1

Ministry of Industry and Trade

Renewable Energy and

Energy Efficiency in Viet Nam –
Assessment of green hydrogen export
potential of Viet Nam
2

Imprint
Publisher
Federal Ministry for Economic
Affairs and Climate Action (BMWK)
Public Relations
11019 Berlin
www.bmwk.de

Project: Bilateral Energy Partnerships in Developing and

Emerging Countries
Implemented by Deutsche Gesellschaft für internationale
Zusammenarbeit (GIZ) GmbH

Contact: Renewable Energy and Energy Efficiency (4E) Project

Unit 041, 4th Floor, Coco Building,
14 Thuy Khue, Tay Ho District,
Hanoi, Viet Nam
Email: [email protected]
Website: www.gizenergy.org.vn
Tel.: + 84 (0)24 39 41 26 05
F.: + 84 (0)24 39 41 26 06

As at
April 2022

Design
Edelman GmbH, Berlin
Mercury Creative JSC, Ha Noi

Text:
This study was realised by the German-Vietnamese Energy
Dialogue which is implemented by the Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ) GmbH on behalf of
the Federal Ministry for Economic Affairs and Climate Action
(BMWK).
 3

Table of Contents
Abbreviations...................................................................... 6 4.2.2. Hydrogen shipment to Japan.......................... 22

Executive Summary............................................................ 1 4.2.3. Hydrogen shipment to South Korea.............. 23

Chapter 1: Introduction............................................... 3 Chapter 5: Green hydrogen export potential of

Viet Nam...................................................................... 27
Chapter 2: Prospects and progress of hydrogen....... 5
5.1 Potential green hydrogen exporting countries
2.1 Past and present global hydrogen demand and (competitors)..................................................................... 27
supply................................................................................... 5
5.2 Overview of potential green hydrogen-importing
2.2 Hydrogen role in the energy transition..................... 5 countries............................................................................ 30

2.3 Hydrogen production and transportation................. 6 5.2.1. EU’s Hydrogen Strategy................................... 30

2.4 Green hydrogen enabling frameworks...................... 7 5.2.2. Germany’s Hydrogen Strategy........................ 34

2.5 Green hydrogen production opportunity in Viet Nam 5.2.3. Japan’s Hydrogen Strategy.............................. 37
.............................................................................................. 7
5.2.4. South Korea’s Hydrogen Strategy................... 39
Chapter 3: GH2 production potential and costs in
Viet Nam...................................................................... 10 5.3 LCOH in importing countries and GH2 delivery cost
from importing countries................................................ 44
3.1 Methodology............................................................... 10
5.4 Viet Nam’s GH2 export advantages and
3.1.1. Analysis scope................................................... 10 disadvantages................................................................... 47

3.1.2. Geospatial analysis........................................... 10 Chapter 6: Conclusions and Recommendations..... 50

3.1.3. LCOE potential assessment............................. 11 6.1 Policies for Encouraging Green Hydrogen Production
............................................................................................ 51
3.1.4..Estimation of green hydrogen export potential
and cost........................................................................ 11 6.2 Policies for Encouraging Green Hydrogen Demand..
............................................................................................ 51
3.1.5. Limitations......................................................... 11
6.3 Policies for Reducing the Cost of Capital................. 52
3.2 Results.......................................................................... 12
Annex 1: Input Parameters for Financing Costs........... 53
3.2.1. Levelized cost of electricity.............................. 12
References......................................................................... 54
3.2.2. Levelized cost of green hydrogen................... 14

3.2.3. Green hydrogen and green ammonia export

potential....................................................................... 16

Chapter 4: Hydrogen shipping cost........................... 19

4.1 Methodology............................................................... 19

4.1.1. Hydrogen shipping cost elements.................. 19

4.2 Results.................................................................... 21

4.2.1. Hydrogen shipment to Europe....................... 21

4

List of Tables
Table 1: LCOH in 2030 for different technologies and
financing conditions........................................................... 1

Table 2: Key variables for green hydrogen

competitiveness.................................................................. 3

Table 3: LCOH in 2030 for different technologies and

financing conditions......................................................... 14

Table 4: Estimated GH2 potential from solar PV........... 16

Table 5: Estimated GH2 potential from onshore wind.17

Table 6: Techno-economic assumptions for hydrogen

shipping.............................................................................. 20

Table 7: Shipping distances port-to-port....................... 25

Table 8: Key variables for green hydrogen

competitiveness................................................................ 27

Table 9: Overview of certification schemes for imported

hydrogen and/or ammonia............................................. 43

Table 10: Distances from Viet Nam to Key Import Markets

including Unit Shipping Costs.......................................... 45

Table 11: Green hydrogen exporting capabilities of Viet

Nam to Europe.................................................................. 45

Table 12: Green hydrogen exporting capabilities of Viet

Nam to South Korea......................................................... 46

Table 13: Green hydrogen exporting capabilities of Viet

Nam to Japan..................................................................... 46

Table 14: Green hydrogen supply costs to South Korea,

Japan and Europe............................................................. 47
 5

List of Figures
Figure 1: LCOH for GH2 from solar PV by 2030 (with Figure 16: Cost elements for hydrogen shipping to
concessional financing)...................................................... 2 Europe in 2050.................................................................. 22

Figure 2: LCOH for GH2 from onshore wind by 2030 (with Figure 17: Estimates of hydrogen shipping cost to Japan
concessional financing)...................................................... 2 by 2050............................................................................... 22

Figure 3: Shipping cost to South Korea in 2050.............. 2 Figure 18: Cost elements for hydrogen shipping to Japan
in 2050................................................................................ 23
Figure 4: Shipping cost to Japan in 2050.......................... 2
Figure 19: Estimates of hydrogen shipping cost to South
Figure 5: International GH2 production cost range among Korea by 2050................................................................... 24
potential exporting (Present to 2050).............................. 4
Figure 20: Cost elements for hydrogen shipping to South
Figure 6: Hydrogen demand and its distribution by sector Korea in 2050.................................................................... 24
and by source (IEA, 2021)................................................... 5
Figure 21: International Green Hydrogen Production
Figure 7: Estimates for global hydrogen demand in 2050 Costs (2022)....................................................................... 29
(IRENA, 2022)....................................................................... 6
Figure 22: International GH production cost range among
Figure 8: Installed capacity by type in 2020 (EVN, 2021).8 potential exporting countries (Present to 2050)........... 29

Figure 9: LCOE for solar PV power generation.............. 13 Figure 23: 2019 EU Hydrogen Demand by Country...... 31

Figure 10: LCOE for onshore wind power generation.. 13 Figure 24: Forecast of European Union Hydrogen and
Final Energy Demand through 2050............................... 32
Figure 11: LCOE for offshore wind power generation.. 14
Figure 25: Overview of technical potential for green
Figure 12: LCOH for GH2 from solar PV......................... 15
hydrogen production in the EU27+UK........................... 33
Figure 13: LCOH for GH2 from onshore wind............... 16
Figure 26: Green Hydrogen Production Cost Range in
Figure 14: Hydrogen shipping equipment and Potential GH2-Importing Countries (2022).................... 44
infrastructure.................................................................... 19

Figure 15: Estimates of hydrogen shipping cost to Europe

by 2050............................................................................... 21
6

Abbreviations
4E Renewable Energy and Energy Efficiency LCOA Levelized Cost of Ammonia
project
LCOE Levelized Cost of Electricity
ASEAN Association of Southeast Asian Nations
LCOH Levelized Cost of Hydrogen
BOG Boil-off Gas
LH2 Liquid hydrogen
CAPEX Capital Expenditure
LOHC Liquid Organic Hydrogen Carrier
CCS Carbon Capture and Storage
MOIT Ministry of Industry & Trade
CF Capacity Factor
Mt Million tons
CUF Capacity Utilisation Factor
MW Megawatt
ESP Energy Support Programme
MWh Megawatt-hour
EU European Union
NH3 Ammonia
EUR Euro
NZE Net-Zero Emissions
EVN Viet Nam Electricity
OPEX Operational Expenditure
GH2 Green Hydrogen
PEM Polymer/proton electrolyte membrane
GHG Greenhouse Gas
PtX Power-to-X (hydrogen derivatives)
GHI Global Horizontal Irradiance
PV Photovoltaic
GIZ Deutsche Gesellschaft für Internationale
Zusammenarbeit GmbH PVN Petro Viet Nam

RE Renewable Energy
GO Guarantee of Origin
TWh Terawatt-hour
GSA Global Solar Atlas
UK United Kingdom
GW Gigawatt
US$ US Dollar
GWA Global Wind Atlas VRE variable Renewable Energy
GWh Gigawatt-hour WACC Weighted Average Cost of Capital

IEA International Energy Agency

IPP Independent Power Producer

IRENA International Renewable Agency

kg Kilogram

kt Kilotons
 7

Executive Summary
Green hydrogen (GH2) is poised to play an increasingly global market in the future. This study was conducted to
important role in the energy transition worldwide. One explore the possibilities of Viet Nam to participate in the
main area where green hydrogen is expected to be rapidly growing international GH2 market.
needed is to facilitate the decarbonisation of “hard-to-
decarbonise” sectors such as steel production, shipping, In addition to export opportunities, many countries
and the production of chemical feedstocks. Grey and will need to start engaging in the production of green
blue hydrogen (i.e., hydrogen derived from fossil hydrogen in order to decarbonize their own local
fuels) currently dominate the global market. However, industrial sectors; this makes GH2 a crucial element for
GH2 based on electricity produced from renewable Viet Nam’s own domestic energy transition.
energy (RE) sources is needed to reach global net zero Hydrogen production potential and
targets. As of early 2022, less than 1% of the hydrogen levelized cost
used around the world today is derived from water
electrolysis; the vast majority is still produced using fossil The levelized cost of hydrogen (LCOH) is highly
fuels. dependent on the cost of the available RE resources
since electricity alone represents 30% to 60% of the
With appropriate policy and financing supports, Viet Nam total LCOH. The simulation results of the study showed
could become an important exporter of GH2, serving that LCOH in Viet Nam depends significantly on the
the regional market in Asia or potentially even the underlying financing conditions.

Table 1: LCOH in 2030 for different technologies and financing conditions

TECHNOLOGY SCENARIO MIN MEDIAN MAX

Solar PV Local conditions 3.76 4.86 6.88
Concessional 2.84 3.63 5.14
Onshore wind Local conditions 2.79 3.63 5.44
Concessional 2.09 2.65 3.97
Offshore wind Local conditions 4.73 6.08 8.43
Concessional 3.45 4.43 6.02

Note: for details on the financing assumptions, see Annex 1.

Under a case with privileged or concessional financing,

the LCOH in Viet Nam is expected to range from 2.84 -
5.14 US$/kg H2 if derived from solar PV and 2.09 - 3.97
US$/kg H2 for GH2 produced from onshore wind power
in 2030. Due to the significantly higher CAPEX and OPEX
for offshore wind, the LCOH for hydrogen produced
via dedicated offshore wind plants, under concessional
financing, ranges from 3.45 - 6.02 US$/kg H2. Without
concessional financing, the LCOH increases by between
0.7 – 2.41 US$/kg H2, depending on the case.

Figures 1 and 2 present LCOH according to the

geographic location of power generating plant for solar
and onshore wind respectively.1

1 It was not possible to generate a comparable map for offshore

wind due to data availability issues.
8

Figure 1: LCOH for GH2 from solar PV by 2030 (with Figure 2: LCOH for GH2 from onshore wind by 2030 (with
concessional financing) concessional financing)

In terms of GH2 production potential, the estimated transportation cost of hydrogen depends on both the
GH2 potential is 38 236 kilotons for solar PV and 1 631 electricity cost in exporting and importing countries
kilotons for onshore wind. The corresponding green for conversion and reconversion respectively. Of the
ammonia quantities are 217,250 kilotons from solar PV three analysed shipping options, ammonia is the most
and 9,270 kilotons from onshore wind. economic, except for importing countries with low
electricity prices where LOHC becomes the preferred
For the transportation of hydrogen, three hydrogen option. Figures 3 and 4 show the shares of different
carriers were assessed: liquid hydrogen (LH2), Ammonia shipping cost elements to Japan and South Korea in 2050.
and liquid organic hydrogen carrier (LOHC). The

2.50 3.50
Shipping cost (S/kg H2)

3.00
2.00
2.50
1.50 2.00
1.50
1.00
1.00
0.50 0.50
0.00
0.00 LH2 Ammonia LOHC
LH2 Ammonia LOHC
Conversion Terminals Ship Reconversion Conversion Terminals Ship Reconversion

Figure 3: Shipping cost to South Korea in 2050 Figure 4: Shipping cost to Japan in 2050
 9

Five key variables will determine the competitiveness comparison with competitors like Chile, Morocco
of Vietnamese green hydrogen on the global market in and Australia as described in the table below.

Table 2: Key variables for green hydrogen competitiveness

Key Variable Viet Nam’s relative position

Renewable energy Viet Nam has good overall RE resource quality. However, on an international level, Viet
resource quality Nam’s relative position is weaker in solar than other potential competitors such as
Australia, Morocco, and Chile. With regard to wind power, Viet Nam’s resources are among
the best in Southeast Asia.

Proximity to target Viet Nam is located roughly 2 700 nautical miles (approx. 5 050 km) from ports in South
market Korea, and just over 3 000 nautical miles (approx. 5 720 km) from major ports in Japan.
Due to the significant costs of shipping, serving these markets might be more realistic
than exporting to European countries.

Land availability Viet Nam has a total land surface of 331 690 km2, significantly less that potential
competitors such as Morocco (446 550 km2), Australia (7 692 000 km2) and Chile (756 950
km2).

In addition, Viet Nam has a significantly higher population density (311 inhabitants/km2)
compared to its competitors: 83 inhabitants/km2 for Morocco and 383 inhabitants/km2
for Australia. Note that the land requirements for GH2 production are not due as much
to the electrolyser facilities, but rather to the land required for the dedicated renewable
energy plants.

