9. Application of AIM/Enduse to Vietnam: A Studyon Effects of CO2 Emission Reduction Targets
Ram M. Shrestha1 and Le Thanh Tung1
Summary. This study examines the effects of imposing CO2 emission: reduction
targets on the least cost energy resource requirements as well as emissions of CO2,SO2 and NO2 from different economic sectors of Vietnam in 2020 using the
AIM/Enduse model. The results show that in 2020 total primary energy
requirement in the reference scenario would be 2,170 PJ as compared to 866 PJ in
2000. About 13.5 billion m3 of natural gas would be required in the reference
scenario in 2020 while hydropower capacity needed would be about 5,000 MW.
The study also shows that the least cost energy mix for meeting emission
reduction targets of 5% to 15% in 2020 would require the use of additional 3.6 to
3.9 billion m3 of natural gas over and above the quantity of gas needed in thereference scenario. The incremental cost of reducing CO2 emission by 5 to 15% of
the reference scenario emission would be in the range of US$ 9.2 to US$ 58.3 per
ton of CO2.

9.1 Introduction
In recent years, Vietnam has recorded a relatively high economic growth rate(7%), particularly after it has moved towards a market based economy. According
to Ministry of Planning and Investment, economic growth rate is projected to bearound 6% during 2000-2020 (MPI 2001). Consequently, energy consumption andassociated environmental emissions are expected to rise significantly in the
coming decades.
Total energy consumption in Vietnam has been growing at an average annual
rate of 8.5% recently. Fossil fuel consumption (coal, oil and natural gas)accounted for 75% of total primary energy requirement of the country in 2000 and
was growing at an average annual growth rate (AAGR) of 9.2% during 19952000. As a result, CO2 emission from energy use in the country had increased at
the rate of 8.7% per annum during the period (Institute of Energy 1999).
Developing countries like Vietnam are facing increasing pressure for ameaningful participation in global efforts for greenhouse gases (GHGs) emission
reduction. A reduction of GHG emission would, however, affect not only theenergy supply cost but also the structure of energy system and technology mix inboth supply and demand sides. In this paper, we analyze the implications of
introducing CO2 reduction targets for energy-mix, technology-mix, emission of
local/regional pollutants (SO2 and NO2) and total energy supply costs in Vietnam
1

Asian Institute of Technology, PO Box 4, Klong Luang, Pathumthani 12120, Thailand

142 Shrestha, R. M. et al.

in meeting projected demand for energy services in 2020. We also calculate theincremental cost of CO2 abatement at selected CO2 emission reduction targets.

9.2. Structure of AIM/Enduse Model for Vietnam
9.2.1 Basic structure
The AIM/Enduse model is a bottom-up linear programming optimization model. It
accounts for the flow of energy resources from resource extraction to enduse
through energy conversion/refining processes considering energy characteristicsof the technologies involved in each stage. The general structure of the model isshown in Fig. 1. The model determines least cost combination of energy resources
and technologies needed to meet the projected demand for energy services by
various sectors in a study year.
There are several constraints used in the model. These are constraints on oldstocks of energy devices, reformable devices, newly introducible devices, energy
service demands and energy resource availability (see Part IV, Manual, thisvolume).
9.2.2 Energy supply sectors
Coal. In Vietnam, there are two kinds of technology in use for coal extraction i.e.,
open pit technology and underground technology. The options of using coal inelectricity generation as well as in industry, residential and commercial sectors are
considered in the model. The model also includes the options for import andexport of coal.

• Natural Gas• Crude Oil• Coal
• Biomass• Hydro• Uranium• etc.
Primary energy

Electricity
generation

Oil refining andgas processing

Secondary energy• Cooking stove• Lamp• Electric motors• Boilers• Car, bus, rail
• etc.

• Cooking• Lighting• Cooling• Heating• Thermal use• Drives…
• etc.

