2,000 8.0 4,000 24.6 Imported 2,100 7.6 5,200 25.5 5,200 25.5 Total 42,470 190 60,800 294 85,600 432 Source: IE, 2006 3.2 Electrical Generation Using Renewable Energy Generation capacity using renewable energy is dominated by medium and large hydropower plants. Hydropower has expanded rapidly and supplies a large proportion of grid electricity. In contrast, other forms of renewable energy have lagged in their development. In 2004, the total capacity of all current hydropower plants reached 4,227 MW, 60 percent of which came from two large hydropower plants in Hoa Binh (1,920 MW) and Yaly (720 MW). The balance is supplied by 30 medium-sized projects (capacity at 100 to 350 MW). Small projects (less than 30 MW) represent only a fraction of the total capacity. Continued expansion in the number of medium and large hydropower plants is expected in the future; fourteen (3,170 MW) new medium-sized plants, all but one of which were initiated in 2003 and 2004, were under construction in early 2005. An additional 16 medium-sized plants, totaling a further 2,775 MW, are under development. 11 IE, 2006. Page 15 POWER GENERATION FOR ELECTRICITY WBCFA Vietnam - Sector Notes in Energy Sector | Page 15 With this rapid expansion, it is anticipated that in the next 10 years the potential for medium-sized hydropower will be largely exhausted. Table 8. Potential for and Use of Renewable Energy for Power Generation in Vietnam Type of energy Theoretical potential (MW) Technical potential (MW) Utilization (MW) Solar radiation (kWh/m2/day) No limit 6 – 10 0.8 (PV solar) Wind N/A 200 – 400 1.2 Pico and mini hydropower 1,600 – 2,000 780-1,000 135 Biomass and biogas 700 – 810 600 – 800 150.75 Geothermal 340 200 – 300 0 Total (MW) 1,800 – 2,160 1,496 – 2,160 287.75 Source: IE 2006. Development of other renewable energy technologies has been limited — with only 2.1 percent of energy generated from wind power (0.0009 percent), small-scale hydropower (0.92 percent), photovoltaic (PV) solar energy (0.008 percent), and biomass (1.1 percent) — due to legislative barriers, high investment costs, and higher electricity production costs (see Table 8). Projects are under development, however, most under the auspices of the CDM. This includes many small hydropower projects: more than 30 have been proposed for CDM financing. A wind-power generation project with an installed capacity of 27 MW is also being developed by the Vietnam Renewable Energy Joint stock company (REVN) and is expected to be completed in 2009. Several other medium to large (10 to 125 MW) wind projects are in the feasibility stage. Overall, the installed capacity of power plants using renewable energy is projected to reach around 1,500 MW by 2020, contributing 6.6 percent of the country’s electricity supply. Table 9 shows the portion of renewable power plants (excluding large- and medium-sized hydropower plants) in the total system production capacity. Table 9: Cost of Electricity Production Power plant type Cost, USD/kWh Electricity from grid 0.035 Small-sized hydropower 0.04 Biogas 0.099 Biomass (bagasse) 0.042 Biomass (rice husk) 0.058 Solar photovoltaic (PV) 0.638 Wind power 0.069 Source: IE 2005 and MONRE 2004a. Table 10. Anticipated Contribution of Renewable Energy to Total Power Generation in Vietnam 2005 2010 2015 2020 2025 2030 Capacity, GWh 5815 11.630 23.260 34.890 52.335 69.780 Portion of total electricity generation in Vietnam 4% 6% 7% Page 16 POWER GENERATION FOR ELECTRICITY WBCFA Vietnam - Sector Notes in Energy Sector | Page 16 Source: IE 2006. 3.3 GHG Emissions from the Power Sector Combustion of fossil fuel (coal, oil, gases, etc) in the power subsector generates GHG emissions. In 2003, total GHG emissions from power plants were 12,720 thousand tCO2-e. Table 11. CO2 Emissions from Power Plants, 2003 GHG emission (thousand tons) NOx CO2 CO2-e percentage Thermoelectric plant (coal, oil) 20.90 7,370.41 13,558 54.65% Gas turbine plant 19.94 5,349.90 11,251.07 45.35% Total: 24809.07 Source: IE 2006. Table 12. CO2 Emission Projections from Power Plants, 2005 to 2020 Source: IE 2006. The main factors contributing to the accelerated growth in greenhouse gas emissions from power generation are the rapidly increasing demand for energy, the low overall efficiency of coal power plants, and the slow development of renewable energy technologies other than medium and large hydropower plants. 