Vietnam's hydrogen economy takes shape with national strategy, projects

Vietnam is the newest Asian country to jump onto the hydrogen bandwagon with the announcement of its national hydrogen development strategy by 2030 in February and investor interest from foreign energy companies, signaling a growing marketplace for the new fuel source.

Vietnam's hydrogen plan also comes on the heels of the launch of its carbon exchange and amid efforts to boost renewables, phase out coal-fired power generation and ramp up the use of gas and LNG as a transition fuel, and obtain funding under the Just Energy Transition Partnership.

On March 7, 2024, China Huadian Engineering Co. Ltd., a subsidiary of one of China's largest power generators China Huadian Corp., and Vietnam's Minh Quang JSC met officials of the central province of Quang Tri to invest $2.39 billion in a green hydrogen project.

The project will comprise a 1,200 MW wind power plant, an 800 MW solar power plant and a water electrolysis plant for hydrogen production, along with storage and transport infrastructure, the companies said. Its initial phase will have a green hydrogen plant alongside a 200-MW solar farm.

In March 2023, Vietnam-based The Green Solutions Group Corp., or TGS, started work on the Tra Vinh Green Hydrogen project in the coastal province of Tra Vinh, Vietnam's first green hydrogen plant in the Mekong Delta, with production capacity of 24,000 mt/year and construction timeline of two years at a cost of $327.7 million. Honeywell signed a memorandum of understanding with TGS at the UN Climate Change Conference, or COP28, for supplying equipment to the project.

On Feb. 7, Vietnam launched its national hydrogen development strategy by 2030 with a vision to 2050, aiming to produce between 100,000 mt and 500,000 mt/year of hydrogen from renewable energy and other processes with carbon capture by 2030.

Production capacity will be raised to 10 million to 20 million mt/year by 2050, and the targets are part of Vietnam's efforts to realize its net-zero commitment by 2050, according to the strategy document.

"Like many countries, Vietnam has developed a H2 strategy for the country. The totemic policy setting within the H2 strategy is the development of production capacity within the country to produce both blue and green hydrogen," Michael Harrison, partner at law firm Baker Botts, said.

He said the strategy expects blue hydrogen, derived from natural gas and carbon capture, and green hydrogen, derived from electrolyzing water and renewable energy, to have both domestic and export markets.

"In the context of the domestic market, the H2 strategy is targeting 10% of final energy demand in Vietnam matched by the use of H2. Given the dynamics in Vietnam, it is possible to see the use of H2 across the transport sector and to decarbonize difficult to decarbonize industries," Harrison said.

National strategy

Under the national strategy, Vietnam expects to ramp up green hydrogen and carbon capture technologies by 2050, as well as build markets for hydrogen in electricity production, transportation (roads, railway, waterway, airway), industrial production (steel, cement, chemical, oil refining), and commercial and residential use.

In electricity production, Vietnam plans to pilot cofiring of natural gas with hydrogen and coal with ammonia to meet fuel switching targets under the National Power Development Plan for 2021-2030, with a vision to 2050 (PDP 8).

Similarly, Vietnam's green transformation roadmap for the transportation industry includes the use of hydrogen to decarbonize both public transportation and long-haul trucking, the industrial sector will test green hydrogen to replace grey hydrogen in fertilizer production and petrochemical refining, and hydrogen will be trialed in the production of green steel and cement. There is a plan to eventually incentivize investments for green hydrogen exports, the strategy said.

"As with all countries, the development of a H2 strategy is the starting point. In order for projects to be developed, the market for H2 domestically will need increased definition, with the domestic market being key to the development of H2 production capacity," Harrison said.

"At the moment, the capacity to carry BH2 and GH2 in liquefied form does not exist, nor will there be sufficient capacity by 2030. As such, the market for H2 will be domestic, and depending on policy settings in other countries (critically, requiring decarbonization of activities), there may be a market for blue ammonia (BNH3) or green ammonia (GNH3)," Harrison said.

Vietnamese investors said they expect hydrogen funding to be supported by initiatives like the Asian Development Bank's announcement on March 13 to mobilize $2.1 billion as part of the Vietnam government's Resource Mobilization Plan to implement the Just Energy Transition Partnership that brings in $15.8 billion in financing from developed nations.

The RMP launched at COP28 in December identified several barriers to hydrogen investment in Vietnam including high investment costs, absence of subsidies, unclear regulatory environment, supply chain issues and variable renewable energy supply.

These are the hydrogen projects in the list for JETP implementation:

Source: Vietnam Resource Mobilization Plan