Demand device

Service demandFig. 1. Structure of the AIM/Enduse model142

9. Application of AIM/Enduse to Vietnam

143

Crude oil and petroleum products. At present, all crude oil produced in Vietnam
is exported, as there is no petroleum refinery in the country. For the energy systemdevelopment in 2020, the model allows for not only domestic crude oil production
but also crude oil export/import as well as petroleum refining and oil productimport.
Natural Gas/LPG. The model allows for extraction and transportation of naturalgas, transformation of the gas to liquefied petroleum gas (LPG) as well as the useof gas in power generation and industry sectors. The use of LPG is considered incommercial and residential sectors. It also has a provision for gas import.
Renewable energy. Renewable energy resources in Vietnam include hydropower,
biomass, solar, geothermal and wind. Use of biomass is considered only forresidential cooking while solar, geothermal and wind energy options are
considered for power generation.
Electricity. For power generation, options considered in the model include
nuclear, coal (both conventional and clean coal technologies), diesel, gas (gasturbine and combined cycle technologies), hydropower and renewable energy(geothermal, wind, solar). Provisions for export and import of power are also
made in the model.
Table 1. Enduse technology options considered in this study
Enduse service
Lighting
Cooling
Cooking
Hot water
Thermal use
Electrical drives
Process heating
#1
#2
Steam

Sector/Sub-sector
Residential andcommercial
Residential
andcommercial
Residential
Residential
andcommercial
Commercial
Industry (all sub-sectors)

Other electricalappliances
Road

CementIron and steel
Fertilizer and chemical,
Iron and steel, pulp andpaper and other industry
Residential
andcommercial
Passenger transport

Rail
Air
Road
Rail
Air
Water

Passenger transport
Passenger transport
Freight transport
Freight transport
Freight transport
Freight transport

Technology option
Incandescent, fluorescent and compact
fluorescent lamp
Conventional and energy efficient air
conditioners
Biomass, kerosene, electricity, and LPG cook
stoves.
Electrical water heaters
Kerosene, coal and gas boilers
Standard and energy efficient motors
Coal and natural gas kilns
Oil fired and electrical furnaces
Coal, natural gas and oil burning boilers(conventional and energy efficient)Electrical appliances
Existing and new: two-wheelers, cars, vans,
jeeps, electric cars, bus-diesel, bus-CNG andelectric buses.
Existing and new: diesel & electric locomotives.
Existing and new aircrafts.
Existing and new: light and heavy trucks
Existing & new: diesel & electric locomotives.
Existing and new cargo aircrafts
Existing and new ships143

144 Shrestha, R. M. et al.

9.2.3 Energy services
The model covers energy service demand of residential and major production
sectors, i.e., commercial, industrial and transport sectors. Agriculture sector is notincluded here partly because of unavailability of all end-use data and partly due tothe sector’s small share (2%) in total final energy consumption of the country in2000 (Institute of Energy 1999). Industry sector is classified into five sub-sectors,i.e., cement, fertilizer and chemical, iron and steel, pulp and paper and others.
Transport sector comprises passenger and freight transport services. Passenger andfreight transport services are both categorized further into three types (i.e., road,rail and air). Technology options considered in this study for each type of enduse/energy service demand in different sectors are presented in Table 1.

9.3 Scenarios
9.3.1 Reference scenario
The reference scenario in this study is considered as the “business as usual”
scenario, i.e., without introduction of any emission mitigation policy. Data onenergy service demands in this case are based on the energy demand forecasting
study of Institute of Energy carried out using MAED and MEDEE-ENV models(Institute of Energy 1999). Technology data on existing power generation plants
are based on Institute of Energy (2000) and that on candidate plants are based on
Institute of Energy (2000), IEA (1998) and ADB (1998). The data on oil refineries
and natural gas processing are obtained from Petrovietnam (2001a, 2001b, 2002).
The data on end-use technology options are taken from COSMO (1999), ADB(1998), Shrestha et al. (1998), MOSTE (1997), Hanoi University of Technology(2000) and Minh (2000).
9.3.2 Emission reduction scenarios
Besides the reference scenario, we analyze three different emission reduction (ER)cases in which targets for reducing the CO2 emission in the reference scenario in2020 by 5%, 10% and 15% are considered. Hereafter, we call these emission
reduction cases as ER5, ER10 and ER15 cases respectively. All others things in
the ER cases remain the same as that in the reference scenario.