2005 2010 2015 2020 GHG emissions (ktCO2-e) 27,730 36,102 46,750 71,268 Page 17 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 17 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 173.5 548.7 7.7 7.4 0 : P 173.5 555.9 7.7 2.3 0 : L 173.5 558.2 7.7 2.3 0 : O 173.5 560.6 7.7 2.3 0 : O 173.5 563.0 7.7 2.3 0 : L 173.5 565.4 7.7 4.8 0 : R 173.5 570.1 7.7 4.9 0 : Q 173.5 574.9 7.7 2.3 0 : \03 173.5 577.3 7.7 3.3 0 : W 173.5 580.3 7.7 5.2 0 : & 173.5 585.6 7.7 6.0 0 : 2 173.5 591.6 7.7 4.9 0 : ffl 173.5 596.2 7.7 3.4 0 : \10 173.5 599.8 7.7 4.6 0 : H 173.5 604.6 7.7 4.5 0 : \12 173.5 609.3 7.7 4.5 0 : \ 173.5 614.1 7.7 3.4 0 : U C   O       G       P   T Figure 4: Trends in emissions from the energy sector A list of potential typologies of interventions were evaluated to understand their potential for sector wide reductions in emissions of GHGs. Based on the sector potential and the relative challenges of implementing the typology in a portion of the sector, potentially feasible interventions were characterized based a set of criteria important to their implementation potential including estimates of potential emission reductions, in-roads institutionally, and methodology and additionality issues. While all interventions are believed to have potential as “win-win” or “no-regrets” interventions under the CDM, considerations on the related co-benefits and financial cost (if any) related to the intervention was also included in the evaluation and as summarized in the Annexes. All calculations of the emission reduction potentials were based on the sector structure over the time span of 2010 and 2015 and used CDM and IPCC methodologies where available and local emission factors where available. 4.1 Typologies of Potential CCM Projects in the Energy Sector To understand the CCM options for the energy sector, typologies of likely projects were assessed. The typologies explored appear in Table 12. Table 13. Typologies of Potential CCM Projects Typology of intervention Description E1 Renewable energy use for power generation Developing plants using small-scale hydropower, wind power, and bagasse and risk husk biomass energy to generate electricity capacity. E2 Recovery and use of gas from oil fields Recovering gas associated with oil production that otherwise would have been flared and processing the recovered gas into Page 18 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 18 dry gas for use as fuel by power plants. E3 Recovery and use of methane gas from coal fields Recovering methane gas that otherwise would have been emitted in the course of coal mining for use in power generation. E4 Energy efficiency improvements in coal-fired power plants Improving the energy efficiency of coal plants by upgrading existing plants and employing up-to-date technology in new coal plants, through use of equipment with subcritical or supercritical boiler technology. 4.1.1 Project type E1: Renewable energy use for power generation (i) Project technologies/activities . This project type comprises several technologies and activities for developing grid-connected, low-emission electricity generating plants, including the following options: · Option 1: Developing medium- and small-sized hydropower plants. These projects involve constructing new facilities that use hydropower to generate electricity. Water intakes, headraces, and penstocks are built to convey water to a turbine coupled to an electricity generator. Depending on the size of the plant, a dam may be required to create a reservoir. · Option 2: Using wind power to generate electricity. These activities involve constructing new facilities that use wind power to generate electricity. The projects require ground preparation, construction of wind-tower foundations, and erection of steel wind towers to support wind turbines. To connect to the grid, a local power substation is required. · Option 