Cost of capital The cost of debt provided for renewable energy projects in Viet Nam ranges from between
6.5% and 10%. By contrast, lending for major RE energy projects in countries like Australia
and Chile benefit from a cost of debt as low as 2-3%.

Political stability Overall Viet Nam benefits from a high degree of political stability. In addition, it ranked
relatively well on the World Bank’s ease of doing business report in 2020, at 70 out of 190,
but behind other competitors such as Australia (14th), Chile (59th), and Morocco (53rd).

Compared to Viet Nam, the four major competitors significant cost reductions are anticipated, brining green
considered here currently have certain competitive hydrogen costs down from a range of EUR 3 - 6/kg in
advantages in terms of green hydrogen production (see much of the world today to EUR 1,00 - 1,50/kg by 2050
the figure below). These competitive advantages are (see Figure 5 below).
reflected in the current estimated cost of green hydrogen
production. Looking ahead to 2030, 2040, and 2050,

Figure 5: International GH2

production cost range among
potential exporting (Present to
2050)
10

Viet Nam is expected to continue having a slightly higher greater domestic demand for green hydrogen, in order
production cost than other markets with higher resource to help accelerate Viet Nam’s own energy transition.
quality, more abundant land, a lower cost of capital, or This includes a set of policies specifically to encourage
all three. However, this slightly higher production cost hydrogen adoption in the natural gas pipeline network,
does not necessarily mean that Viet Nam will be unable shipping, and in the industrial sector:
to compete: much hydrogen production built for exports
is likely to be developed in the context of bilateral - Introduce standards for the injection of green
partnerships, with preferential financing conditions and hydrogen into natural gas infrastructure.
long-term supply contracts. Under such an approach, Viet - Provide fiscal incentives for industries to shift
Nam’s production costs are likely to remain sufficiently their hydrogen or ammonia consumption to green
competitive to be able to secure bilateral agreements for hydrogen.
green hydrogen supply.
- Provide public financing to support the construction
However, given the substantial impact of shipping costs, of green hydrogen storage infrastructure.
it is likely in the next decade that the international trade
in green hydrogen will occur primarily on a regional - Introduce requirements for key domestic users of
basis, with regional trading hubs between markets that hydrogen (e.g., refineries) to meet a minimum share
are close to one another geographically. of their hydrogen needs with certified, domestically
produced green hydrogen (similar to a Renewable
A further factor that needs to be overcome in countries Electricity Standard or “Renewable Portfolio
like Viet Nam that wish to export green hydrogen is the Standard”)
cost of capital. As highlighted above, the cost of capital
in Viet Nam is notably higher than the cost of capital in - Introduce policies to encourage green hydrogen use
other competitor markets like Australia. in key sectors such as shipping.

Policy Recommendations: - Adopt carbon pricing in order to improve the

economics of low- and zero-carbon technologies like
In order to participate and compete in this growing green hydrogen.
market, there are a number of policy measures that Viet
Nam can implement. The policy recommendations are 3. Policies to reduce the cost of capital
broken into three major areas: policies for encouraging
- Establish export-oriented partnerships with
GH2 production, policies for encouraging GH2 demand
importing regions (e.g., the EU, Germany) to
within Viet Nam, and policies to help reduce the cost of
bring lower-cost, long-term financing to support
capital.
the development of green hydrogen production
1. Policies for encouraging GH2 production and infrastructure in Viet Nam
policies:
- Explore the creation of a green hydrogen export
- Establish clear long-term targets for the production initiative to encourage multi-lateral lenders to
of green hydrogen in Viet Nam support the build-out of green hydro production.

- Introduce favourable taxation and fiscal rules for - Explore providing sovereign backing, or direct
green hydrogen production government investment, for strategic green
hydrogen investments
- Explore the introduction of feed-in tariffs for green
hydrogen production fed into the natural gas - Explore introducing guaranteed offtake agreements
network or establishing a government-backed “buyer-of-last-
resort” for green hydrogen to reduce market risk.
- Develop monitoring and certification protocols to
ensure compliance with international norms and Based on current economics and the important role
standards. played by shipping costs, the more viable opportunities
for Viet Nam to export green hydrogen are likely to
- Establish a designated industrial cluster for hydrogen be concentrated in the Asia Pacific region. By focusing
production and research. first on meeting growing demand in Asia, Viet Nam can
actively support the emergence of regional trade in green
2. Policies for Encouraging Green Hydrogen
hydrogen, which could flourish into a truly global trade
Demand in Viet Nam
by the 2040s.
In addition to green hydrogen support policies, it is
important to develop specific policies aimed at creating
 11

Chapter 1
12

Introduction

A growing number of countries are pledging to be carbon identify and evaluate the export potential of GH2 and
neutral by 2050, which requires a rapid transformation of green ammonia from Viet Nam to international markets,
the energy sector by shifting away from the consumption to Europe in general and to South Korea, Japan, and
of fossil fuels towards cleaner and renewable energy Germany in particular.
(RE) sources. Green hydrogen (GH2) and GH2 derivatives
The specific objectives of this assignment are to:
known as Power-to-X (PtX) products are regarded as a
key element of this transformation, thanks to their role in
• Estimate GH2 production potential and its
decarbonizing the so-called hard-to-abate sectors, such
levelized cost of production (LCOH)
as steel, cement, chemicals, long-haul road transport,
maritime shipping, and aviation. • Estimate the shipment cost of GH2 and green
ammonia (NH3) from Viet Nam to potential
GH2 is obtained by splitting water into hydrogen and
importing countries
oxygen using electricity from RE, which makes the
process free or low Greenhouse Gases (GHG) emissions. • Conduct a quantitative and qualitative analysis
Direct applications of GH2 include its usage as a raw to identify and evaluate the potential export for
material in the industrial sector, as a fuel in the transport GH2 and green NH3 from Viet Nam to potential
sector, or as an energy storage medium that can later be importing countries.
used for re-electrification. Indirect applications of GH2
consists of combining it with nitrogen (N2) to produce
This report, structured into six chapters, presents
ammonia or with a sustainable carbon (CO and CO2)
the results of the assignment. Chapter 2 provides
to produce methanol, jet fuels, methane, and other
an overview of the progress and prospect of green
hydrocarbons, which can be used to replace their fossil
hydrogen; Chapter 3 presents the assessment
fuel-based counterparts.
methodology and results on the LCOH production while
To lay out the foundation for hydrogen development Chapter 4 describes the methodology and presents the
and enhance its contribution to their carbon neutrality, results of GH2 and green NH3 shipping cost from Viet
several countries worldwide have developed or are Nam to potential importing countries. Chapter 5 presents
developing mid- and long-term hydrogen strategies, an analysis of the Vietnamese exporting opportunities
including national production, import or export plans of GH2 and green NH3 from Viet Nam to potential
as well as financing and cooperation opportunities. importing countries; Chapter 6 presents the conclusions
These countries can be classified into three groups of the study and formulated recommendations to
depending on their domestic GH2 production potential, effectively develop the national exporting capability in
their expected hydrogen demand, and the cost of import the future.
or export. These groups comprise (1) net exporters:
countries with large RE potential and low-cost green
hydrogen production, (2) self-sufficient: countries
with sufficient production potential to cater to their
own needs without resorting to imports, and (3) net
importers: countries that will need imports to satisfy
domestic demands.

In order to explore its possibilities of participating in

the rapidly growing international GH2 market, GIZ,
on the behalf of the Government of Viet Nam, has
commissioned the study “Assessment of green hydrogen
export potential of Viet Nam”. The objective of the study
is to conduct a quantitative and qualitative analysis to
 13

Chapter 2
14

Prospects and progress of hydrogen

With the continuous decrease in RE costs combined with the global commitment to the Paris Agreement,
GH2 has gained interest among the international community, as a solution for a deep decarbonisation of
the economy. Hence, several countries are positioning themselves in GH2/PtX and investing in research and
technology development (R&D) by implementing demonstration and pilot projects in the field.

2.1 Past and present global hydrogen Currently, natural gas is the main source of hydrogen
demand and supply production, accounting for about 60% of the world’s
annual hydrogen production. Coal-based hydrogen
The demand for hydrogen has risen slowly but steadily represents 19% of the total global hydrogen supply, while
over the past two decades to reach 90 Mt in 2020, up the remaining 21% is by-product hydrogen produced in
from approximately 60 Mt in 2000, a compound annual facilities designed primarily for other products, mainly
growth rate of 2% (Figure 6-a). Of the total hydrogen refineries in which the reformation of naphtha into
demand in 2020, refineries consumed about 44% while gasoline results in hydrogen (Figure 6-c).
the industrial sector consumed 56% (IEA, 2021): 37.5% for
ammonia production, 12.5% for methanol production,
and 6% in the iron and steel industry (Figure 6-b).

100 (a) (b) (c) Coal

Iron & Steel Refining 19%
6% 44%
Mt H2

80

60

40
90 Mt H2
90 Mt H2 By-products
21%
20

0
2000 2005 2010 2015 2020 Methane Others
Chemicals 59% 1%
50%
Refining Chemicals Iron and steel

Figure 6: Hydrogen demand and its distribution by sector and by source (IEA, 2021)

2.2 Hydrogen role in the energy transition

Several governments are increasingly rallying behind
the target of net zero emissions (NZE) by 2050, in order
to limit the global temperature, rise to 1.5°C by 2100 as
laid out in the 2015 Paris Agreement. Being responsible
of over three-quarters of the total global emissions, the
energy sector requires a rapid transformation by shifting
the consumption away from fossil fuels towards cleaner
and RE sources. However, not all sectors of the economy
(e.g., steel, cement, chemicals, road transport, maritime
shipping, and aviation) can easily make a direct switch
from fossil fuels to electricity. Hydrogen has emerged as
a key option for decarbonizing these sectors and a key
element of the energy transition where its shares to the
total final energy demand in 2050 vary between 12% and Figure 7: Estimates for global hydrogen demand in 2050
22% as presented in Figure 7 below. (IRENA, 2022)
 15

2.3 Hydrogen production and 2.4 Green hydrogen enabling frameworks

transportation
In order to make GH2 competitive, the creation of a
Hydrogen from coal and natural gas without Carbon green hydrogen value chain and appropriate regulatory
Capture and Storage (CCS) facilities is referred to as framework is vital. GH2 faces competition in terms of
“grey hydrogen”, while hydrogen production with CCS is efficiency and cost that need to be overcome. For the
given a “blue” colour. Hydrogen from the electrolysis of penetration of GH2 in the long term, milestones such
water using 100% renewable electricity is referred to as as deployment targets, cost reduction and scaling up
“green hydrogen” and is the most suitable one for a fully should be reflected in policies. Broadly speaking, it
sustainable energy transition. is possible to distinguish three major phases of GH2
market development: (1) the market activation phase
Key colours of hydrogen: (2) the market penetration phase, and (3) the market
growth phase.
• Grey H2: Steam methane reforming (SMR) or coal
gasification - First phase: The first phase until 2030 can be
considered as the market activation phase. This
• Blue H2: Grey H2 with CCS phase is characterised by running trials, executing
pilots, and launching demonstration projects to
• Green H2: Electrolysis of water with renewable
evaluate the technology, gain skills and expand the
electricity
local knowledge base. Hydrogen clusters, hubs or
valleys can be established to strengthen the overall
Concerning the transportation of large amount of GH2 supply chain. The main role of policy in this
hydrogen, gas in pipelines or as liquid by ships are the phase is to activate the development of electrolysis
most economic hydrogen transportation options. Unlike capacity and to gain knowledge.
pipelines, transporting hydrogen by ships requires
converting it into Liquid Hydrogen (LH2), ammonia or - Second phase: In the second phase until 2040,
Liquid Organic Hydrogen Carriers (LOHCs). 1,2 most countries expect the market penetration of
green hydrogen to grow as GH2 exits the early
- Liquid hydrogen: LH2 occupies over 50% less market activation phase and starts to compete with
volume than compressed hydrogen. However, alternative carriers (such as grey hydrogen) in a
the conversion of hydrogen gas to a liquid state growing number of end-uses. The commercialisation
requires cooling its molecules to -253°C, and this of green hydrogen starts to occur in a number of
process is energy intensive since it consumes applications. Policy in this phase can support by
energy equivalent to 25-35% of the initial hydrogen establishing projects to foster domestic demand
quantity. Furthermore, transporting and keeping while providing targeted incentives to support
LH2 in liquid state requires highly insulated tanker export-related infrastructure.
ships, which are currently not many.
- Third phase: In the third phase until 2050, hydrogen
- Ammonia: ammonia is the most promising hydrogen markets are expected to mature and to enter the
carrier; it has a much higher energy density per unit market growth phase. During this phase, green
volume than LH2 and compressed hydrogen, and it hydrogen starts to play a growing role in a number
is already a well-established internationally traded of end-uses and becomes an important building-
commodity. However, the conversion of hydrogen to block of the global energy mix. GH2 is widely used
to replace natural gas in the pipeline distribution
- Liquid organic hydrogen carriers: LOHCs are
network, and several industries use green hydrogen
organic compounds that can absorb and release
to meet their needs. By this stage, it is expected
hydrogen through chemical reactions. They can
that green hydrogen is fully cost-competitive and is
serve as a storage and transportation medium
being exchanged on the global market. At this stage,
for hydrogen liquids without further cooling
policy is about providing stability and predictability
requirements. LOHCs are very similar to crude
to the market.
oil and oil products, so the existing oil transport
infrastructure could even be adapted to transport
LOHCs. However, as with ammonia, there are costs
associated with the conversion and reconversion
processes. These processes would require energy
equivalent to between 35% and 40% of the initial
quantity of hydrogen.