9.4 Data and Assumptions
An annual discount rate of 6.0% is used in the study. Emission factors for CO2,SO2 and NO2 used in this study are based on Intergovernmental Panel on Climate
Change (IPCC).

144

9. Application of AIM/Enduse to Vietnam

145

Table 2. Maximum allowable limits on renewable energy use in Vietnam in 2020
Resource
Hydropower
Solar PV system
GeothermalWind power

Availability (GWh)
62,000
1,450
1,400
1,500

9.4.1 Energy resources
Oil and petroleum products. In 2000, oil and natural gas production were about
12.5 million tons and 1.4 billion m3 respectively. The total proven reserve of oil isestimated to be about 250 million tons (Petrovietnam 2001b). At present, allpetroleum products are imported and their prices are determined by theGovernment Pricing Committee.
Natural gas. The estimated reserve of natural gas discovered so far in Vietnam isabout 1,000 billion m3. An optimistic scenario of natural gas supply potential isestimated to be about 15 billion m3 per year (bcm/year) in 2020 (Petrovietnam
2002). This is also the maximum allowable limit considered in this study.
Coal. Total coal reserve is estimated to be over 6 billion tons. Most of it isanthracite. In recent years coal production has fluctuated between 4 to 8 million
tons per year. According to Vietnam General Coal Company (1998), coalproduction could exceed 20 million tons in year 2020 if there is enough demand.
We have used this figure as the maximum available quantity in this study.
Nuclear. In this study, maximum allowable capacity of nuclear power generationis set at 1,500 MW.
Renewable energy resources. In this study, renewable energy resources are
considered to be available for use in 2020 up to the limits specified in Table 2.
9.4.2 Enduse data
Industry sector. The consumption of useful energy (defined as energy output
delivered in the form of end-use energy services) of this sector was 127 PJ in 2000
and its average annual growth rate (AAGR) during 2000-2020 is estimated to be
7.8%. In 2000, the levels of useful energy consumption (UEC) of cement,
fertilizer and chemical, pulp and paper, iron and steel and other sub-sectors were18.0 PJ, 11.3 PJ, 13.2 PJ, 32.6 PJ and 52.0 PJ respectively. The AAGR of UEC ofthese sub-sectors during 2000-2020 are projected to be 6.6%, 8.7%, 8.5%, 8.5%
and 7.4% respectively. Consequently, the share of iron and steel in 2020 would be
29.0% while that of pulp and paper, cement, fertilizer and chemical, and othersub-sectors would be 12.0%, 11.0%, 10.0% and 38.0% respectively (Institute ofEnergy 1999)145

146 Shrestha, R. M. et al.

Commercial sector. Total energy consumption in the commercial sector was 23.1
PJ in 2000 and it is estimated to increase at an average annual growth rate of 6.6%
during 2000-2020. The shares of different energy services in total useful energy
consumption of the sector in 2000 were as follows: thermal use 27.7%, hot water
16.0%, air conditioning 11.7%, lighting 5.2% and other appliances 39.4%. In
terms of useful energy demand, lighting is projected to have the highest AAGR of
8.6% followed by air conditioning, other appliances, hot water and thermal use
with 7.8%, 7.1%, 6.1% and 4.8% respectively (Institute of Energy 1999).
Transport sector. The end-use demand data for the transport sector in 2000 wereobtained from the General Statistical Office (2000). The average annual growthrate of service energy demand in the transport sector during 2000-2020 is assumed
to be 7.2%. Table 3 presents the end-use demand for and corresponding share ofvarious types of transport services.
Residential sector. Total useful energy consumption (TUEC) in this sector was
29.5 PJ in 2000 and it is estimated to increase at an AAGR of 7.9% during 20002020. The shares in the sector’s TUEC of different energy services (i.e., end-uses)
in 2000 are as follows: cooking 42%, air conditioning 10.5%, water heating 8.8%,
lighting 5.8% and 32.9%. The AAGRs of useful energy demand for cooking, airconditioning, water heating, lighting and other end-uses are estimated to be 4.6%,
8.2%, 14.3%, 7.7% and 9.0% respectively (Institute of Energy 1999).