3: Power generation using bagasse and rice husk biomass energy. These projects involve both constructing new facilities and upgrading or modifying existing facilities to generate electricity using bagasse and rice husk from sugar and rice mills, respectively. This option will be discussed in detail in the Sector Note on Waste Management. (ii) Baseline and additionality issues. In the baseline scenario, additional power demand in the absence of the project activity would be covered by power plants burning fossil fuels. Developing plants that use renewable energy would reduce fossil-fuel use and therefore GHG emissions. Although renewable-energy power-generation projects are not new in Vietnam, quite a number of investment barriers remain. Some medium-sized hydropower projects, for example, can face significant limitations in terms of financing, hydrologic risk, and government regulations. For other types of renewable energy projects, barriers can be even stronger, making the present cost of electricity generation by renewable means higher in comparison to costs for generating electricity using traditional fossil fuels. Another critical barrier is the lack of government support for and subsidies to renewable-energy efforts, limited access to financing, and complex regulations and procedures with regard to selling to the grid. (iii) Assessment of applicable CDM Methodologies Approved methodologies are available for all proposed interventions. (iv) GHG emissions reduction potential. Page 19 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 19 The emission reductions achieved by the project activity will be calculated as the difference between baseline emissions and the sum of project emissions and leakage. The power subsector has a high potential for GHG emissions reduction through the use of renewable energy technologies and upgraded technologies in existing thermal power plants. The potential GHG emissions reduction for the various solutions are shown in Table . Table 14 shows the large potential electricity generating capacity of small- and medium-sized hydropower plants. Table 14. Potential GHG Emissions Reduction by Renewable-Energy Electricity Generation by 2010 CO2 emission reduction Additional investment Marginal cost Solution 1000 tCO2-e Million USD USD/tCO2 Geothermal power 12,218.87 600 14.18 Solar power 209.82 35 154.16 Wind power 8,553.21 210 7.77 Biomass energy 2,613.48 60 1.81 Biogas energy 1,194.73 28 2.15 Source: CDM Guidebook 2004. Table 15. Small- and Medium-Sized Hydropower Development Projections, 2008 – 2020 2008 2010 2015 2020 Region GWh MW GWh MW GWh MW GWh MW North 1,570.1 365.2 1,964.0 456.8 3,219.8 748.8 3,910.0 909.3 Central 2,493.1 579.8 3,011.7 700.4 3,716.9 864.4 4,515.4 1,050.1 South 49.5 11.5 49.5 11.5 952.5 221.5 1,382.5 321.5 Total 4,112.77 956.5 5,025.22 1,168.7 7,889.22 1,834.7 9,807.9 2,280.9 Source: IE 2006. \ Based on the 2008 CO2 emission factor for the national grid developed by RCEE (CEF 2008 = 590.81 tCO2-e/GWh), it is possible to calculate the potential GHG emission reductions from small- and medium-sized hydropower plants. Table 16. Related Potential GHG Emissions Mitigation Projections from Small- and Medium-Sized Hydropower, 2008–2020 Total ERs, tCO2-e/year Region 2008 2010 2015 2020 North 927,631 1,160,351 1,902,290 2,310,067 Central 1,472,948 1,779,342 2,195,982 2,667,743 South 29,245 29,245 562,747 816,795 Total 2,429,824 2,968,938 4,661,018 5,794,605 Figure 5. Climate Change Mitigation Options for Hydropower Use Page 20 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 20 G         C O           : Percentage of : sector potential : Total ERs, : tCO2/yr : 1% 638,079 : : 2% 1,297,419 : : 4% 2,722,452 : : 10% 4,104,948 : : 2 : 4% 6,338,210 : : 63% 8,528,933 : : 100% 8,798,626 : GHG emission reduction by utilization of m edium-sized hydropower 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 B a n U o n N h o Q u e 2 & 3 D a k M y 1 H u a N a B a c M e B o u n g r i v e r 4 D o n g N a i 5 B o u n g R i v e r 2 D o n g N a i 2 B a o L a c D u c X u y e n t C O 2 / y r Medium-sized hydropower bundling option : Total