1 Estimates for global hydrogen demand in 2050 (IRENA, 2022)

2 IEA (2019) – The Future of Hydrogen: Seizing today’s opportunities
16

2.5 Green hydrogen production 2020, for instance, of the estimated 309 GW solar PV
opportunity in Viet Nam potential, only 5.4% was developed while for wind only
0.3% of the country’s 184 GW (24 GW for onshore and
Viet Nam is endowed with various RE resources, 160 GW for offshore) potential was developed .1
especially solar PV, and wind. In the Association of
Southeast Asian Nations (ASEAN) region, Viet Nam has The huge amount of untapped RE potential presents
emerged as the leader in solar PV and wind electricity an opportunity for Viet Nam to take advantage of the
adoption since 2019. Viet Nam’s total capacity of solar growing GH2 global market. Viet Nam also has good
PV reached about 16,500 MW by the end of 2020, with shipping access to several rapidly growing markets,
approximately half of this capacity coming from rooftop particularly in the Asia Pacific region. However, Viet
installations as shown in the table/figure below. Nam also faces a number of constraints for scaling up
GH2 production and competing with other exporting
While solar PV has seen the greatest expansion in Viet countries on the global market, as will be described later
Nam, installed wind power capacity has also grown in this report (see Chapter 5).
quickly. Installed wind power capacity has reached
nearly 4.000 MW by the end of Q1:2022, surpassing
all other countries in the ASEAN region. Despite these
improvements, Viet Nam still has a huge amount of
untapped solar PV and wind potential. By the end of

Installed Wind
Technology Percentage share 0.75%
capacity (MW)

Solar
Hydropower 20 774 29.98% Coal fired
12.80%
31.10%
Coal fired 21 554 31.10%
Rooftop solar
Gas & oil fired 8 858 12.78% 11.80%
Wind 518 0.75% 2020 Biomass
Solar PV 8 871 12.80% 0.53%

Rooftop solar 7 785 11.23% Hydropower Gas fired +

29.98% oil fired
Biomass 365 0.53% 12.78%
Imports 572 0.83%
Imported
Total 62 297 100% 0.83%

Figure 8: Installed capacity by type in 2020 (EVN, 2021)

1 EVN (2021), Annual Report 2021

 17

Chapter 3
18

GH2 production potential and costs in

Viet Nam

This chapter describes the applied methodology and presents the results of the estimated GH2 and green
ammonia (NH3) production potentials in Viet Nam and their corresponding levelized costs. The levelized
cost of hydrogen (LCOH) and levelized cost of green ammonia production (LCOA) are the average cost per kg
(in discounted real terms) of building and operating a GH2 and green NH3 production asset over the project
lifetime. LCOH and LCOA cover all relevant project related costs, including capital, operating, fuel, and
financing costs.

3.1 Methodology it ideal for H2 production using variable RE (IRENA, 2022).

As such, this study assumes the use of a PEM electrolyser
The estimation of the potentials for GH2 and green NH3 for analysing the GH2 production.
together with the LCOH and LCOA for the 2050-time
horizon was conducted in five consecutive steps listed 3.1.2. Geospatial analysis
below:
The geospatial analysis dealt with modelling the
• Analysis scope: definition of RE technologies to be geographical distribution of the country’s RE resources
considered, techno-economical parameters and (i.e., wind and solar) and respective covered areas. For
assessment period; solar PV, the analysis used the data from the Global
Solar Atlas 2.0 (GSA) of the World Bank Group. The GSA
• Geospatial analysis: RE resource evaluation and provides different solar data set types; this study used
their geographical distribution; the global horizontal irradiance (GHI). Concerning wind,
its geospatial analysis was performed using data from
• LCOE assessment: estimation of the levelized cost
the Global Wind Atlas 3.1 (GWA), which is the product
of electricity (LCOE) for different RE technologies
of a partnership between the Technical University of
and financing options;
Denmark (DTU Wind Energy) and the World Bank Group.
• GH2 potential and cost assessment: estimation Similar to GSA, the GWA provides different wind data
of GH2 and green NH3 production costs and types, such wind speed, capacity factor and power
potential. density at different hub heights and rotor diameters. This
study used the wind resource potential at a 100 m hub
height and rotor diameter of 126 m.
3.1.1. Analysis scope
3.1.3. LCOE potential assessment
The analysis covered solar PV, onshore and offshore
This step consisted of estimating the LCOE for solar PV
wind technologies for the whole Vietnamese territory
and wind installable on the land areas determined in
based on technology (efficiency) improvements and
the previous section. To calculate the LCOE for each
cost reductions expected by 2050. For GH2 production,
technology (solar PV and onshore and offshore wind), a
alkaline and Polymer Electrolyte Membrane (PEM)
financial model was built in excel for a 100 MW power
electrolysers are the two main technologies currently
plant considering a project lifetime of 20 years.
commercially available. The alkaline technology is more
mature, and its supply chain already established (i.e., fast
deployment). However, its limited operation window of
10 – 100% loading (Thyssen Krupp, 2022) combined with
its slow dynamic response makes it less suited for H2
production from variable RE (IRENA, 2022). On the other
hand, the PEM electrolyser has a fast response ramp-up
and ramp-down capability, as well as a wide dynamic
operating window ranging from 0 to 100%, which makes
 19

3.1.4. Estimation of green hydrogen export to produce 1 kg H2. Finally, the estimated GH2 was
potential and cost converted into NH3 and the corresponding LCOA was
calculated.
The estimation of the GH2 and green NH2 and their costs
followed the following process: 3.1.5. Limitations

• Data availability and reliability: there is a wide range

Selection of in available data on GH2 production, conversion and
GH2 NH3
LCOH the potential reconversion, and the simulation results depend on
simulations potential
simulations and cost the considered values. This study used average values
with low estimation
calculation where possible and applicable.
LCOH

• Assignment timeframe: the time and resources

allocated to the assignment was not enough to collect
LCOH can be computed for three possible electrolyser
and process all necessary data, given the extent of the
cases: stand-alone, connected to a dedicated RE plant via
mission which required the estimation of the LCOE for
the national grid and direct connected to the grid.
different RE technologies, estimation of the LCOH and
Case 1: Stand-alone hydrogen production plant: GH2 potential as well as the shipment cost.

Under this case, a hydrogen electrolyser is directly • RE potential to be dedicated to GH2 production: there
connected to off-grid solar or/and wind farms. Thus, was no information on how much land would be made
the electrolyser is independent of the transmission and available for RE project development. The potential for
distribution grid; instead, it draws electricity directly from GH2 was based on own assumptions.
its own RE sources. Under this case, we investigate four
• Hydrogen shipment: apart from ammonia, all the
scenarios: solar PV, onshore wind, offshore wind, and a
other two shipping options are still at earlier stage
combination wind and solar PV.
with very little or no showcases currently available.
Case 2: Connected to a dedicated RE source through the grid: All the calculations with regard to hydrogen shipping
costs are therefore based on existing studies and
This case also requires the electrolyser to consume 100% industry data.
renewable electricity, but this time from a RE power plant
supplying the electrolyser via the power grid, implying 3.2 Results
wheeling charges. The same scenarios as in case 1 were
This section presents the estimated LCOE for solar PV
also explored.
and wind technologies, LCOH, estimates of GH2 export
Case 3: Grid connected hydrogen production plant: potential as well as green NH3 export potential and its
production cost (LCOA).
This scenario was analysed to make use of curtailed
electricity where the electrolyser is grid connected, but 3.2.1. Levelized cost of electricity
only operated in times of high RE generation to mitigate
Since electricity represents a considerable share of the
curtailment.
total LCOH (30% to 60% of the LCOH1 ), we have put
The computation of LCOH was done for Case 2 and case more emphasis on the LCOE for both solar and wind
3 using a 100 MW PEM electrolyser technology for each technologies under different conditions, especially the
RE type described in the previous section. The LCOH capacity factor at each geographical location. In addition
is the average cost per kg (in discounted real dollar) of to technical conditions, two financing options for each
building and operating a GH2 production asset over the technology were simulated:
project lifetime. LCOH covered all relevant project related
- Local conditions: 70% debt, 30% equity, 10-year debt
costs, including investment costs, fixed and variable
term, cost of debt: 8%, cost of equity: 13%, Weighted
operating cost, fuel/electricity cost and well as the
cost of capital (WACC): 9%, inflation: 3% p.a., Tax
financing costs.
treatment in line with Viet Nam tax code according to
LCOH was simulated at different capacity factors (CF) and Circular 78/2014 / TT-BCT
those simulations that yielded low LCOH in comparison
- Concessional financing: 80% debt, 20% equity, 18-year
with LCOH in selected countries (mainly potential
debt term, cost of debt: 3%, cost of equity: 9% (WACC:
importing countries) were considered for export
4.0%), inflation: 3% p.a., Tax treatment in line with Viet
potential analysis. The annual GH2 export potential
Nam tax code according to Circular 78/2014 / TT-BCT
was then estimated dividing the total annual energy
generation at the potential CF by the energy required
1 Lazard, 2021. Lazard’s Levelized cost of hydrogen Analysis
20

- The simulation of the above assumptions led to the 197

200
following results:
180 175 Local conditions Concessional

- Solar PV: the LCOE for solar PV varies between 92 160

157

LCOE (US$/MWh)
US$/MWh and 50 US$/MWh for project financed under 139
143
140 131
local conditions and between 61 US$/MWh and 36$/ 123 121
MWh for project funded by concessional financing. 120 111 112
105
101
100 93
- Onshore wind: under local financing conditions, the 86
80
80 75
simulation results showed that the LCOE ranges
between 103 US$/MWh (areas with low wind) and 48 60
<30% 34% 38% 42% 46% 50% 54% >54%
US$/MWh (areas with high wind) while concessional Capacity factor (%)

financing would lead to an LCOE ranging between 74 Figure 11: LCOE for offshore wind power generation
US$/MWh and 34 US$/MWh.
Table 3: LCOH in 2030 for different technologies and
- Offshore wind: the highest LCOEs were recorded financing conditions
for offshore wind where the financing under local
conditions led to an LCOE varying between 197 US$/ TECHNOLOGY SCENARIO MIN MEDIAN MAX
MWh and 105 US$/MWh whereas concessional
financing would slightly improve the LCOE and bring it Solar PV Local 3.76 4.86 6.88
to between 139 US$/MWh and 75 US$/MWh. conditions

Figure 9 to Figure 11 present the simulation results at Concessional 2.84 3.63 5.14
different technical and financial conditions. Onshore wind Local 2.79 3.63 5.44
conditions
3.2.2. Levelized cost of green hydrogen
Concessional 2.09 2.65 3.97
The LCOH simulations results exhibit a wide range of
LCOH, as presented in the table below. Offshore wind Local 4.73 6.08 8.43
conditions

100 Concessional 3.45 4.43 6.02

92
90 Local conditions Concessional
81
Note: for details on the financing cost assumptions, see
80
73
Annex 1.
LCOE (US$/kg H2)

69
70 66
61 60
60 55 55
51
For table 2 above, the min, median, and max cases are
49 50
50 45
42
calculated based on a range of different capacity factors
38
40 36 for each technology. For solar PV, the assumed range
30 of capacity factors extends from 12.5% to 22.9%; for
20 onshore wind power, the range is 25% to 50%; and for
≤ 12.5 14.2 15.8 17.5 19.2 20.8 22.5 >22.5
Capacity factor (%) offshore wind, the assumed range extends from 30% to
Figure 9: LCOE for solar PV power generation 55%. For each technology, the minimum case is the case
with the lowest, realistically achievable LCOH in Viet Nam,
based on the two financing cases presented.
103
100 Local conditions Concessional
Due to the high costs of electrolysers, the LCOH depends
86
to a significant degree on the capacity utilisation factor
LCOE (US$/MWh)

80 74 74 (CUF) of the electrolyser. Simply put, electrolyser costs

62
64 can be amortised more quickly when the electrolysers
60 57
53 52 operate at higher capacity factors. An electrolyser
46 48
41 operating purely on solar power, for instance, would
37
40 34 be limited to a capacity utilisation factor (CUF) of
between 15%-25%, depending on the specific location.
20 If the electrolyser were operating purely on onshore
<25 30 35 40 45 50 >55
Capacity factor (%) wind power, the maximum CUF would range between
Figure 10: LCOE for onshore wind power generation 30% and 45%; for offshore wind, between 35% and
55%, depending on the wind regime. For geothermal
power, the utilisation factors could be as high as 90%,
occasionally slightly more.
 21

In order to overcome this limitation and to improve the

economics of GH2 in relation to grey (or fossil-based)
hydrogen production, a further option that is gaining
traction is to hybridise the installations and generate GH2
using a combination of different RE sources, including
solar, wind, biomass, geothermal, or hydropower.
Together, a hybrid combination of technologies can
produce higher capacity factors, and therefore enable a
lower LCOE.

Among the countries currently positioned to become

major exporters of GH2, the majority have either
excellent solar or wind resources, and many plan to use
a combination of both wind and solar in hybrid facilities.
This is partly due to the lower per-kWh costs of solar
and wind power, as well as the shorter lead times to
construct new projects. Building new hydropower or
geothermal projects, by contrast, is not only costlier per-
kWh, it also takes significantly longer (e.g., 6-10 years vs.
1-2 years for solar and wind).

Since the focus of the study was to estimate GH2

export potential at competitive prices, the estimations
focused on the scenarios that would yield lower costs of Figure 13: LCOH for GH2 from onshore wind
hydrogen (i.e., solar PV and onshore wind financed with Source: based on GWA 3.1
the help of concessional finance). study assumed that 5% of the country’s land would be
assigned to GH2 projects (3% for solar PV and 2% for
Figure 12 and Figure 13 present LCOH according to the
onshore wind). To estimate the GH2 potential an average
geographic location of power generating plant for solar
power density of 80 MW/km2 was used for solar PV (GIZ
and onshore wind respectively.
Viet Nam, 2018), while 2.3 MW/km2 (Nguyen, 2006) was
Green hydrogen and green ammonia export potential applied for onshore wind.