Table 3. Demand for transport services
Service Type

2000

2020

Value

Share

Value

Share

Passenger-transport(106 p-km)

18,857
3,462
4,428
26,747

70.5%
12.9%
16.6%
100%

74,595
13,695
17,516
105,806

70.5%
12.9%
16.6%
100%

Freight- transport(106 ton-km)

4,799
1,921
200
31,706
38,626

12.0%
5.0%
1.0%
82.0%
100%

18,984
7,599
791
125,422
152,796

12.4%
5.0%
0.5%
82.1%
100%

Road
Rail
Air
Sub total, 106 p-km

Road
Rail
Air
Water
Sub total, 106 ton-km

Source: General Statistical Office (2000)

146

9. Application of AIM/Enduse to Vietnam

147

9.5. Simulation Results
9.5.1 Primary energy
The primary energy mix in 2020 under the selected emission reduction scenarios
under the reference scenario is presented in Table 4 along with that in 2000. As
can be seen from the table, total primary energy requirement (TPER) in Base andER cases in 2020 would be over 2,140 PJ, i.e., about 2.5 times the figure in 2000.
The use of natural gas, hydro and nuclear energy would increase with ER target
while coal and oil consumption would decrease. In 2020, natural gas requirement
would be 13.5 billion m3 in the reference scenario. Natural gas use as a percentage
of TPER in 2020 would increase from 21.9% in the reference scenario to 29.1% in
ER15 case. In order to meet emission targets of 5%, 10% and 15%, additional
quantities of natural gas of 3.6, 3.7 and 3.9 billion m3 over and above that neededin the reference scenario would be required. The share of coal would fall from
36.5% in the reference scenario to 28.2% in ER15 case while that of oil would
decrease from 28.7% to 26.7%. It should be noted here that the reduction in coaluse is mainly because of considerable fuel switching from coal to natural gas inpower generation. The share of hydro energy would increase from 5.7% in thereference scenario to 6.6% in ER15 case.
Table 4. Least cost primary energy requirements in different scenarios, %Energy Resource
Biomass
Coal
Natural gas
Crude oil for refinery
Hydro energy