bundled ERs, tCO2/yr Ban Uon 659,060 : +Nho Que 2&3 1,200,431 +Dak My 1 1,694,727 +Hua Na 2,118,408 +Bac Me 2,518,552 +Boung river 4 2,906,927 +Dong Nai 5 3,236,457 +Boung River 2 3,537,742 +Dong Nai 2 3,726,045 +Bao Lac 3,902,579 +Duc Xuyen 4,024,976 Page 21 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 21 Figure 6. Climate Change Mitigation Options for Wind Energy Use GHG emission reduction by utilization of windpower 0 500,000 1 ,000,000 1,500,000 2 ,000,000 2,500,000 3,000,000 PetroVN J-V Phuong Mai 1.2 Phuong Mai 2 Tuy Phong 2 Phuong Mai 3 Ninh Phuoc Phuong Mai 1 Tuy Phong t C O 2 - e / y r W ind farm bundling option T otal ERs, tCO2/yr PetroVN J-V 1,417,944 + Phuong Mai 1.2 1,843,327 +Phuong Mai 2 2,126,916 +Tuy Phong 2 2,254,531 +Phuong Mai 3 2,325,995 +Ninh Phuoc 2,396,893 +Phuong Mai 1 2,467,790 +Tuy Phong 2,510,328 Figure 7. Climate Change Mitigation Options for Biomass Use Rice husk Bagasse Total No. of projects 33 27 60 Range of capacity (MW) 1..15 5..16 Total installed capacity (MW) 169 250 419 In-house consumption (%) 0% 53% Total electricity sold to grid (MWh/yr) 1,014,000 381,900 1,395,900 Potential ERs (tCO2-e/yr) 599,081 225,630 824,712 GHG emission reduction by utilization of biomass for power generation 0 100000 200000 300000 400000 500000 600000 700000 0% 20% 40% 60% 80% 100% t C O 2 - e / y r Rice husk Bagasse ( v) Current renewable-energy CDM project pipeline in Vietnam. The Song Muc hydropower project was approved as a CDM project on June 26, 2006, and became the second registered CDM project in Vietnam. The objective of the project is to rehabilitate a hydropower-generation plant by renewing the penstocks and reinstalling the Kaplan turbines at the ruins of the Song Muc Hydropower Station. The project plans call for generation of 7.2 GWh of electricity annually. The electricity will be transmitted to the Page 22 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 22 national grid and will replace part of the electricity now supplied by fossil-fuel-powered thermal plant; as a result, CO2 emissions will be reduced by 4,306 tCO2 per year. On April 6, 2009, the Executive Board of the CDM approved Binh Thuan Wind Power Plan as a CDM project. The project is a 30MW wind power generation plant which can generate 91.5 GWh per year. According to the Designated National Authority (DNA) of Vietnam, as of July 2008, 35 ongoing CDM projects in the power generation sector have been approved; 34 of these are hydropower generation projects, and only one is a rice-husk power generation project. Since that time the number of CDM projects proposed in power generation has doubled. (vi) Potentially feasible sector-wide interventions Intervention Potential structure and in-roads Estimated GHG reduction Estimated CDM Revenues 3 medium sized hydropower projects currently under FS stage Through EVN investment program. 1.3 million tCO2-e per year $13 million per year 44 small scale hydropower plants between 15 and 30 MW Through intermediary banks and MOIT 2.7 million tCO2-e per year. $27 million per year 1 large demonstration wind farm Through Petro VN. 1.4 million tCO2-e per year $14 million per year Utilization of 20% of rice husk production and 40% of bagasse production for power generation Through intermediary bank. 150,000 tCO2-e per year $1.5 million per year 4.1.2 Project type E2: Recovery and use of gas from oil fields Project technologies/activities. This project type comprises measures to recover and use gas associated with oil production, which would have otherwise been flared or vented on- site, to generate power for sale to the national grid. The project activities include construction of a gas pipeline and compressor facilities to recover and transport the associated gas. Recovered gas is processed into dry gas (mainly CH4), LPG (butane and propane), and condensate. Dry gas is sent to local power plants, substituting for the gas and fuel oil previously used. Figure 8. Schematic Illustration of a Gas-Recovery Project Page 23 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 23 The recovery and use of the gas, which would otherwise have been flared or