Removing institutional bottlenecks for businesses to shift energy
Energy transition is a comprehensive innovation process in institutions, technology and growth models. In which, businesses play a central role, directly investing, developing and operating clean energy projects.
According to Dr. Nguyen Quoc Viet - Lecturer at the University of Economics (Vietnam National University, Hanoi), the difficulties that have made businesses slow to participate in the transition in the past time are not due to the shortage of natural resources or the limitations of technical solutions, but due to bottlenecks in green financial institutions, the lack of substantive economic incentive mechanisms and policy risks in electricity purchase and sale contracts.
Dr. Nguyen Quoc Viet said that capital is always the first and biggest bottleneck that makes businesses hesitant when entering the energy transition journey. Initial investment rates for large-scale renewable energy projects such as offshore wind power with complex seabed survey costs, imported LNG gas power or investment in installing energy storage batteries (BESS) are extremely expensive, exceeding the financial balance of most domestic private enterprises.
Vietnam has a set of criteria for classifying green projects, but the implementation guidelines are still not synchronized. This causes difficulties for banks in assessing environmental - social risk (ESG), risk valuation, causing businesses to meet high loan and collateral conditions" - Dr. Nguyen Quoc Viet emphasized.
According to Dr. Nguyen Quoc Viet, the lack of clear, continuous and long-term economic incentive mechanisms makes businesses see green transformation investment as a financial burden that reduces short-term profit margins, rather than an opportunity to create long-term added value.
Vietnam needs a strong change in thinking in institutions and policies for the energy market in general, and renewable energy in particular: Shifting from an administrative command mechanism to a market mechanism to optimize resources and reduce conversion costs. We build a stable policy framework to encourage investment in clean energy, low-emission technology and new business models based on green economy and circular economy" - Dr. Nguyen Quoc Viet said.
Do not let small and medium-sized enterprises stand outside the game
If energy transition only stops at large corporations, large industrial parks, and large-scale energy projects, this process will not be truly comprehensive. But if hundreds of thousands of small and medium-sized enterprises gradually save electricity, optimize energy use, invest in high-performance equipment, use renewable energy, ensure transparency of emission data and participate in green supply chains, it will be a solid foundation for successfully implementing green growth goals, sustainable development and enhancing national position.
According to Mr. Mac Quoc Anh - Vice Chairman cum General Secretary of the Hanoi Association of Small and Medium Enterprises, the state needs to have guiding policies; the financial system needs to have suitable products; business associations need to play a bridging role; experts, research institutes, universities, international organizations need to participate in technical support and businesses themselves must change their thinking from passive to proactive.
Talking to Lao Dong Newspaper, Assoc. Prof. Dr. Nguyen Thuong Lang - an economic expert assessed that Vietnam needs to improve trade and industrial policies in the direction of both selective protection and encouragement of the development of renewable and new energy, thereby forming "leading cranes" in the field of green, clean and sustainable energy. At the same time, it is necessary to open the market according to international commitments, promote technology transfer, improve institutions and implement preferential mechanisms on finance, investment, taxes and administrative procedures to support businesses.
In addition, the State needs to accompany businesses in the energy transition process by perfecting institutions, gradually reducing the proportion of fossil fuels, developing the energy transition market and ensuring a price mechanism, sharing benefits and risks in a public and transparent manner, creating a foundation for sustainable development.