The potential for GH2 export potential depends on how The GH2 potential was estimated based on the following
much land that can be made available to accommodate equation:
GH2 dedicated power plants and their geographic
Where GH2pot. is the estimated GH2 potential in ton,
locations. Since this information was not available, the
8760 the total number of hours in a year, CFi is the
plant capacity factor in %, Pi the installed capacity in
MW, and ŋelec. the unit electricity consumption for GH2
production (kWh/kg). The unit electricity consumption
(ŋelec.) is given by the product of H2 higher heating value

(HHV) with the system efficiency. The study used 70% as

the system efficiency (IRENA, 2020) and 39.4 kWh/kg as
hydrogen HVV.

The two tables below present the estimated GH2

potential at different plant capacity factor values.

Figure 12: LCOH for GH2 from solar PV

Source: based on GSA 2.0
22

Table 4: Estimated GH2 potential from solar PV

Area 3% of the Capacity Annual energy Equiv. GH2 LCOH in 2030 LCOH in 2050
Capacity factor
(km2) area (km2) (MW) (MWh) (ton) (US$/kg) (US$/kg)

Below 12.5% 329 9.9 790 864,678 15,441 Above 5.14 Above 1.85

12.5 - 14.2% 25530 766 61,273 76,218,302 1,361,041 5.14 - 4.54 1.85 – 1.63

14.2 - 15.8% 82765 2483 198,635 274,926,734 4,909,406 4.54 - 4.06 1.63 – 1.46

15.8 - 17.5% 59101 1773 141,843 217,445,968 3,882,964 4.06 - 3.67 1.46 – 1.32

17.5 - 19.2% 24554 737 58,929 99,114,276 1,769,898 3.67 - 3.35 1.32 – 1.21

19.2 - 20.8% 78744 2362 188,987 344,348,620 6,149,082 3.35 - 3.09 1.21 – 1.11

20.8 - 22.5% 51726 1552 124,143 244,685,815 4,369,390 3.09 - 2.84 1.11 – 1.03

Above 22.5% 5189 156 12,454 27,274,395 487,043 Below 2.84 Below 1.03

327,939 9,838 787,054 1,284,878,789 22,944,264 Average: 3.45 Average: 1.24

Table 5: Estimated GH2 potential from onshore wind

Capacity % of the Capacity Annual energy Equiv. GH2 LCOH in 2030 LCOH in 2050
Area (km2)
factor area (km2) (MW) (MWh) (ton) (US$/kg) (US$/kg)

Below 25% 252,572 5,051 11,618 25,444,113 454,359 Above 3.97 Above 1.42

25 - 30% 29,935 599 1,377 3,618,725 64,620 3.97 - 3.31 1.42 – 1.19

30 - 35% 17,953 359 826 2,532,046 45,215 3.31 - 2.84 1.19 – 1.02

35 - 40% 12,044 241 554 1,941,277 34,666 2.84 - 2.61 1.02 – 0.93

40 - 45% 8,175 164 376 1,482,404 26,471 2.61 - 2.32 0.93 – 0.83

45 - 50% 4,139 83 190 833,954 14,892 2.32 - 2.09 0.83 – 0.75

Above 50% 3,121 62 144 691,725 12,352 Below 2.09 Below 0.75

327,939 6,559 15,085 36,544,244 652,576 Average: 3.60 Average: 1.30

As shown in the above tables, the estimated annual GH2 Concerning green ammonia, its annual potential was
potential from solar PV is 22,944 kilotons at an average calculated by dividing the estimated GH2 potential by its
production cost (LCOH) of 3.45 US$/kgH2 in 2030 and weight fraction in ammonia of 17.65%. This resulted into
1.24 US$/kgH2 in 2050. As for GH2 from onshore wind, 129,996 kilotons of ammonia from solar PV and 3,697
its annual potential is estimated to be 652 kilotons with kilotons of ammonia from onshore wind.
at an LCOH of 3.60 US$/kgH2 in 2030 and 1.3 US$/kgH2
in 2050. The LCOA were calculated as part of shipping cost.
 23

Chapter 4
24

Hydrogen shipping cost

This chapter describes the applied methodology to estimate hydrogen-shipping cost from Viet Nam to
potential importing countries, mainly Europe/Germany.

4.1 Methodology - Cost of storing LH2, NH3 or LOHCs in ports before

their shipment
Hydrogen shipping analysis consisted of estimating the
levelized cost of hydrogen shipping from centralized - Transportation cost from export terminal to the
production facilities to the import terminal in German, terminals in importing countries
Japan, and Republic of Korea. Transporting hydrogen by
- Boil-off gas (BOG) cost
ships requires converting it into LH2, ammonia or LOHCs.
- Cost of storing LH2, NH3 or LOHCs in import
4.1.1. Hydrogen shipping cost elements
terminals before their reconversion
Our assessment of the export cost includes the following
- Cost of reconverting NH3 and LOHCs to pure
cost elements:
hydrogen
- Cost for converting pure hydrogen into LH2, NH3 and
LOHCs

Figure 14: Hydrogen shipping

equipment and infrastructure
Source: Hydrogen transportation
(Roland Berger)

The below figure illustrates hydrogen shipping 4. Storage at import terminal: to store the delivered
value chain. As shown in the above figure, hydrogen LH2, NH3 or LOHC at the import terminal state
shipping analysis covered the following equipment and before their gasification/reconversion.
infrastructure:
5. Gasification/reconversion: a facility that gasifies
1. Liquefaction/conversion: a facility that liquefies the LH2, crack the NH3, or dehydrogenate the
hydrogen, convert H2 into NH3 (Haber-Bosch cyclohexane to toluene and hydrogen.
process), or convert toluene to cyclohexane (LOHC).
The estimation of the shipping cost was conducted using
2. Storage at export terminal: to store LH2, NH3 or a 100 MW PEM electrolyser (same as in the case of LCOH
LCOH before their shipment calculation) with the following characteristics:

3. Shipping: transportation of LH2, NH3 or LOHC from

the export terminal to import terminals via tanker ship.
 25

- Capacity factor: 45% - The Future of Hydrogen – IEA G20 Hydrogen report:
Assumptions (IEA, 2020);
- LCOH: 4.61 US$/kgH2 in 2022, 2.76 US$/kgH2 in
2030, 1.66 US$/kgH2 in 2040 and 1 US$/kgH2 in 2050 - Different research articles from international
recognised scientific journals and information from
- System efficiency: 70% in 2022,
IEA and IRENA websites.
The data used for estimating the shipping cost was
The study assumed the case of an electrolyser installed
obtained from three main sources:
at harbour, meaning that no pipeline was analysed. For
- Gas Infrastructure Europe (GIE): Database containing generation facilities not located at harbours, a pipeline
cost estimates for technologies required for the should be included in the analysis.
import of liquid RE carriers. The database is based
The table below presents the techno-economic
on publicly available information and project
assumptions for hydrogen shipping.
experiences (DNV GL, 2020);

Table 6: Techno-economic assumptions for hydrogen

shipping

Cost element Parameter LH2 Ammonia LOHC

Conversion Lifetime (years) 20 20 20

CAPEX ($/kW) 1 500 889 97

OPEX (%CAPEX/a) 2.5 1.5 3

Electricity use (kWh/kg H2) 10* 4.7 1.5

Toluene CAPEX ($/kg tol) - - 400

Export Terminal Lifetime (years) 20 20 20

CAPEX ($/ton) 3 190 1 995 812

OPEX (%CAPEX/a) 2 2.5 2.5

Electricity use (kW/kg H2) 0.61 0.005 0.01

Boil-off (%/day) 0.1 - 0.1

Ship Lifetime (years) 20 20 200

CAPEX ($/t) 3 745 1 600 691

OPEX (%CAPEX/a) 4 4 2.5

Speed (km/h) 37 37 37

Berthing time (h) 48 48 48

Fuel use (MJ/ton.km) 0.07 0.07 0.07

Boil off (%/day) 0.2 - -

Import Terminal Lifetime (years) 20 20 20

CAPEX ($/tpa) 3 190 1 710 568

OPEX (%CAPEX/a) 2 2.5 2.5

Electricity use (kW/kg H2) - 0.02 0.01

Boil-off (%/day) 0.1 - -

Reconversion Lifetime (years) 20 20 20

CAPEX ($/kW) 300 259 261

OPEX (%CAPEX/a) 3 3 3

Electricity use (kW/kg H2) 0.1 4,7 13

*6.1 kWh/kg H2 used from 2030 onwards

26

To calculate shipping costs in 2030, 2040 and 2050, cost

reductions were applied to the initial CAPEX numbers 4.00

based on projections of Wijayanta et al. (2019). 3.50

S hipping cost ( $/kg H2)

3.00
4.2 Results
2.50

This section summarises the calculation results for 2.00

shipping hydrogen from Viet Nam (Port of Saigon) to 1.50

Europe (Port of Rotterdam – The Netherlands), Japan and

1.00
South Korea. 2022 2030 2040 2050

LH2 Ammonia LOHC

4.2.1. Hydrogen shipment to Europe
Figure 17: Estimates of hydrogen shipping cost to Japan by
Based on the data and assumptions presented in the 2050
methodological section, ammonia is the most economical
Similar to shipping hydrogen to Europe, LOHC is the most
option to export GH2 from Viet Nam to Europe as shown
expensive shipping option due to the high electricity
in the figure below.
prices for LOHC dehydrogenation, which amounts 0.182
US$/kWh for businesses (GlobalPetrolPrices, 2022b).
4.50
4.00
S hipping cost ( $/kg H2)

3.50
3.50
3.00
2.50 3.00
S hipping cost ( S /kg H2)

2.00
2.50
1.50
1.00 2.00
0.50
2022 2030 2040 2050 1.50
LH2 Ammonia LOHC
1.00

Figure 15: Estimates of hydrogen shipping cost to Europe by 0.50

2050 0.00
LH2 Ammonia LOHC
As can be seen from the figure below, which presents Conversion Terminals Ship Reconversion
different cost elements of the shipping cost, LOHC is the
most expensive option under this case. This is justified Figure 18: Cost elements for hydrogen shipping to Japan in
by the high dehydrogenation energy needs (about 15 2050

kWh/kg H2) combined with the high price of electricity in

4.2.3. Hydrogen shipment to South Korea
The Netherlands of 0.134 US$/kWh (GlobalPetrolPrices,
2022a) . Unlike the shipment to Europe and Japan where
ammonia and LH2 are seen promising, the study found
3.50
that Ammonia and LOHC would be the cheapest option
3.00
to export GH2 from Viet Nam to South Korea as it can be
S hipping cost ( S /kg H2)

2.50
seen in the figure below.
2.00

1.50
3.50
1.00

0.50 3.00
S hipping cost ( $/kg H2)

0.00 2.50
LH2 Ammonia LOHC

Conversion Terminals Ship Reconversion 2.00

1.50
Figure 16: Cost elements for hydrogen shipping to Europe in
2050 1.00

0.50
2022 2030 2040 2050
4.2.2. Hydrogen shipment to Japan
LH2 Ammonia LOHC

The simulation of the shipping cost revealed that,

Figure 19: Estimates of hydrogen shipping cost to South
by 2030, ammonia would be the best way to export Korea by 2050
hydrogen to Japan. After 2030 LH2 would be the most
economical way of shipping hydrogen to Japan as
noticeable in the below figure.
 27

The low cost of shipping hydrogen using ammonia In addition to its greater proximity to Europe, Morocco
and LOHC is explained by the low electricity price has also already signed agreements to cooperate on
in South Korea of 0.075 US$/kWh for businesses green hydrogen production with EU Member States such
(GlobalPetrolPrices, 2022c) compared to other two as Portugal, specifically for the export of green hydrogen
countries. The figure below shows the shares of different (Kasraoui, 2022). The distance from Morocco to other key
cost elements for hydrogen shipping to South Korea in ports in the EU are comparatively short, including to the
2050. Port of Cadiz (256 nautical miles, or “nm”), Marseille (999
nm), Rotterdam (1.682 nm), Bremerhaven (1.927 nm),
2.00 and Hamburg (1.959 nm). Compared to the distances
involved in shipping from Viet Nam (Port of Saigon) to the
S hipping cost ( S /kg H2)

1.60
EU (Rotterdam) of 10.082 nm, Viet Nam is approximately
1.20 5-7 times further from the key EU ports than other
major potential competitors such as Iceland or Morocco.
0.80
This puts countries like Morocco in an advantageous
0.40
position with regard to shipping costs for shipping green
hydrogen to the EU.
0.00
LH2 Ammonia LOHC

Conversion Terminals Ship Reconversion

Figure 20: Cost elements for hydrogen shipping to South

Korea in 2050

Another important factor that influences the shipping

cost is geographic proximity. The table below provides
an overview of the main distances between the primary
competitors outlined above to three of the main ports in
the countries examined.