vented, will reduce anthropogenic GHG emissions. GHG emission reductions may also occur at the power plants, since the recovered gas would substitute for part of the fuel oil previously used. LPG and condensate produced from the recovered gas would substitute for a certain amount of LPG and condensate currently imported and therefore would have no net effect on GHG emissions relating to the project. Fertilizer produced from dry gas is expected to substitute for fertilizer already made from similar materials and is not expected to result in net increase of GHG emissions. Baseline and additionality issues. In the baseline scenario, all gas associated with oil production is flared at the well or consumed on-site, thus emitting CO2 into the atmosphere. This approach accords with Vietnam’s mandated laws and regulations, which allow gas flaring but prohibit gas venting. In alternative scenarios, all associated gas is recovered and used. Recovered gas is used mainly for power production, thus reducing consumption of other fuels and reducing CO2 emissions. The main barriers to projects of this type include the following: · High investment costs; · Investment in recovery, land transport, and use of recovered gas not considered commercially attractive relative to other investment opportunities; · Limited access to financing sources; and · Complex regulations and procedures governing sale of electricity to the grid. · GHG emission reduction potential. The emission reductions achieved by the project activity will be calculated as the difference between baseline emissions and the sum of project emissions and leakage. The GHG emission reduction potential is calculated using approved methodology AM0009. Error! Reference source not found. Figure 9 presents the results of calculations of potential emission reduction from recovery and use of associated gas at all existing and new oil fields and a bundling option for several oil fields. Figure 9. Climate Change Mitigation Options for Recovery and Use of Associated Gas from Oil Fields Page 24 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 24 0 500,000 1,000,000 1,500,000 2,000,000 2 ,500,000 Su Tu Den ( Black Lion) Ruby Rong ( Dragon) Ca Ngu V ang ( Golden Tuna)* Dai Hung ( Big Bear) Bunga K ekwa Su Tu Vang ( Golden L ion)* t C O 2 / y r : Oil field gas : bundling : option : T : otal ERs, : tCO2/yr : Su Tu Den : 744,641 : : +Ruby 1,028,959 : : +Rong 1,299,737 : : +Ca Ngu Vang* : 1,570,516 : : +Dai Hung : 1,705,905 : : + : Bunga Kekwa : 1,841,294 : : +Su Tu Vang* : 1,976,684 : (iv) Current oil-field gas-recovery CDM project pipeline in Vietnam. The first project in Vietnam dealing with associated gas recovery and use is located at the Rang Dong Oil field. The project was registered as a CDM project in 2006. The net volume of CO2 emission reduction through this project is about 6.77 million tons. (v) Potentially feasible sector-wide interventions Intervention Potential structure and in-roads Estimated GHG reduction Estimated CDM Revenues Recovery of gas from 7 oil fields and use for power generation. Through Petro VN. 2.0 million tCO2-e per year $20 million per year 4.1.3 Project type E3: Recovery and use of methane gas from coal fields (i) Project technologies/activities. (ii) This project type comprises measures to capture fugitive methane from coal mines that, in the absence of recovery efforts, would be emitted into the atmosphere. Project activities include constructing recovery and processing facilities and transporting the gas to power plants for use in electricity generation. Coal fields contain large amounts of methane. Sources of methane emissions are typically divided into four categories: underground mining, open-pit mining, post-mining activities, and abandoned mines. Depending on geology, reservoir characteristics, and mine layout, coal-mine methane can be recovered before or after mining. The techniques used in methane recovery are vertical wells, long- hole and short-hole horizontal boreholes, and gob wells. Vertical wells and in- mine horizontal boreholes, which recover methane before mining, produce nearly pure methane. In contrast, gob wells, which recover post-mining methane, may recover methane mixed with air. The recovered methane gas can be processed to make pipeline quality methane steam for sale or to generate electricity 12 . (iii)Baseline and additionality issues. 