2000
Referencescenario
7.1
37.8
8.2
-

Referencescenario
3.5
36.5
21.9
29.3

2020
ER5

ER10

ER15

3.5
31.3
27.7
25.9

3.6
29.4
28.4
23.2

3.6
28.2
29.1
21.3

7.1

5.7

5.6

5.8

6.6

Nuclear

-

2.6

2.6

2.7

3.1

Geothermal

-

0.2

0.2

0.2

0.2

Solar

-

0.2

0.2

0.2

0.2

Wind energy

-

0.1

0.1

0.1

0.1

Import of oil product

39.6

-

2.8

5.8

5.4

LPG import

0.1

-

-

-

0.4

-

-

-

0.7

1.9

866

2,170

2,199

2,163

2,145

Electricity import
Total, PJ

147

148 Shrestha, R. M. et al.

9.5.2 Electricity
Electricity generation
The structure of power generation in the emission reduction scenarios is presented
in Table 5. As can be seen from the table, total electricity generation in reference
scenario in 2020 would be 3.62 times that in 2000. Furthermore, total electricity
generation in 2020 would increase with CO2 emission reduction target i.e., from89.4 TWh in reference scenario to 103.3 TWh in ER15 case.
Table 5 also shows that the share of natural gas based power generation in 2020
would increase from 21.3% in reference scenario to 47% in ER15 case while thatof coal fired power generation would decrease from 13.5% in reference scenario
to 2.5% in ER10 case and 0% in ER15 case. Furthermore, there would be no oilbased power generation in 2020. The share of hydropower would be 35.0% in thereference scenario and would remain almost at that level in the ER cases. The
combined share of other renewable power generation sources (i.e., wind,geothermal and solar) would be about 3% in Base as well as the ER cases
considered. Electricity import is found cost effective under ER10 and ER15 cases
and accounts for 4.2% and 10.0% of total electricity supply respectively in 2020.
The share of nuclear power generation would decrease with CO2 emission
reduction target although the level of generation in absolute term would remainunchanged in ER5 and ER10 cases and increase slightly in ER15 case.
Power generation capacity
As can be seen from Table 6, total power generation capacity in 2020 in thereference scenario would be 2.7 times that in 2000. Total electricity generation
capacity would increase with CO2 emission reduction target: The capacity would
increase from 12,856 MW in reference scenario to 13,517 MW in ER5 case and to
14,552 MW in ER15 case. The share of natural gas based generation capacity
Table 5. Electricity generation by type of power plant in different cases, GWh
Type of generation
Hydro
Coal
Natural gas
Oil
NuclearGeothermal
Solar
Wind
ImportTotal

2000
Referencescenario
13,056
3,333
5,278
3,000
-

Referencescenario
31,38913,33337,222
0
5,000
894
894
717
-

2020
ER5

ER10

ER15

31,667
6,111
45,278
0
5,000
906
894
725
-

31,944
2,222
45,833
0
5,000
914
894
731
3,806

36,111
0
48,611
0
5,556
1,022
894
767
10,33324,72289,44490,556

91,389103,333

148

9. Application of AIM/Enduse to Vietnam

149

would increase from 43.1% in reference scenario to 48.8% in ER15 case whilethat of coal fired generation capacity would decrease from 15.0% to 9.5%. The
share of hydropower in total generation capacity is about 33.5% in the reference
scenario and would remain almost at that level at the ER cases considered. In
ER15 case, 4,873 MW of hydropower capacity would be installed which amounts
to 65.0% of hydro energy potential. The combined share of other renewablesources (i.e., wind, geothermal and solar) would be about 2.3% in Base and ER
cases. The share of nuclear power generation capacity would be about 5.3% in allcases considered.
Table 6. Total power generation capacity in different cases, MW
Power Plant
Hydro
Coal
Natural gas
Oil
NuclearGeothermal
Solar
Wind
Total