Table 7: Shipping distances port-to-port

Distance Distance Distance

to the EU to South to Japan
Country
(Port of Korea (Port (Port of
Rotterdam) of Daesan) Tokyo)

Morocco
1.682nm 11.287nm 11.648nm
(Casablanca)

South Africa
7.323nm 10.047nm 10.430nm
(Cape Town)

Chile
10.044nm 15.971nm 16.342nm
(Chacabuco)

Australia
11.511nm 5.063nm 5.298nm
(Perth)

Viet Nam
10.082nm 2.727nm 3.088nm
(Saigon)
Source: (Ports, 2022)
28

Chapter 5
 29

Green hydrogen export potential of

Viet Nam

5.1 Potential green hydrogen exporting Table 8: Key variables for green hydrogen competitiveness
countries (competitors)
Key Viet Nam’s relative position
Investments toward the production of green hydrogen Variable
are growing rapidly worldwide. A growing number of
Renewable Viet Nam has good overall renewable energy
jurisdictions are starting to adopt plans to make sure energy resource quality. However, on an international
that new natural gas infrastructure, for instance, is resource level, GIS and RE resource maps indicate
“hydrogen-ready” while dozens of hydrogen production quality that Viet Nam’s relative position is weaker in
solar than other potential competitors such
facilities are emerging in Europe, the Middle East, India, as Australia, Morocco, and Chile. With regard
the U.S., and Canada. Within the framework of the EU’s to wind power, Viet Nam’s resources are
recently launched Clean Hydrogen Alliance, a total of among the best in Southeast Asia at between
6-10m/s at 100m hub heights. However, the
600 projects are expected to come online across the best resource potential is offshore, which
EU by 2025.1 Thus far, the majority of these hydrogen entails a higher production cost due to
significantly higher CAPEX and OPEX (https://
production facilities have been launched as part of
globalwindatlas.info/ | https://globalsolaratlas.
pilot projects to test the feasibility and costs of green info/map)
hydrogen production and include projects at various
Proximity Viet Nam is located roughly 2.700 nautical miles
stages of planning and development. However, the to target from ports in South Korea, and just over 3.000
majority of the projects currently under development are market nautical miles from major ports in Japan. This is
aimed first and foremost at meeting domestic demand in contrast to over 10.000 nautical miles from
the port of Rotterdam, Europe’s largest. Due to
(e.g., in the EU) and not at international exports. the significant additional costs of shipping, it
will be difficult for Viet Nam to compete directly
The main markets that are currently emerging as near- on exports to the EU in the near-term against
term exporters of green hydrogen considered in this other neighbouring exporting countries such
as Morocco, which is located roughly 1.700
study Chile, Morocco, South Africa, and Australia nautical miles from Rotterdam.

When considering potential competitor countries in Land Viet Nam has a total land surface of
availability 331.690km2. This is in contrast to Morocco
terms of green hydrogen production, there are five main
(446.550km2), Australia (7.692.000km2) and
variables to consider: Chile (756.950km2). In addition, Viet Nam has
a significantly higher population density at 311
1. Renewable energy resource quality inhabitants/km2 vs. a population density of 83/
km2 for Morocco, 3/km2 for Australia.
2. Proximity to target market
Cost of The cost of debt provided for renewable energy
capital projects in Viet Nam ranges from between
3. Land availability 6.5% and 10%, depending on whether the
loan is provided by a national bank or a local
4. Cost of capital commercial bank. Debt tenors are typically
limited to a maximum of 14-15 years from
5. Political stability/Political will national banks and around 10 years for
commercial banks. It can be expected that
similar conditions will be available for projects
This analysis will consider each of these five variables
dedicated to green hydrogen production. By
in turn with reference to the four main competitors contrast, lending for major renewable energy
identified above. projects in countries like Australia and Chile
benefit from a cost of debt as low as 2-3%,
and debt tenors of up to 18 years. In order
to be competitive globally in terms of green
hydrogen production, it is likely that Viet Nam
will need to rely on concessional financing
from major international lenders, or consortia
of lenders, in order to bring the cost of capital
down, and in turn, the cost of green hydrogen
1 EC (2021). https://ec.europa.eu/info/news/hydrogen-europes- production.
industry-rolling-out-hydrogen-projects-massive-scale-2021-nov-30_
en
30

Compared to Viet Nam, the four major competitors

Political Overall Viet Nam benefits from a high degree
stability of political stability. It has a credit rating of BB considered here currently have certain competitive
/ Political from the major credit rating agencies and is advantages in terms of green hydrogen production (see
will considered investable. In addition, it ranked
the figure below). These competitive advantages are
relatively well on the World Bank’s ease of
doing business report in 2020, at 70 out of 190, reflected in the current estimated cost of green hydrogen
but behind other competitors such as Australia production. (Note that the country that currently has the
(14th), Chile (59th), and Morocco (53rd). In
addition, Viet Nam has articulated a clear lowest green hydrogen production costs is Iceland, which
political will to accelerate the energy transition has a competitive edge that is expected to persist until
and to develop ambitious policies to support roughly 2030; as such, Iceland is included to provide an
the emergence of a clean energy economy.
This provides Viet Nam with a strong position additional benchmark.)
in terms of mobilizing investment for green
hydrogen production.

Figure 21: International Green

Hydrogen Production Costs (2022)
Source: PwC (2022)1

However, this merely provides a snapshot of the costs

of hydrogen production today. Forecasting these
values forward for the coming years, the relative
competitive position of each country changes, and
Viet Nam’s relative position improves substantially
(see the below figure).
Figure 22: International GH production cost range among
potential exporting countries (Present to 2050)
Source: PwC (2022)

1 https://www.pwc.com/gx/en/industries/energy-utilities-resources/
future-energy/green-hydrogen-cost.html
 31

As the above figure shows, Viet Nam is expected to 5.2.1. EU’s Hydrogen Strategy
continue having a slightly higher production cost than
other markets with higher resource quality, more In 2020, the EU released its “Hydrogen strategy for a
abundant land, a lower cost of capital, or all three. climate-neutral Europe” in support of the EU’s vision
However, this slightly higher production cost does of achieving its European Green Deal and the energy
not necessarily mean that Viet Nam will be unable to transition to net zero emissions. The EU Strategy outlines
compete: much hydrogen production built for exports the plan for scaling up a European green hydrogen
is likely to be developed in the context of bilateral supply and demand, prioritizing investments, and
partnerships, with preferential financing conditions and regulations, promoting research and innovation, and
long-term supply contracts. For instance, countries within international cooperation. The EU Strategy is broken
the EU as well as Japan and South Korea face constraints down to three phases:
with regard to how much GH2 they can produce - Phase I – (2020-2024) – install at least 6 GW of green
domestically and will likely need to be reliant on imports. hydrogen electrolyzers and achieve 1 million metric
Under such an approach, Viet Nam’s production costs tons/year of green hydrogen production.
are likely to remain sufficiently competitive to be able to
secure bilateral agreements for GH2 supply. - Phase II – (2024-2030) – green hydrogen becomes
highly integrated in the European energy system.
The broader question for Viet Nam is which export Strategic objective of installing at least 40 GW of
markets it should focus on first. Given the significant green hydrogen electrolyzers and producing up to 10
impact of shipping costs, it is more likely that Viet Nam million metric tons/year of green hydrogen.
will be able to export green hydrogen at a competitive
price in the Asia Pacific region than to Europe in the near- - Phase III – (2030-2050) green hydrogen reaches
term. The next section looks at the current status among technological maturity, is deployed at large scale,
potential green hydrogen importing countries. and reaches sectors that are considered hard to
decarbonize. 1
5.2 Overview of potential green hydrogen-
importing countries The figure below shows the total EU demand for
hydrogen and related synthetic products such as
The main export markets that are emerging for the ammonia by country and fuel type (as of 2019).
sale of green hydrogen are largely concentrated among
industrialised countries with ambitious climate goals.
This analysis considers four major jurisdictions: the EU,
including a separate sub-section in Germany, Japan, as
well as South Korea.

Figure 23: 2019 EU Hydrogen

Demand by Country
Source: Entec (2022) 2

1 European Commission (2020) P.5-7 https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX:52020DC0301

2 https://op.europa.eu/en/publication-detail/-/publication/7ab70e32-
a5a0-11ec-83e1-01aa75ed71a1/language-en
32

Measures to Encourage Hydrogen Demand EU’s Hydrogen Demand Targets and Estimates

- Strategic Forum for Important Projects of Common While hydrogen may have only made up 2% of final
European Interest (IPCEI) – the Strategic Forum for energy production in 2015, the industry is expected to
IPCEI built a common European vision strategic grow significantly in the EU and reach between 8-24%
value chains for technologies such as hydrogen of final energy consumption by 2050. 4 Under ambitious
and facilitated cooperation to engage in new joint scenarios, some forecasts see EU hydrogen demand
investments. Through the Forum, which concluded growing to as high as 2 250 TWh by 2050 (roughly 69
in 2020, helped identify a range of large investment million metric tonnes), with less ambitious forecasts
projects along the strategic hydrogen value chain projecting total demand of roughly 780 TWh (roughly 24
which could be designated as ‘IPCEI projects’ and million metric tonnes).5 Although much of this hydrogen
allow them to receive member state subsidies.1 is currently grey hydrogen, produced from fossil fuels like
natural gas and coal, national plans expect that a growing
- Clean Hydrogen Partnership – The EU established share of this hydrogen demand will need to be met with
the Fuel Cells and Hydrogen Joint Undertaking (FCH green hydrogen in order to remain in compliance with
JU), which was succeeded in late 2021 by the Clean the Paris Agreement.
Hydrogen Joint Undertaking (or “Clean Hydrogen
Partnership”). This public-private partnership The figure below provides an overview of the projected
between the European Commission, the hydrogen development of the green hydrogen industry in Europe
industry and academia support research and through 2050.
innovation on hydrogen technologies in Europe.2

- European Clean Hydrogen Alliance – Launched in

2020, this is collaboration between government,
industry, and civil society groups to guide the
investment in hydrogen technologies with a pipeline
of concrete projects and promote the production and
consumption of clean hydrogen. 3

Figure 24: Forecast of European

Union Hydrogen and Final Energy
Demand through 2050
Source: Source: FCH JU (2019)

1 Ibid., 8-9.
2 Clean Hydrogen Partnership (2022) https://www.clean-hydrogen. 4 FCH JU
europa.eu/about-us_en 5 FCH (2019). Hydrogen Roadmap Europe, Fuel Cells and Hydrogen,
3 European Commission (2020) P.3 https://eur-lex.europa.eu/legal- https://www.fch.europa.eu/sites/default/files/Hydrogen%20
content/EN/TXT/?uri=CELEX:52020DC0301 Roadmap%20Europe_Report.pdf
 33

Domestic Hydrogen Production - 2030 – 5 million metric tons/year green hydrogen

(from 40 GW of electrolyzers “in Europe’s
The EU strategy specifies that the bloc will build up its neighborhood’)45
productive capacity for green hydrogen over the next 20
years in order to meet some of its projected demand. - 2040 – (not specified in EU 2020 Strategy)
In 2019, the bloc produced an estimated 10.8 million
- 2050 – (not specified in EU 2020 Strategy)
metric tons/year of primarily grey hydrogen for the
petrochemical and other industries. 1 Import Standards
- 2030 – 5 million metric tons/year green hydrogen RED II sets the standard for green hydrogen use across
(from 40 GW of electrolyzers) 2 all EU sectors. To qualify, hydrogen sources must:
- 2040 – (not specified in EU 2020 Strategy) - Come from renewable energy sources (excluding
biomass) (Art. 27),
- 2050 – up to 23.6 million metric tons/year to 68.2
million metric tons/year (780-2,251 TWh) or 8-24% - Mass balancing6 of the produced volumes along the
of final energy demand based on the Hydrogen value chain (Art. 30),
Roadmap estimate range (not specified in EU 2020
Strategy)3 - Meet additionality requirements (supply must be
derived from new renewable energy projects), and
Hydrogen Imports
- Provide information on received state aid.7
The EU strategy emphasizes the need to foster
international cooperation regarding hydrogen Although the EU could, in principle, meet its needs in
technologies and identifies a medium-term target for GH2 with domestic production (see the figure below),
imports from its potential hydrogen partners. many EU Member States are likely to remain reliant on
imports to meet a portion of the GH2 needs due to a
range of factors including cost, political constraints, land
availability, and the need to simultaneously decarbonise
the power as well as the heating sectors.

Figure 25: Overview of technical

potential for green hydrogen
production in the EU27+UK
Source: Wang et al. (2021). European
Hydrogen Backbone, Guidehouse

4 The EU is interested in trade with neighboring countries in the

Eastern Neighborhood (i.e., Ukraine) and Southern Neighborhood
countries. (European Commission (2020) p.19)
5 European Commission (2020) P. 2 https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52020DC0301
6 “The mass balancing approach links the certificate with the
1 Entec (2022) P.155 https://op.europa.eu/en/publication-detail/-/ respective physical delivery of the energy carrier. Sustainability
publication/7ab70e32-a5a0-11ec-83e1-01aa75ed71a1/language-en certificates are traded via mass balancing, so that a physical delivery
2 ENTEC (2022) p.9 https://op.europa.eu/en/publication-detail/-/ of an energy carrier goes hand in hand with the certificate.” (DENA
publication/7ab70e32-a5a0-11ec-83e1-01aa75ed71a1/language-en (2022) p.23)
3 FCH JU (2019) P.12 https://www.fch.europa.eu/sites/default/ 7 DENA (2022) P.13 https://www.dena.de/newsroom/
files/20190206_Hydrogen%20Roadmap%20Europe_Keynote_Final. publikationsdetailansicht/pub/report-global-harmonisation-of-
pdf hydrogen-certification/
34

5.2.2. Germany’s Hydrogen Strategy

Germany in particular has already announced that it - €860 million over 17 years as part of the coal exit
plans to rely on imports to meet a substantial portion of to establish a research center for sustainable and
its green hydrogen needs, with estimates ranging from infrastructure-compatible hydrogen economy (HC-
between 55% and 95% of its demand by 2050. H2).8