12 Refer to the demonstration project by Northwest Fuel Development Inc. (URL: http://fossil.energy.gov/fred/factsheet.jsp?doc=2174&projtitle=Recovery%20and%20Utilization%20of%20C oal%20Mine%20Methane) Page 25 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 25 In the selected baseline scenario, in the absence of the project activity, all methane from coal mines (both open-pit and underground) is emitted into the atmosphere as a result of coal exploitation. Baseline emissions exclude methane emissions that must be removed to comply with national or local safety requirements or legal regulations. The main barriers to this type of project include the following: · High investment costs; · Investment in recovery, land transport, and use of gas not considered commercially attractive relative to other investment opportunities; · Limited access to financing sources; and · Complex regulations and procedures governing sale of electricity to the grid. (iii) GHG emission reduction potential. GHG emissions reduction calculations for this project type combine estimates for burning CH4 instead of emitting it directly into the atmosphere and for reducing fossil fuel combustion used in power generation. The GHG emission reduction potential is calculated using methodology AM0025, with some simplifications. The calculation is based on the statistical data on coal exploitation in Quang Ninh Province, which in 2006 accounted for 32 million tons, 40 percent from underground mines. Figure 10 uses the IPCC emission factor (10 cubic meters of methane per ton of coal exploited) to show the emission reductions in relation to the percentage of methane gas captured from Vietnam’s open-pit and underground coal mines. Error! Reference source not found. Figure 10. Climate Change Mitigation Options for Capturing Methane Gas from Coal Mines 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% m i l l i o n t C O 2 / y r Underground coal mines Open-pit coal mines Total ERs, tCO2/yr Recovery rate, % Under- ground Open- pit 0% 0 0 10% 171,520 7,718 20% 343,040 15,437 30% 514,560 23,155 40% 686,080 30,874 50% 857,600 38,592 60% 1,029,120 46,310 70% 1,200,640 54,029 80% 1,372,160 61,747 90% 1,543,680 69,466 100% 1,715,200 77,184 Page 26 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 26 (iv) Current methane-recapture CDM project pipeline in Vietnam. Currently, no CDM projects of this type are in the pipeline. (v) Potentially feasible sector-wide interventions Intervention Potential structure and in-roads Estimated GHG reduction Estimated CDM Revenues Recovery and utilization of methane gas from 20% of underground mines and 20% of open pit mines in Quang Ninh Through VINACOMIN 360,000 tCO2-e per year $3.6 million per year 4.2.4 Project type E4: Energy efficiency improvements in coal-fired power plants (i) Project technologies/activities. Most of Vietnam’s currently operating coal-fired plants were installed a long time ago. For example the total installed capacity of 30-year old power plants (Uong Bi, Pha Lai 1, and Ninh Binh) is 645 MW. These older plants are based on pulverized coal technology, which has rather low efficiency (around 23 percent). Improvements can be made at these power plants that will increase their efficiency and reduce their energy consumption. For the new power plants to be constructed in Vietnam, options exist to introduce new technologies including new supercritical boilers or other efficient technologies combined with subcritical boilers. (ii) Baseline and additionality issues. In the baseline scenario, no change is made in power-plant efficiency. In alternative scenarios, energy efficiency is improved using clean- coal technology. Improvements in coal-fired plants will reduce fossil fuel (coal) consumption, thus, reducing CO2 emissions. The main barriers to this type of project include the following: · New technologies not