Vietnam and other Asian countries are on a coal spree! Given the dynamics of energy use in the rapidly developing industrial sector there, it is no surprise that these nations have backpedaled on big promises made at international climate conferences to reduce emissions of carbon dioxide from fossil fuels.

Vietnam’s projected 2024 growth rate for Gross Domestic Product (GDP) stands at 5.8%, the sixth highest in Asia. Among the biggest contributors to GDP is the industrial sector (38 percent), especially manufacturing. S&P Global has noted a considerable improvement in Vietnam’s manufacturing sector in the fourth quarter of 2023 and is expecting Vietnam to perform well this year.

Electricity is a cornerstone of manufacturing operations in Vietnam. In 2023, coal produced more than 40% of all electricity in the country, while the country’s abundant hydro reserves contributed around 30%. Natural gas accounted for about 10%.

However, 2024 is expected to see a shortfall in hydroelectric generation because of less rainfall. Simultaneously, electricity production with natural gas is being complicated by forecasts of higher gas prices. Bloomberg reports that state-run PetroVietnam Gas “recently decided not to purchase a cargo for June due to high offer prices.”

So, the heavy lifting to meet power demand must now come from coal. The country is urging coal miners to maximize production before demand reaches peak in the summer months. The country’s prime minister has asked for an increase in coal exploration as well, signaling a sustained interest in the medium to long-time reliance on coal.

Vietnam’s move to increase coal use was inevitable. It cannot continually risk a huge demand-supply gap whenever dams go dry or gas prices skyrocket. The growth rate of power demand from expanding industries is increasing at a fair pace, and energy security is critical in ensuring manufacturing’s positive trend.

Similar patterns across Asia

…click on the above link to read the rest of the article…