2000
Referencescenario
2,866
700
1,150
670
-

Referencescenario
4,350
1,932
5,530
39
669
109
109
88

2020
ER5

ER10

ER15

4,258
1,687
6,517
39
677
111
109
89

4,312
1,576
6,580
39
684
112
109
89

4,873
1,382
7,127
39
772
125
109
94

5,386

12,856

13,517

13,531

14,552

Table 7. Energy input used for power generation, PJ
Energy Type

Hydro
Coal
Natural gas
Oil
NuclearRenewable
ImportTotal

2000
Referencescenario
62.2
49.7
65.6
38.0
215.5

2020
Referencescenario

ER5

ER10

ER15

123.0
169.0
322.0
57.0
9.8
-

124.0
77.0
410.0
58.0
9.9
-

125.0
29.0
413.0
58.0
10.0
15.0

142.0
0
432.0
66.0
10.5
41.0

680.8

677.9

650.0

691.5

149

150 Shrestha, R. M. et al.

Energy mix in power generation
Energy inputs used in electricity generation in 2020 under different cases areshown in Table 7 along with the corresponding numbers in 2000.
In reference scenario, total amount of natural gas used for power generation in2020 would be 4.9 times of that in 2000. The amount of gas used for power
generation in 2020 is found to increase with ER target: It would be 8.5 billion m3
per year (bcm/year) in reference scenario and 10.8, 10.9 and 11.4 bcm/year in
ER5, ER10 and ER15 cases respectively. The power sector share in total natural
gas consumption in the country in reference scenario would be 67.7%.
9.5.3 Final energy consumption in sectors
Total consumption of final energy (defined as the quantity of energy delivered orused by final consumers) in reference scenario in 2020 would be 3 times that in2000. Total final energy consumption (TFEC) in 2020 was found to decreaseslightly with ER targets i.e., from 1,648 PJ in reference scenario to 1,633 PJ in
ER15 case (Table 8). Industry sector would have the largest share (47.0%) in
TFEC in reference scenario in 2020 followed by transport (29.0%), residential(16.3%) and commercial (7.6%) sectors. The shares would remain almost thesame under the ER cases considered.
9.5.4 Emissions
CO2 emissions
The sectoral contributions to total CO2 emission in 2020 under different cases areshown in Table 9 together with the figures in 2000. CO2 emission in reference
scenario in 2020 would be about 34 million tons, which is 3 times thecorresponding figure in 2000.
In 2000, the transport sector was the largest contributor to CO2 emission(38.8%) followed by the industry, power, commercial and residential sectors. In
2020, the industry sector would be the largest contributor accounting for about
46.0% of the total CO2 emission in reference scenario followed by the transport,
power generation, residential and commercial sectors. With the emission reduction
targets, the industry sector would still maintain the highest share in total CO2
emission. It should also be noted that the shares of the industry and transport
sectors in total CO2 emission would increase in the ER cases considered while thatof the power sector would fall. There would be only slight changes in the shares of
the commercial and residential sectors.
SO2 emissions
CO2 emission reductions are also found to result in mitigation of SO2 emission due
to changes in energy mix. Table 10 gives the levels of SO2 emission by sector.

150

9. Application of AIM/Enduse to Vietnam

151

Table 8. Final energy consumption by sector, PJ

SectorCommercial
Industry
Residential
Transport
Total

2000
Referencescenario
38
189
98
229
554

2020
Referencescenario
125
775
270
478
1,648

ER5

ER10

ER15

125
775
268
478
1,646

125
774
268
478
1,645

125
762
268
478
1,633

ER5

ER10

ER15

1.2
47.8
1.3
27.0
22.7

1.3
48.1
1.3
27.6
20.7

1.3
48.4
1.4
29.5
19.4

32,39430,68928,984

ER5

ER10

ER15

1.1
70.5
0.3
16.0
12.0

1.2
75.6
0.4
17.2
5.6

1.3
78.2
0.4
18.8
1.3

572.7

533.1

489.0

ER5

ER10

ER15

0.7
50.1
0.2
25.7
23.3

0.7
51.1
0.2
27.2
20.8

0.7
51.3
0.2
28.2
19.6

362.2

347.8

330.9

Table 9. Sectoral shares in total CO2 emission, %Commercial
Industry
Residential
Transport
Power generation

2000
Referencescenario
2.6
30.5
2.1
38.8
26.0

Referencescenario
1.2
46.1
1.5
26.0
25.2

Total, 103 tons

10,99334,099

Sector

2020

Table 10. Sectoral shares in total SO2 emission, %SectorCommercial
Industry
Residential
Transport
Power generation
Total, 103 tons

2000
Referencescenario
3.0
43.5
2.6
24.0
26.9

Referencescenario
1.0
62.3
0.5
14.2
22.1

2020

198.4

648.6

Table 11. Sectoral shares in total NO2 emission, %SectorCommercial
Industry
Residential
Transport
Power generation
Total, 103 tons