yet available in the country; · High investment costs; and · Limited access to financing sources. Additionality analysis should follow the UNFCCC’s guidelines EB 39 (Annex 10): “Tool for the Demonstration and Assessment of Additionality.” (iii) GHG emission reduction potential. CO2 emissions from coal combustion in both the baseline and the project scenarios will be calculated using the methodological tool EB 41 (Annex 11). At a conservative estimate, efficiencies possible to obtain by deploying subcritical and supercritical technologies are 35 percent and 40 percent, respectively. Figure 11. Climate Change Mitigation Options for Improving Old Coal-Fired Power Plants Page 27 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 27 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 0% 20% 40% 60% 80% 100% E m i s s i o n r e d u c t i o n , t C O 2 / y r % coal fired plants upgraded Subcritical (COP=35%) S ubcritical (COP=35%) Total ERs, tCO2/yr Level of upgrade 0% 0 20% 1,054,678 40% 1,331,531 6 0% 1,595,201 80% 1,690,122 100% 1,763,950 Figure 6. Climate Change Mitigation Options for New Coal-Fired Power Plants (constructed 2010 to 2012) 0 1 2 3 4 5 6 7 8 9 0% 20% 40% 60% 80% 100% m i l l i o n t C O 2 / y r % new coal fired plants Subcritical (COP=35%) Supercritical (COP=40%) Level of bundling Total ERs, tCO2/yr Subcritical Supercritical 0% 0 0 20% 1,582,018 1,961,043 40% 3,164,036 3,922,086 60% 4,746,054 5,883,130 80% 6,328,072 7,844,173 100% 6,591,742 8,171,013 (iv) Current coal-plant efficiency CDM project pipeline in Vietnam . Currently, no CDM projects of this type are in the pipeline. (v) Potentially feasible sector-wide interventions Intervention Potential structure and in-roads Estimated GHG reduction Estimated CDM Revenues Rehabilitation of 3 old power plants (subcritical energy efficiency) Through EVN 1.3 million tCO2-e per year $13 million per year Introduction of super critical boilers to 3 new coal fired plants constructed between 2010 and 2012. Through EVN/VINACOMIN 5.9 million tCO2-e per year. $59 million per year Introduction of ene rgy efficient Through EVN/VINACOMIN 4.7 million tCO2-e per year. $47 million per year. Page 28 POTENTIAL CLIMATE CHANGE MITIGATION OPPORTUNITIES IN THE ENERGY SECTOR FOR 2010 TO 2015 WBCFA Vietnam - Sector Notes in Energy Sector | Page 28 subcritical technologies in 50% of new coal fired power plants constructed between 2010 and 2012. Page 29 Annex 1: Selected Bibliography WBCFA Vietnam - Sector Notes in Energy Sector | Page 29 Annex 1: Selected Bibliography CDM Guidebook. 2004. Composed and edited by TUV Rheinland Hongkong and RCEE, within DEG-supported CDM capacity-building campaign for Vietnam. IE. 2008. Draft Strategy and Master Plan for Renewable Energy Development, Period to 2015, with Outlook to 2025 [a.k.a., Renewable Energy Master Plan]. ———. 2006. Master Plan for Vietnam Power Development, Period 2006 –-2015, with Outlook to 2025 [a.k.a., Sixth Power Master Plan]. ———. 2005. A Quantitative Study on the Feasibility of Industry-Scale Utilization of Solar Energy, Mini Hydropower, and Biomass in Vietnam . JICA. 2007. A Study on National Energy Master Plan . MONRE. 2004a. Evaluating the Effectiveness of the Economy-Environment Factor in GHG Emission Reduction in the Energy Sector . ———. 2004b. Edition of GHG Reduction Demand in Energy, Transportation, and Nonenergy Sectors . World Bank. 2006. Power Strategy: Managing Growth and Reform . Page 30 Annex 2: Summary of Potential Emission Reductions from interventions Page 30 Annex 2: Summary of Potential Emission Reductions from interventions Note: Estimates based on annual reductions during 2010-2015 Page 31 A n n e x 3 : P o t e n t i a l l y F e a s i b l e S e c t o r W i d e I n t e r v e n t i o n s P a g e 3 1 A n n e x 3 : P o t e n t i a l l y F e a s i b l e S e c t o r W i d e I n t e r v e n t i o n s Page 32 A n n e x 3 : P o t e n t i a l l y F e a s i b l e S e c t o r W i d e I n t e r v e n t i o n s P a g e 3 2 G H G r e d u c t i o n p o t e n t i a l ( 2 0 1 0 t o 2 0 1 5 ) S e c t o r P r o g r a m I n t e r v e n t i o n G H G p r o j e c t i o n f o r s e c t o r i n 2 0 1 0 ( m i l l i o n t C O 2 - e ) T o t a l P o t e n t i a l ( m i l l i o n t C O 2 - e / y ) F o r p r o g r a m i d e a ( m i l l i o n t C O 2 - e / y ) C o - b e n e f i t s a n d F i n a n c i a l C o s t E n e r g y r e s o u r c e s a n d e l e c t r i c i t y g e n e r a t i o n 7 7 . 