Thus, most countries looking to transition to green - IPCEI projects – Germany will allocate €8 billion
hydrogen in the coming decades are likely to pursue a towards 62 EU recognized IPCEI projects in the
two-tiered approach: first, encourage domestic green industrial and transportation sectors.9
hydrogen production to meet a portion of domestic
needs, and second, develop or retrofit infrastructure in - Hydrogen Promotion in the Energy Sector
order to enable imports of green hydrogen from abroad. - EEG levy exemption – Under the 2021 update to the
Renewable Energies Law (EEG), renewable energy
National Hydrogen Strategy
that is used to produce green hydrogen is exempt
In 2020, Germany adopted its National Hydrogen from the EEG levy.10
Strategy, which is envisioned as a coherent framework
to support Germany’s decarbonization, create new Developing International Supply Chains
value chains for the German economy and foster - “Hydrogen Potential Atlas” – the Federal Ministry of
international energy policy cooperation.1 The Strategy Research has been funding a “Hydrogen Potential
contains an action plan with 38 concrete measures Atlas” since 2020 that is focused primarily on the H2
to be implemented by 2023 (initial ramp-up phase) to production potential of African countries.11
accelerate the development of the hydrogen market.2
- HySupply – The Federal Ministry of Research is also
Measures to Encourage Hydrogen Demand funding a feasibility study for a long-term strategic
hydrogen partnership between German and
Government Financing
Australian government and industry partners though
- Package for the Future – Pandemic-related funding which Germany would export hydrogen technologies
which includes €9 billion for accelerating the market and import green hydrogen produced in Australia.12
rollout of hydrogen technology in Germany. This
includes €2 billion towards fostering international Industrial Decarbonization
partnerships.3 - Action Concept Steel - more than 2 GW of green
hydrogen production capacity and about 1,700 km
- NIP funding – €2.1 billion funding cumulative through
of hydrogen pipelines are planned for decarbonizing
2026 for National Innovation Program on Hydrogen
steel production within this framework.13
and Fuel Cell Technology (NIP) since 2006.4

- ECF funding – €51 million for 2020-2023 under the - Carbon Contracts for Difference (CfD) – the Federal
Energy and Climate Fund (ECF) for research on green Government will provide funding in support of
hydrogen and energy applications of hydrogen decarbonizing the steel and chemical industries
technology.5 equal to the difference between the cost of avoiding
emissions and the EU’s emission trading system (ETS)
- Commercializing green technologies – €600 million carbon price (budget of €3 billion until 2024). 14
in 2020-2023 to foster the commercialization of
sustainable technologies, including hydrogen
8 CSIS (2021a) https://www.csis.org/analysis/germanys-hydrogen-
solutions.6 industrial-strategy
9 Ibid.
- €1 billion in 2020-2023 funding towards technology 10 CSIS (2021a) https://www.csis.org/analysis/germanys-hydrogen-
& facilities that use hydrogen to decarbonize their industrial-strategy
11 BMBF (2021) https://www.bmbf.de/bmbf/de/home/_documents/
manufacturing processes.7 potenzialatlas-wasserstoff-afr-ergieversorger-der-welt-werden.
html#:~:text=Potenzialatlas%20Wasserstoff%3A%20Afrika%20
1 BMWK (2020) P.5 https://www.bmwi.de/Redaktion/EN/ k%C3%B6nnte%20Energieversorger%20der%20Welt%20werden%20
Publikationen/Energie/the-national-hydrogen-strategy.html 20.05.2021,Partnerschaft%20zwischen%20Deutschland%20und%20
2 Ibid., p.16-27. Westafrika
3 Ibid., 5. 12 Acatech (2022)
4 Ibid., 5. 13 CSIS (2021a) https://www.csis.org/analysis/germanys-hydrogen-
5 Ibid., 5. industrial-strategy
6 Ibid., 5. 14 CSIS (2021a) https://www.csis.org/analysis/germanys-hydrogen-
7 Ibid., 5. industrial-strategy
 35

Hydrogen Demand Targets and Estimates Hydrogen Imports

55 TWh of hydrogen (about 1.7 mt) are used in Germany In order to meet the projected green hydrogen demand
each year and are used in industrial applications in Germany, the government estimates that it would
amongst the chemicals and petrochemicals sectors.15 need to install more than three times the renewable
The German government expects hydrogen to energy capacity of Australia (35.7 TW in 2020).2627,
see greater market penetration led by increased Germany instead is expected to rely heavily on imports of
consumption in the industrial sector (0.3 million metric hydrogen and related products.
tonnes/year or 10 TWh alone by 2030) and FCEVs and
potentially other sectors such as heating in the long - 2030 – 2.3 million metric tonnes/year to 2.9 million
term.16 metric tonnes/year or 27-34 GW (equivalent of 76
to 95 TWh)28. Third party estimates range from 43%
- 2030 – 2.7 million metric tonnes/year – 3.3 million to 70% for hydrogen and 90 to 100% for synthesis
metric tonnes/year or 32-39 GW (equivalent of 90 to product imports.29
110 TWh) 17
- 2040 – 0.67million metric tonnes/year to 9.49 million
- 2040 – estimated by third parties to be between 3.6 metric tonnes/year (22.2 to 313.3 TWh) based on
million metric tonnes/year and 11.6 million metric third party estimates, which is from 55% to 78% for
tonnes/year for hydrogen and related products hydrogen and 93% to 100% for synthesis product
(119 and 382 TWh) (not specified in Germany’s 2020 imports as a percentage of total demand (not
Strategy)18 specified in Germany’s 2020 Strategy)30

2050 – estimated between 7.1 million metric tonnes/year - 2050 – 45 million metric tonnes/year31. Third party
and 22.4 million metric tonnes/year for hydrogen and estimates range up to 17.24 million metric tonnes/
related products by third parties, though may be as high year (568.8 TWh), or 53% to 80% for hydrogen and
as 45 million metric tonnes/year (234 – 740 TWh) (not 79% to 100% for synthesis product imports as a
specified in Germany’s 2020 Strategy).1920 percentage of total demand.32

Domestic Hydrogen Production

- 2030 – 0.4 million metric tonnes/year or 5 GW (14

TWh) ,2122

- 2040 – 0.8 million metric tonnes/year or 10 GW (28

TWh) ,2324

- 2050 – up to 1.9 million metric tonnes/year (63 TWh)

estimated by third parties (not specified in Germany’s
2020 Strategy) 25

15 BMWK (2020) P.9 https://www.bmwi.de/Redaktion/EN/

26 BMBF (2022) https://www.bmbf.de/bmbf/shareddocs/
Publikationen/Energie/the-national-hydrogen-strategy.html
kurzmeldungen/de/woher-soll-der-gruene-wasserstoff-kommen.
16 BMWK (2020) P.9 https://www.bmwi.de/Redaktion/EN/
html;jsessionid=725C8EB1E6810005E627A034DAD7E9E9.
Publikationen/Energie/the-national-hydrogen-strategy.html
live722
17 Ibid., p.5
27 Statista (2021) https://www.statista.com/statistics/1248614/
18 Fraunhofer (2021) p.20-21 https://www.wasserstoffrat.
australia-renewable-energy-capacity/#:~:text=In%202020%2C%20
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
Australia’s%20total%20renewable,tripled%20within%20the%20
Wasserstoff-Abschlussbericht.pdf
last%20decade
19 Fraunhofer (2021) p.20-21 https://www.wasserstoffrat.
28 CSIS https://www.csis.org/analysis/germanys-hydrogen-industrial-
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
strategy
Wasserstoff-Abschlussbericht.pdf
29 Fraunhofer (2021) p.20-21, 33-34, 81 https://www.wasserstoffrat.
20 Bundesregierung (2022) https://www.bundesregierung.de/breg-
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
de/themen/klimaschutz/faq-wasserstoff-1732248
Wasserstoff-Abschlussbericht.pdf
21 The Physics Factbook (2005) https://hypertextbook.com/
30 Fraunhofer (2021) p.20,-21 33-34, 81 https://www.wasserstoffrat.
facts/2005/MichelleFung.shtml
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
22 BMWK (2020) P.5 https://www.bmwi.de/Redaktion/EN/
Wasserstoff-Abschlussbericht.pdf
Publikationen/Energie/the-national-hydrogen-strategy.html
31 Bundesregierung (2022) https://www.bundesregierung.de/breg-
23 The Physics Factbook (2005) https://hypertextbook.com/
de/themen/klimaschutz/faq-wasserstoff-1732248
facts/2005/MichelleFung.shtml
32 Fraunhofer (2021) p.33-34, 81 https://www.wasserstoffrat.
24 2020 DE strategy p.5
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
25 Fraunhofer (2021) p.20-21, 33-34, 81 https://www.wasserstoffrat.
Wasserstoff-Abschlussbericht.pdf
de/fileadmin/wasserstoffrat/media/Dokumente/Metastudie_
Wasserstoff-Abschlussbericht.pdf
36

5.2.3. Japan’s Hydrogen Strategy Energy Sector Hydrogen Utilization

In 2017, Japan was the first country in the world to - Pilot projects – Since 2018, Japan has been testing
issue a national hydrogen strategy. Japan’s “Basic hydrogen as a fuel source for gas turbines and
Hydrogen Strategy” has 10 primary goals that range successfully demonstrated its use in the world’s first
from promoting technological innovation in hydrogen hydrogen-only cogeneration system.40
technologies to further integrating the use of hydrogen
Promoting hydrogen-based mobility
across multiple sectors.3334
- FCEV and HSR deployment – Japan currently have
Japan has also supported its strategy by issuing a
5,500 FCEV passenger vehicles and busses and
“Strategic Roadmap for Hydrogen and Fuel Cells” in 2014
has 137 HRSs in operation.41 It plans to scale up to
with updates in 2016 and 2019 that provide targets for
800,000 passenger FCEVs, 1,200 FCEV buses, 10,000
technological deployment, the breakdown of costs, and
FCEV forklifts and 1,000 HRSs by 2030.42
the measures needed to achieve these deployment
goals.35 Additionally, the Japanese government issued - Hydrogen trains – The East Japan Railway Company
a “Green Growth Strategy” in 2020 with an update in is partnering with Hitachi and Toyota and is currently
2021 which provide timelines and targets for hydrogen testing a hydrogen train.43
infrastructure deployment, end-use fuel cell products like
FCEVs and home fuel cells, and hydrogen volumes used - Hydrogen ships – the Japanese government aims to
in industries.36 introduce the first hydrogen vessel by 2028 44

Measures to Encourage Hydrogen Demand Hydrogen Demand Targets and Estimates

Government Financing Japan currently consumes 2 million metric tons/year of

hydrogen, and it aims to increase the relative share of
- Japan’s national R&D agency, the New Energy, and hydrogen and ammonia to 1% of primary energy and
Industrial Technology Development, allocated $2.7 electricity demand by 2030.4546
billion to establish a large-scale hydrogen supply
chain and an additional $700 million to generate - 2030 – up to 3 million metric tons/year47
green hydrogen.37
- 2040 – up to 9.6 million metric tons/year (200 pj to
- 2020 annual investments totaled $670 million across 1,150 pj per year) based on third party estimates (no
the hydrogen and fuel cell industry.38 set target)484950

Facilitating Industrial Decarbonization - 2050 – approximately 20million metric tons/year51

- COURSE50 project – Under this initiative, Japan aims

to cut total CO2 emissions in its steel mills by 30% by
integrating hydrogen into the production process.39

40 Ibid., 19.
33 These elements are: (1) achieving low-cost hydrogen use, (2) 41 IEA (2021) p. 76 https://iea.blob.core.windows.net/
developing international hydrogen supply chains, (3) facilitating assets/3a2ed84c-9ea0-458c-9421-d166a9510bc0/
renewable energy expansion in Japan, (4) H2 use in power GlobalHydrogenReview2021.pdf
generation, (5) expanding hydrogen use in mobility, (6) further 42 Ibid.
utilizing hydrogen in industrial processes, (7) promoting fuel 43 Ibid., 77
cell technology, (8) achieving further technological innovations, 44 Ibid.,
(9) expanding its international presence through international 45 Ibid., 76.
frameworks and cooperation, and (10) promoting public education 46 CSIS (2021b) https://www.csis.org/analysis/japans-hydrogen-
and cooperation with local governments. industrial-strategy#:~:text=Japan%20is%20focused%20on%20
34 METI (2017) p.20-37 https://www.meti.go.jp/english/press/2017/ expanding,the%20current%20level%20by%202030
pdf/1226_003b.pdf 47 2021 Japan Green Growth Strategy Update https://www.meti.
35 METI (2019) https://www.meti.go.jp/english/ go.jp/english/policy/energy_environment/global_warming/ggs2050/
press/2019/0312_002.html pdf/02_hydrogen.pdf
36 CSIS (2021b) https://www.csis.org/analysis/japans-hydrogen- 48 1 mt of hydrogen is equal to 0.00012 Pj to 0.00014 Pj, which
industrial-strategy#:~:text=Japan%20is%20focused%20on%20 is based on the assumption that there is 120-140 Mj of hydrogen
expanding,the%20current%20level%20by%202030 per kg. The Physics Factbook (2005) https://hypertextbook.com/
37 CSIS (2021b) https://www.csis.org/analysis/japans-hydrogen- facts/2005/MichelleFung.shtml
industrial-strategy#:~:text=Japan%20is%20focused%20on%20 49 ACIL Allen (2018) P.C-5 https://arena.gov.au/assets/2018/08/
expanding,the%20current%20level%20by%202030 opportunities-for-australia-from-hydrogen-exports.pdf
38 IRENA (2022) p.41https://www.irena.org/publications/2022/Jan/ 50 The Physics Factbook (2005) https://hypertextbook.com/
Geopolitics-of-the-Energy-Transformation-Hydrogen facts/2005/MichelleFung.shtml
39 METI (2019) P.35 https://www.meti.go.jp/english/ 51 https://www.meti.go.jp/english/policy/energy_environment/
press/2019/0312_002.html global_warming/ggs2050/pdf/02_hydrogen.pdf
 37

