Political Economy of Climate Change Mitigation and Energy Policies in Vietnam – A Case Study

In order to meet its rapidly growing electricity demand, Vietnam envisages a substantial ramp-up of fossil electricity generation and ranks third in terms of planned coal-fired capacity additions globally. These developments stand in sharp contrast to the country’s mitigation pledges under the Paris Agreement. As Vietnam’s energy policy is not straightforward from an economic or strategic perspective, it is essential to understand the underlying political economy factors. Our study is the first to provide a systematic in-depth analysis of the complex interplay of relevant societal, political and international actors, their objectives and how they influence energy policy formulation. Extensive data collected in expert interviews allow us to shed light on otherwise inaccessible constellations. These include specific, also personal, vested interests, informal processes and underlying power struggles contributing to Vietnam’s focus on coal. We identify three overarching goals governing energy policies, which are closely entangled with the Vietnamese Communist Party’s strategy to legitimize its power: maintaining low electricity prices, providing sufficient and reliable supply for fast economic growth as well as controlling environmental pollution. We show that Vietnam’s tightly regulated electricity market which is dominated by large state-owned enterprises, incumbent groups and respective vested political interests lead to an investment climate which favors large-scale coal projects and hinders renewable energy additions. We further find that, while environmental concerns are becoming more politically relevant on the provincial level, strong silo structures within the administration and among donor organizations result in inconsistent and weak national environmental legislation. These insights can help to identify politically feasible entry points to mitigate climate change and for prevent carbon lock-in in Vietnam’s electricity sector.