0 3 6 . 6 1 9 . 6 E 1 R e n e w a b l e e n e r g y U t i l i z a t i o n o f h y d r o p o w e r f o r p o w e r g e n e r a t i o n : e l e c t r i c i t y g e n e r a t e d b y 3 m e d i u m s c a l e h y d r o p o w e r p l a n t s u n d e r p r e - F S s t a g e 4 1 . 3 E l e c t r i f i c a t i o n ; T y p i c a l l y p r o f i t a b l e w i t h C D M E 1 R e n e w a b l e e n e r g y U t i l i z a t i o n o f h y d r o p o w e r f o r p o w e r g e n e r a t i o n : e l e c t r i c i t y g e n e r a t e d b y 4 4 o u t o f 1 0 1 3 s m a l l s c a l e h y d r o p o w e r p l a n t s w h i c h a r e b e t w e e n 1 5 a n d 3 0 M W 8 . 8 2 . 7 E l e c t r i f i c a t i o n ; T y p i c a l l y p r o f i t a b l e w i t h C D M E 1 R e n e w a b l e e n e r g y U t i l i z a t i o n o f w i n d p o w e r f o r p o w e r g e n e r a t i o n : e l e c t r i c i t y g e n e r a t e d f r o m t h e l a r g e s t o u t o f 8 w i n d f a r m s w i l l b e s o l d t o t h e n a t i o n a l p o w e r g r i d 2 . 5 1 . 4 E l e c t r i f i c a t i o n ; C a n b e p r o f i t a b l e b u t m a r g i n a l i n V i e t n a m E 1 R e n e w a b l e e n e r g y / A g r i c u l t u r a l w a s t e A g r i c u l t u r a l s o l i d r e s i d u e s : U t i l i z a t i o n o f 2 0 % o f r i c e h u s k p r o d u c t i o n a n d 4 0 % o f b a g a s s e p r o d u c t i o n f o r p o w e r g e n e r a t i o n 0 . 9 1 0 . 1 5 0 . 0 6 ( 2 0 % r i c e h u s k ) 0 . 0 9 ( 4 0 % b a g a s s e ) E l e c t r i f i c a t i o n , r e d u c e d p o l l u t i o n i n r i v e r s a n d o f a i r ; T y p i c a l l y p r o f i t a b l e w i t h C D M E 2 R e c o v e r y a n d u s e o f g a s f r o m o i l f i e l d s R e c o v e r y o f a s s o c i a t e d g a s f r o m t h e l a r g e s t o u t o f 7 a v a i l a b l e o i l f i e l d s , a n d u t i l i z a t i o n f o r p o w e r g e n e r a t i o n o r h e a t i n g 2 . 0 2 . 0 P r o d u c t i o n o f g a s , l o w e r p r i c e d e n e r g y f o r o i l p r o c e s s i n g a n d r e l a t e d i n d u s t r i e s ; T y p i c a l l y p r o f i t a b l e w i t h C D M E 3 R e c o v e r y a n d u s e o f g a s f r o m c o a l f i e l d s R e c o v e r y a n d u t i l i z a t i o n o f m e t h a n e g a s f r o m c o a l m i n e s : 2 0 % o f u n d e r g r o u n d m i n e s a n d 2 0 % o f o p e n - p i t m i n e s i n Q u a n g N i n h p r o v i n c e 1 . 8 0 . 3 6 S a f e t y i m p r o v e m e n t s ; T y p i c a l l y p r o f i t a b l e w i t h C D M b u t n e v e r t r i e d i n V i e t n a m E 4 E n e r g y e f f i c i e n c y i m p r o v e m e n t s i n c o a l - f i r e d p o w e r p l a n t s E n e r g y e f f i c i e n c y i m p r o v e m e n t i n t h e l a r g e s t 3 o l d c o a l p l a n t s b y a p p l y i n g s u b c r i t i c a l t e c h n o l o g y T y p i c a l l y p r o f i t a b l e w i t h C D M 1 . 8 1 . 3 R e d u c e d a i r p o l l u t i o n ; e n e r g y s a v i n g s . E 4 E n e r g y e f f i c i e n c y i m p r o v e m e n t s i n c o a l - f i r e d p o w e r p l a n t s A d o p t i o n o f s u p e r c r i t i c a l b o i l d e r s i n 5 0 % o f n e w c o a l - f i r e d p o w e r p l a n t s c o n s t r u c t e d f r o m 2 0 1 0 t o 2 0 1 2 T y p i c a l l y p r o f i t a b l e w i t h C D M 8 . 2 5 . 9 R e d u c e d a i r p o l l u t i o n ; e n e r g y s a v i n g s . E 4 E n e r g y e f f i c i e n c y i m p r o v e m e n t s i n c o a l - f i r e d p o w e r p l a n t s A d o p t i o n o f e n e r g y e f f i c i e n t s u b c r i t i c a l t e c h n o l o g i e s i n 5 0 % o f n e w c o a l - f i r e d p o w e r p l a n t s c o n s t r u c t e d f r o m 2 0 1 0 t o 2 0 1 2 T y p i c a l l y p r o f i t a b l e w i t h C D M 6 . 6 4 . 7 R e d u c e d a i r p o l l u t i o n ; e n e r g y s a v i n g s . Page 33 P a g e 3 3