Domestic Hydrogen Production - Consumption growth: from 220,000 mt/year in 2020

to 5.26 million metric tons/year in 2040
- 2030 – up to 3million metric tons/year
- Fuel cell vehicles and fueling stations – In 2021, South
- 2040 – 210,000 mt/year to 1.4 million metric tons/ Korea had over 14,400 passenger FCEVs and at least
year (34 pj to 173 pj) based on third party estimates 52 operational HRSs. Targets:
assuming 85% imports (no set government domestic
target) ° 2022 – 80,000 passenger FCEVs and 310 HRSs ,

- 2050 – 3 million metric tons/year (based on 85% ° 2025 – 200,000 passenger FCEVs and 450 HRSs
import assumption) , (Korean New Deal)

Hydrogen Imports ° 2040 - 6.2 million passenger FCEVs and at least

1,200 HRSs. This includes 2.9 million cars, 80,000
A key component of Japan’s hydrogen strategy is taxis, 40,000 buses, and 30,000 trucks by 2040.
to establish a large-scale hydrogen supply chain to
accommodate imports from energy exporting countries. ° 2050 - more than 2,000 HRSs (no 2050 FCEV
Japan’s demand for imported hydrogen may represent target)
more than 85% of its total hydrogen demand. The
- Power generation – 13.8-21.5% of power generation
following import estimates are shown below:
from hydrogen and ammonia by 2050
- 2030 – up to 300,000 mt/year (government target -
Measures to Encourage Hydrogen Demand
hydrogen type not specified). Third party estimates
range from 744,000 mt/year to 3.28 million metric Government Policies
tons/year.
- Hydrogen Law – In 2020, the Korean National
- 2040 – 1.19 million metric tons/year to 8.16 million Assembly passed the Hydrogen Economy Promotion
metric tons/year (166 pj to 977 pj) based on third and Hydrogen Safety Management Law (“Hydrogen
party estimates assuming 85% imports (no set Law”). The Hydrogen Law codifies elements of the
government domestic target) , hydrogen industrial strategy and provides support to
hydrogen-focused companies with subsidies, loans,
- 2050 – 17 million metric tons/year (based on 85%
and tax exemptions for R&D. The Hydrogen Law was
import assumption) ,
revised in late 2021 with amendments defining clean
Import Standards hydrogen and introducing a Clean Hydrogen Energy
Portfolio Standard (CHPS) and Clean Hydrogen
Japan has neither a national certification scheme, nor a Certification System.
definition for clean hydrogen, nor are there any further
known developments on these matters. The Aichi - Renewable Portfolio Standard – since 2012, large
Prefecture is the only region in Japan with a certification power producers have been required produce a
scheme which was established in 2018. In Aichi, the minimum amount of their electricity from clean
scheme defines renewable hydrogen as hydrogen from energy technologies, including fuel cell power
water electrolysis using renewable electricity sources generation.
or from steam-reforming using biomass (see Table 9 on
Government Financing
certification requirements).
- Korean New Deal – As part of the national
5.2.4. South Korea’s Hydrogen Strategy
development strategy to support the Korean
Korean Hydrogen Economy Roadmap economy’s recovery from the COVID pandemic, the
Korean government committed 13.1 trillion won
In 2019, the Republic of Korea (“South Korea”) released (nearly $11 billion) by 2025 to expand the zero-
its national “Hydrogen Economy Revitalization Roadmap,” emission vehicle supply (including FCEVs).
which sets out the government’s plans for growing the
South Korean hydrogen economy. The Roadmap sets - Total hydrogen-related spending – Total fiscal year
growth targets for FCEVs, fuel cells, hydrogen supply and spending in 2021 on hydrogen technologies was
consumption, and hydrogen distribution and storage. $701.9 million, which represented a 40 percent
increase from 2020 spending.
The Roadmap and subsequent policies specify the
following targets: - Funding for the FCEV industry – the South Korean
government has committed $2.34 billion to grow the
hydrogen vehicle industry
38

Subsidies Domestic Hydrogen Production

The South Korean government is providing the following South Korea produces 220,000 mt/year exclusively from
subsidies: grey hydrogen. The country currently does not produce
any green hydrogen. The annual domestic production
- FCEV purchase subsidies – In 2019 the national and
targets are as follows:
local governments provided subsidies for an FCEV
purchase ranging from $27,300 to $30,300. - 2030 – 1.94million metric tons/year.

- HRS subsidies – Currently about half the cost - 2040 – 1.58-5.26 million metric tons/year (minimum
of installing fuel stations is subsidized by the of 30% of the 5.26 million metric tons/year are
government. A hydrogen fuel subsidy is also planned targeted to be from domestic production).
for vehicles through a future amendment to the
Passenger Transport Service Act and the Trucking - 2050 – 5million metric tons/year (3 million mt/year
Transport Business Act. of green hydrogen and 2 million mt/year of blue
hydrogen)
- Natural gas feedstock subsidy – The government
subsidizes the purchase of natural gas used to Hydrogen Imports
produce hydrogen for buildings and at utility scale The South Korean government anticipates that it will
with a 6.5% discount. rely heavily on imported hydrogen to meet its future
Hydrogen Demand Targets and Estimates hydrogen consumption. To that end, the country has
planned 40 import bases by 2050 and expects the
The government aims to boost grow their overall following annual import volumes:
consumption from 200,000 mt/year to 27.9 million metric
tons/year based on the following year targets - 2030 –1.96 million mt/year green hydrogen Third-
party estimates range from 317,000 mt/year to
- 2030 – 3.9 million metric tons/year, with a target of 1.3million metric tons/year.
56% green hydrogen
- 2040 – Up to 3.68million metric tons/year (up to
- 2040 – 5.26 million metric tons/year, 70% blue or 70% of 2040 target) of unspecified hydrogen. No
green hydrogen target specifically for green hydrogen. Third-party
estimates range from 1.36 mm to 4.59 million metric
- 2050 – 27.9 million metric tons/year, over 90%
tons/year (200 pj to 550 pj), or 85% of imports.
green hydrogen with blue hydrogen making up an
estimated 2million metric tons/year - 2050 –22.9 million mt/year of green hydrogen from
overseas
Other targets:
Import Standards
- Fuel mixing with fossil generation – “The government
is targeting a fuel mix of 30% hydrogen at all its In its 2021 revision of the Hydrogen Law, the South
gas-fired power plants by 2035 and a mix of 20% Korean government established a mandatory purchase
ammonia at more than half of its coal-fired power standard, the CHPS, which is scheduled to take effect in
plants in 2030. The government does not specify if mid-2022 and set the foundation for a clean hydrogen
the hydrogen and ammonia must be green or blue, certification system. The Korean government defines
or if grey is allowed. clean hydrogen as either green hydrogen (produced
with renewable energy) or blue hydrogen (hydrogen
- FCEV and HRS targets – (See section “Korean
that is produced from non-renewable energy sources
Hydrogen Economy Roadmap”)
with carbon capture and storage (CCS). Development
- Electricity – South Korea aims to boost their power of the clean hydrogen certification system is underway
generation from hydrogen from 314MW in 2018 to and is expected to be completed in 2023 (see Table 9 on
1.55GW in 2022 and to 17.1GW by 2040. certification schemes below).
 39

Table 9: Overview of certification schemes for imported hydrogen and/or ammonia

MARKET EU GERMANY SOUTH KOREA JAPAN - AICHI PREFECTURE

Requirements a. Hydrogen must be a. 100% RE Unspecified. Will a. Renewable electricity or

sourced from 100% RE need to be either grid electricity accompanied
b. Data on green or blue by renewable electricity
b. Proof of guaranteed received state hydrogen to be certificates.
of origin (GO) aid deemed “clean
cancellation must be hydrogen” under the b. Renewable electricity
provided in accordance CHPS. installations that will be used
with electricity volumes for hydrogen production
Official certification should be new or unused.
consumed standards are
expected to be c. Existing renewable facilities
c. Information on complete by 2023 can be included in the short-
received state aid term.
Certification ISCC PLUS, CertifHy, dena Clean hydrogen Certification Scheme
Schemes dena Biogasregister, Biogasregister, certification system
TÜV Süd CMS 70 TÜV Süd CMS 70 (under development)
Sustainability • Mass balancing: RED Both Book N/A Mass balancing
II & Claim and
Tracking Mass Balancing
Method • Book & Claim: for both dena
CertifHy Biogasregister
• Both: dena and TÜV Süd
Biogasregister, TÜV CMS 70
Süd CMS 70
Status In progress Implemented, In progress, expected Implemented, but applies only
but not currently in 2023 to Japan’s Aichi Prefecture
applicable to
hydrogen
Additional RED II has been Applies to There are no known
Explanation implemented, but biomethane and developments towards
national biogas but could creating a national hydrogen
be expanded to certification scheme
implementation green hydrogen
is pending. All
certifications

will need to seek

recognition by EU under
RED II regulation.

A central part of the regulations in the EU with regard to the

import of green hydrogen is the question of additionality (see
Text Box below).
40

Understanding Additionality Requirements

5.3 LCOH in importing countries and GH2
delivery cost from importing countries
It is important to note, however, that additionality
requirements apply: in order to be eligible to export In order to be able to export green hydrogen to other
to the EU, green hydrogen production must be markets, the cost of production in each of those markets
derived from new facilities in order to prevent that is of central importance. The current cost of producing
clean electricity from existing facilities is merely green hydrogen within the EU, Japan, and South Korea
diverted from supplying homes and businesses to the ranges from EUR 4.50 – 6.00/kg, with both Japan and
production of hydrogen, without catalysing additional South Korea having a higher production cost than
investment in clean energy supply. Germany.

While such additionality standards are not yet

universally applied, and exemptions exist depending
on the country, they are likely to make it difficult, if
not impossible, to rely on existing hydropower or
geothermal assets to produce green hydrogen that is
eligible for export.

For more information on additionality requirements,

see: Agora Energiewende (2021). Making Renewable
Hydrogen Cost-Competitive, https://static.agora-
energiewende.de/fileadmin/Projekte/2020/2020_11_
EU_H2-Instruments/A-EW_223_H2-Instruments_WEB.
pdf

Figure 26: Green Hydrogen Production

Cost Range in Potential GH2-Importing
Countries (2022)
Source: PwC (2022)
 41

Based on the above figure, the current cost of producing The GH2 exporting capabilities of Viet Nam was
green hydrogen in Germany (EUR 4.50 – 4.75/kg) is conducted by comparing H2 production cost in potential
roughly equivalent to the cost of producing it in Viet Nam importing countries (Europe, South Korea, and Japan)
(EUR 4.75 – 5.00/kg). Based on current costs, the more with H2 delivery cost (production plus transportation
attractive export markets are South Korea and Japan, cost) from Viet Nam to these importing countries as
both of which have higher green hydrogen production well as the H2 delivery costs from potential competitors
costs, and greater geographic proximity to Viet Nam. (including specifically Australia, Chile, Morocco, and
South Africa). Information on LCOH was extracted from
However, in order to obtain a more complete picture, it a study on Cost-development of renewable hydrogen
is necessary to consider both the hydrogen production elaborated by PwC (2021). To estimate the transportation
costs as well as the respective shipping costs from cost from potential GH2 exporting to potential importing
different competitors to the key importing markets. countries, the unit shipment cost (in US$/kgH2/1000
The total green hydrogen delivery cost combines km) from Viet Nam to respective importing countries
both the production and the transportation costs. Thus, was first calculated (see Table 3 below) and then used as
to compare how Viet Nam is positioned competitively unit shipment cost from potential exporting countries to
against other potential GH2 exporting countries, it respective importing countries.
is necessary to compare the total combine GH2
production costs in different competitor markets as
well as the respective distance from those markets
to the GH2 importing countries.
42

Table 10: Distances from Viet Nam to Key Import Markets including Unit Shipping
Costs

Destination Distance 2030 2050

(km)
Total shipping Unit shipping cost Total shipping Unit shipping cost
cost (US$/kg) (US$/kg/1000 km) cost (US$/kg) (US$/kg/1000 km)
Europe 18670 2.98 0.16 2.18 0.12
Japan 5719 2.67 0.47 2.14 0.37

South Korea 5050 2.12 0.42 1.61 0.32

Table 11: Green hydrogen exporting capabilities of Viet Nam to Europe

Cost type 2030 2050

(US$/kgH2)
Av. LCOH Shipping Total Delivery Av. LCOH Shipping Total Delivery
(US$/kg H2) (US$/kg H2) cost (US$/kg (US$/kg H2) (US$/kg H2) cost (US$/kg
H2) H2)
Europe/ 3.44 0.00 3.44 2.33 0.00 2.33
Germany
Morocco 2.92 0.50 3.42 1.33 0.36 1.69
(Casablanca)
South Africa 2.92 2.17 5.09 1.33 1.58 2.91
(Cape Town)
Chile 2.39 2.98 5.37 1.33 2.17 3.50
(Chacabuco)
Australia 2.92 3.41 6.33 1.33 2.49 3.82
(Perth)
Viet Nam 3.18 2.98 6.16 1.59 2.18 3.77
(Saigon)

*Converted from EUR to US$ (1 € = 1.06 US$ based on https://

www.oanda.com/currency-converter/en/ of 28.04.2022); Note:
port-to-port distances are derived from http://ports.com/sea-
route/

Table 12: Green hydrogen exporting capabilities of Viet Nam to South Korea

Cost type 2030 2050

(US$/kgH2)
Av. LCOH Shipping Total Delivery Av. LCOH Shipping Total Delivery
(US$/kg H2) (US$/kg H2) cost (US$/kg (US$/kg H2) (US$/kg H2) cost (US$/kg
H2) H2)
South Korea 4.24 0.00 4.24 2.92 0.00 2.92
Morocco 2.92 8.78 11.70 1.33 6.69 8.02
(Casablanca)
South Africa 2.92 7.81 10.73 1.33 5.95 7.28
(Cape Town)
Chile 2.39 12.42 14.81 1.33 9.46 10.79
(Chacabuco)
Australia 2.92 3.94 6.86 1.33 3.00 4.33
(Perth)
Viet Nam 3.18 2.12 5.30 1.59 1.62 3.21
(Saigon)

*Converted from EUR to US$ (1 € = 1.06 US$ based on https://

www.oanda.com/currency-converter/en/ of 28.04.2022)
 43

Table 13: Green hydrogen exporting capabilities of Viet Nam to Japan

Cost type (US$/ 2030 2050

kgH2)
Av. LCOH (US$/ Shipping (US$/ Total Delivery Av. LCOH (US$/ Shipping (US$/ Total Delivery
kg H2) kg H2) cost (US$/kg kg H2) kg H2) cost (US$/kg
H2) H2)
Japan 4.24 0.00 4.24 4.24 0.00 4.24
Morocco 2.92 10.05 11.7 1.33 8.07 9.40
(Casablanca)
South Africa 2.92 9.00 10.73 1.33 7.22 8.55
(Cape Town)
Chile 2.39 14.10 14.81 1.33 11.32 12.65
(Chacabuco)
Australia (Perth) 2.92 4.57 6.86 1.33 3.67 5.00
Viet Nam 3.18 2.67 5.3 1.59 2.14 3.73
(Saigon)

*Converted from EUR to US$ (1 € = 1.06 US$ based on https://

www.oanda.com/currency-converter/en/ of 28.04.2022)

The hydrogen supply cost is an essential input to decide whether The table below compares the delivery costs of green hydrogen
it is worthwhile to import or export hydrogen. The hydrogen (in the form of green ammonia) from Viet Nam to the three
supply combines both the production and the transportation analysed destinations.
costs.