2000
Referencescenario
1.9
31.7
1.9
37.8
26.7

2020
Referencescenario
0.6
48.1
0.4
24.7
26.2

120.5

377.8

151

152 Shrestha, R. M. et al.

SO2 emission in reference scenario would be about 648 thousand tons in 2020,
which is 3.3 times the corresponding figure in 2000. In 2000, the industry sector
was the largest contributor to SO2 emissions (43.5%) followed by the power,transport, commercial and residential sectors. Industry sector would also be thelargest contributor to SO2 emission in 2020 accounting for about 62.3% of total
SO2 emission in reference scenario followed by the power, transport, residential
and commercial sectors. The industry sector share in total SO2 emission would not
only continue being the highest but would also increase with ER target. Similarly,
the share of the transport sector would increase with the ER targets while the shareof power generation would fall. SO2 emission in ER5, ER10 and ER15 cases
would decrease by 13.2%, 21.7% and 32.6% cases respectively as compared withthat in reference scenario.
NO2 emissions
NO2 emission in reference scenario in 2020 would be 378 thousand tons which isabout 3 times the corresponding figure in 2000 (Table 11).
Transport sector was the largest emitter of NO2 followed by the industry andpower sectors in 2000. In 2020, the industry sector would be the dominant
contributor accounting about 48.1% of total NO2 emission. NO2 emission in ER5,
ER10 and ER15 cases would be reduced by 4.3%, 9.2% and 12.5% respectively ascompared to the reference scenario mission. Furthermore, NO2 emission shares of
the industry and transport sectors would increase in ER cases while that of thepower sector would decline.
9.5.5 Cost for CO2 reduction
Table 12 presents the total cost of energy supply and incremental cost of CO2
reduction in Base and ER cases. The incremental cost increases from $9.2 per tonof CO2 in ER5 case to $58.3 per ton of CO2 in ER15 case. Figure 7 shows the CO2
emission abatement cost curve in year 2020. At the incremental abatement cost(IAC) of 10$/ton of CO2, about 1.8 million tons of CO2 could be mitigated while
29 and 46 million tons of CO2 emission could be reduced at the IAC of $20 and$50 per ton of CO2 respectively.
Table 12. Total cost of energy supply and incremental cost of CO2 emission reduction in2020 at constant prices of 2000
Scenario
Reference scenario
ER5
ER10
ER15

Total cost (Million $)16,835
16,885
17,116
17,792

Incremental cost of CO2 reduction($/ton-CO2)
9.2
25.7
58.3

152

9. Application of AIM/Enduse to Vietnam

153

Incremental cost
Incremental
cost($/ton-CO($/ton-CO22))

70
60
50
40
30
20
10
0
1500

2500

3500

4500

5500

Total CO2 emission reduction (thousand ton)

Fig. 2. Incremental CO2 emission reduction cost curve

9.6 Conclusions
This study has examined the implications of introducing CO2 emissions targets forthe structure of energy use and the cost, as well as SO2 and NO2 emissions in
Vietnam in 2020 by using the AIM/Enduse model.
Total primary energy requirement in 2020 in Base and ER cases would be in
the range of 2,145 PJ to 2,170 PJ as compared to 866 PJ in 2000. The
requirements of natural gas, hydro and nuclear energy were found to increase withemission reduction target while that of coal and oil consumption would decrease.
In 2020, 92.5% of annual natural gas supply availability and 65% of totalhydropower potential would be used up in ER15 case. Additional quantities of
3.6, 3.7 and 3.9 billion m3 of natural gas would be required in order to meetemission targets of 5%, 10% and 15% respectively in 2020 over that needed inreference scenario.
Total electricity generation capacity requirement for the whole system would
increase with CO2 emission reduction target. Power generation capacity would
increase from 12,856 MW in reference scenario to 14,552 MW in ER15 case.
Natural gas based generation capacity would account for 43.1% in reference
scenario and 48.8% in ER15 case. The share of coal based generation capacity
would decrease from 15% in reference scenario to 9.5% in ER15 case.
Industry sector would be the largest contributor to total CO2 emission in
Vietnam in 2020 followed by the transport and power sectors. The power sector isfound to be the main contributor to the reduction of CO2 as well as SO2 and NO2emissions.
Incremental cost of CO2 abatement would be 9.2 US$/ton CO2 at the emission
reduction target of 5% while it would increase to 58.3 US$/ton CO2 at the higher
reduction target of 15%.

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154 Shrestha, R. M. et al.

It should be noted that AIM/end-use is a static optimization model in thatenergy system optimization is carried out for a chosen year. Furthermore, energy
production capacities (e.g., power generation capacity) are treated as continuously
divisible decision variables. However, in fact, some energy investments (e.g.,hydropower, nuclear) are lumpy in nature. Thus, the results of this study could
differ somewhat from that of a study based on a dynamic energy system model,that considers explicitly the lumpiness of energy sector investments.

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