Table 14: Green hydrogen delivery costs to South Korea, Japan, and Europe

COST TYPE 2030 2050

(US$/KGH2)
SOUTH KOREA Japan Europe South Korea Japan Europe

LCOH 2.76 2.76 2.76 1.00 1.00 1.00

Shipping cost 2.12 2.67 2.98 1.61 2.14 2.18

Total 4.88 5.43 5.74 2.61 3.14 3.18

Based on the competitive position of Viet Nam against When shipping costs are added (see Section 4), the more
other potential competitors, including shipping cost attractive near-term opportunities exist in exploring
factors, the destinations where Viet Nam is most exports of GH2 to markets in the Asia Pacific region such
likely to be able to supply green hydrogen cost- as Japan and South Korea.
competitively are in the Asia-Pacific region, in
particular, South Korea and Japan. For most other
regions in the world, other competitors located closer to
the importing market are likely to retain a competitive
edge.
44

5.4 Viet Nam’s GH2 export advantages and

disadvantages
As the market for green hydrogen gains momentum
in the coming years, a number of export opportunities
are likely to emerge. With a clear and focused policy
framework, Viet Nam can position itself to become more
active in the production and export of green hydrogen
to other parts of the world. In this regard, Viet Nam has
several key advantages:

Number Advantages

1. Stable and forward-looking energy policy

framework

2. Large and diverse renewable energy industry

3. Proximity to major importers in the Asia-Pacific

region

4. Strong renewable energy resource potential

5. Low political risk

In addition, Viet Nam’s latest draft PDP signals a growing interest

in boosting production, storage, and export capacity for green
hydrogen. However, with regard to export opportunities, Viet
Nam faces a number of important challenges:

Number Challenges

1. Limited land availability when compared to

other major potential exporting countries, such as
Australia, Chile, and Morocco;

2. Slightly lower resource quality than some of

the other potential competitors, in particular with
regard to solar.

3. Greater geographic distance to the EU (and

hence, higher GH2 shipping cost)

4. Higher cost of capital than many other potential

exporting countries such as Australia, or Chile.

In this regard, Viet Nam has both important advantages but

also faces some significant challenges in scaling up export-
oriented green hydrogen production. Policymakers will need to
take these challenges and advantages into consideration when
developing their policy frameworks.
 45

Chapter 6
46

Conclusions and recommendations

Green hydrogen is poised to play an increasingly East also benefit from abundant oil and gas production
important role in the energy transition worldwide, in and can cross-subsidize green hydrogen production
particular to facilitate the decarbonisation of “hard-to- either directly, or by providing low-interest loans, or
decarbonise” sectors, such as steel production, shipping, sovereign backing for green hydrogen production.
and the production of chemical feedstocks. While Given the important role that the cost of capital plays in
hydrogen is already in use in a number of industries determining the levelized cost of hydrogen production,
around the world, it has yet to realise its full potential strategies will be needed in Viet Nam to help reduce
to support the global energy transition. As of early the cost of capital used to finance green hydrogen
2022, less than 1% of the hydrogen used around the production.
world today is derived from water electrolysis; the vast
In order to participate and compete in this growing
majority is still produced using fossil fuels. In addition,
market, there are a number of policy measures that Viet
the majority is currently used in oil refineries and in the
Nam can implement. The policy recommendations are
production of fertilizers. Concerted policy, investments,
broken into three major areas:
and planning are necessary to overcome the remaining
barriers to green hydrogen and further reduce costs. 6.1 Policies for Encouraging Green
The cost reductions expected in green hydrogen Hydrogen Production
production will be critical to helping drive demand. - Establish clear long-term targets for the
Looking ahead to 2030, 2040, and 2050, significant cost production of green hydrogen in Viet Nam.
reductions are anticipated, brining green hydrogen costs Such targets should be incorporated directly into
down from a range of EUR 3 - 6/kg in much of the world Viet Nam’s Power Development Plan (PDP) and be
today to EUR 1,00 - 1,50/kg by 2050. In combination with adjusted as the market develops.
these projected cost declines, it is expected that global
green hydrogen production costs will converge in much - Introduce favourable taxation and fiscal rules
of the world in the coming decades. This should favour for green hydrogen production. Since much of the
countries like Viet Nam that are developing clear policies investment for large-scale hydrogen production is
and strategies to support the growth of the sector. likely to come from international investors, tax rules
play an important role in determining the success of
However, given the substantial impact of shipping costs, a particular country in mobilizing investment.
it is likely in the next decade that the international trade
in green hydrogen will occur primarily on a regional - Offer government-backed loans for green
basis, with regional trading hubs between markets that hydrogen production. Given the scale of the
are close to one another geographically. Pipelines remain investments required, and the higher overall cost of
the cheapest and safest method for shipping green capital in Viet Nam, the government should consider
hydrogen, which means that countries with existing offering government backing to loans used to
pipeline networks will have an early advantage and will financed green hydrogen production.
be able to procure green hydrogen more cheaply than
- Ensure all new natural gas infrastructure,
by ship. The high shipping costs also mean that many
including pipelines, are hydrogen-ready. Although
countries will try to produce some share of their green
the future growth of natural gas infrastructure in Viet
hydrogen needs themselves, which may weaken import
Nam remains unclear, Viet Nam can send a strong
needs. All of these factors have important implications
signal to the market by requiring all new investments
for the development of trade in green hydrogen in the
in natural gas infrastructure to be “hydrogen-ready”.
years ahead.
- Explore the introduction of feed-in tariffs for
A further factor that needs to be overcome in countries
green hydrogen production fed into the natural
like Viet Nam that wish to export green hydrogen is the
gas network. Such “green gas feed-in tariffs” could
cost of capital. As highlighted above, the cost of capital
help mainstream green hydrogen use in Viet Nam by
in Viet Nam is notably higher than the cost of capital in
introducing it into the natural gas system.
other competitor markets like Australia. Other countries
with excellent solar resources such as in the Middle
 47

- Develop monitoring and certification protocols to - Adopt carbon pricing. Carbon pricing increases the
ensure compliance with international norms and costs of fossil fuel-based energy carriers, thereby
standards. One of the central aspects to a successful improving the competitive position of alternatives
program of green hydrogen production is a robust like green hydrogen. A clear carbon price, gradually
monitoring and certification regime. In order to increasing over time, can help provide a signal to
export to major markets like the EU and Japan, it will the industry and help drive demand for greener
be important to ensure a high degree of trust in the alternatives.
certification process for green hydrogen production.
- Introduce standards for the injection of green
Viet Nam can support this certification process by
hydrogen into natural gas infrastructure. Viet Nam
aligning itself with international norms.
should adopt standards to provide clarity over the
- Establish a designated industrial cluster for injection of green hydrogen or its derivatives into the
hydrogen production and research. Since the natural gas system.
majority of current hydrogen use is located in oil
- Invest in retrofitting gas distribution infrastructure to
refineries, and oil refineries are typically located near
be “hydrogen-ready”.
major ports, ports could become central nodes in
such green hydrogen research clusters. - Fund research projects to explore new applications
for green hydrogen use. Such funding could
6.2 Policies for Encouraging Green
be allocated to the industrial research clusters
Hydrogen Demand
mentioned above and help foster the skills and
In addition to green hydrogen support policies, it is knowledge required.
important to develop specific policies aimed at creating
- Fund the establishment of an annual monitoring
greater domestic demand for green hydrogen, in order
report to track the cost development and near-
to help accelerate Viet Nam’s own energy transition.
term market competitiveness of new applications
This includes a set of policies specifically to encourage
for green hydrogen in order to encourage greater
hydrogen adoption in the natural gas pipeline network,
investment, innovation, and market demand.
shipping, aviation, and industry:

- Provide fiscal incentives for industries to shift

their hydrogen or ammonia consumption to green
hydrogen. Many users of ammonia or hydrogen are
unlikely to make the shift to green hydrogen without
such incentives, as green hydrogen is currently more
expensive than grey hydrogen.

- Introduce requirements for key domestic users of

hydrogen (e.g., refineries) to meet a minimum share
of their hydrogen needs with certified, domestically
produced green hydrogen (similar to a Renewable
Electricity Standard or “Renewable Portfolio
Standard”)

- Introduce policies to encourage green hydrogen

use in key sectors such as shipping. The shipping
industry is one major potential customer for green
hydrogen. However, many ships currently run on
highly polluting Bunker C or diesel fuel, which is often
cheaper. Transitioning the shipping industry to clean
fuels like green hydrogen will require more targeted
policies, including regulatory requirements to reduce
their carbon emissions.
48

6.3 Policies for Reducing the Cost of Capital

- Establish export-oriented partnerships with
importing regions (e.g., the EU, Germany) to
bring lower-cost, long-term financing to support
the development of green hydrogen production
infrastructure in Viet Nam

- Explore the creation of a green hydrogen export

initiative to encourage multi-lateral lenders to
support the build-out of green hydro production.

- Explore providing sovereign backing, or direct

government investment, for strategic green
hydrogen investments

- Explore introducing guaranteed offtake agreements

or establishing a government-backed “buyer-of-last-
resort” for green hydrogen to reduce market risk.

As the market for green hydrogen gains momentum

in the years ahead, Viet Nam is well-positioned to
participate in green hydrogen production. With targeted
policies and clear targets, Viet Nam can ensure that the
industry is ready to meet the growing global demand for
green hydrogen.

Based on current economics and the important role

played by shipping costs, the more viable opportunities
for Viet Nam to export green hydrogen are likely to
be concentrated in the Asia Pacific region, including in
particular to Japan and South Korea. By focusing first on
meeting growing demand in Asia, Viet Nam can actively
support the emergence of regional trade in green
hydrogen, which could eventually flourish into a truly
global trade by the 2040s as the green hydrogen industry
enters its more mature growth phase.
 49

Annex 1: Input Parameters for Financing

Costs

Technical Parameters Commercial Financing Concessional Financing

Solar PV Cost Calculation 20-year operating life, 70% debt, 30% equity, 80% debt, 20% equity,
1-year construction time, 14-year debt term, cost 18-year debt term, cost of
100MW project, Annual of debt: 7%, cost of debt: 3%, cost of equity:
production degradation of equity: 12% (WACC: 8.1%), 8% (WACC: 3.8%), Inflation:
0.6%, Installed cost: USD Inflation: 3% p.a., Tax 3% p.a., Tax treatment
$640/kW, Fixed O&M: USD treatment in line with Viet in line with Viet Nam tax
$10/kW/year, Variable Nam tax code according to code according to Circular
O&M USD $0/MWh, Lease Circular 78/2014 / TT-BCT 78/2014 / TT-BCT
costs: USD $3.000/year

Onshore Wind Power Cost 20-year operating life, 70% debt, 30% equity, 80% debt, 20% equity,
Calculation 2-year construction time, 10-year debt term, cost of 18-year debt term, cost of
100MW project, Annual debt: 8%, cost of equity: debt: 3%, cost of equity:
production degradation of 13% (WACC: 9%), Inflation: 9% (WACC: 4.0%), Inflation:
1.6%, Installed cost: USD 3% p.a., Tax treatment 3% p.a., Tax treatment
$1.350/kW, Fixed O&M: in line with Viet Nam tax in line with Viet Nam tax
USD $30/kW/year, Variable code according to Circular code according to Circular
O&M USD $0/MWh, Lease 78/2014 / TT-BCT 78/2014 / TT-BCT
costs: USD $10.000/year

Offshore Wind Power Cost 20-year operating life, 70% debt, 30% equity, 80% debt, 20% equity,
Calculation 3-year construction time, 10-year debt term, cost 18-year debt term, cost
100MW project, Annual of debt: 9%, cost of of debt: 3.5%, cost of
production degradation of equity: 13% (WACC: 9.7%), equity: 10% (WACC: 4.6%),
1.6%, Installed cost: USD Inflation: 3% p.a., Tax Inflation: 3% p.a., Tax
$2.750/kW, Fixed O&M: treatment in line with Viet treatment in line with Viet
USD $60/kW/year, Variable Nam tax code according to Nam tax code according to
O&M USD $4.5/MWh, Circular 78/2014 / TT-BCT Circular 78/2014 / TT-BCT
Lease costs: USD $6.500,
50

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