Vietnam coal-fired power emissions hit new highs in early 2024

Carbon dioxide emissions from Vietnam's coal-fired power plants jumped to a new high for the first month of the year in 2024 as the country's power producers cranked output to avert a repeat of power outages seen last year.

Vietnam has nearly doubled imports of thermal coal so far this year from the same period in 2023 as the government strives to reassure foreign businesses and investors that power supplies will remain uninterrupted in 2024.

The surge in coal purchases by the world's 10th largest coal consumer suggests coal-fired emissions may climb higher still in the months ahead, undermining global efforts to cut back on fossil fuel use and pollution.

NEW HIGHS

January's coal-fired emissions tally of 11 million metric tons of CO2 and equivalent gases is the highest on record for that month, data from energy think tank Ember shows.

The January total is nearly 70% above the emissions load in the same month of 2023, and is roughly 30% above the January average for the past five years - indicating a clear break with the energy generation trends of previous years.

Coal-fired electricity generation was 12.75 terawatt hours (TWh) in January, 68% more than in January 2023 and the highest monthly total since last July.

Coal produced 55% of the country's total electricity in January, up from an average of 46% in 2023 as a whole.

Total electricity generation from all sources was 23.35 TWh, or 30% more than the same month in 2023.

The high coal-fired and overall generation totals indicate that Vietnam's power firms are clearly committed to raising output, likely in response to pressure from the government to avert the outages seen in 2023 that hurt output at several major factories and production lines.

Recovering industrial activity in neighbouring China is also likely spurring Vietnam's power producers to raise production, as several key Vietnamese industries have strong ties to China and tend to see pickups in order flows whenever Chinese consumer demand rises.

SEASONAL PEAKS

As Vietnam's annual power emissions historically peak around May and June when demand for air conditioning is highest, the surge in emissions at the start of the year suggests potential for additional emissions increases over the coming months and for full-year emissions tallies to smash previous records.

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For 2023 as a whole, Vietnam's coal-fired emissions were a record 110 million tons, and up from 90 million tons in 2022.

If the strong pace of emissions seen so far in 2024 is sustained through the rest of the year, then a full-year total of more than 130 million tons is possible.

The exact volume of power emissions will ultimately be determined by the power mix available to Vietnam's power producers during peak demand periods.

The second largest source of electricity in Vietnam after coal is hydropower, which produced around 30% of the country's electricity in 2023.

In January, hydro dams accounted for only 20.5% of total generation due to enduring drought issues, which forced power firms to ratchet up production from other sources.

If the country receives increased rain levels over the coming months, hydro generation could rebound sharply and allow for curbs to coal generation later in the year.

Higher production from solar and wind farms could also allow for power providers to cap coal use, especially during the sunniest months of the year when air conditioning demand is at its highest.

Wind electricity generation scaled a record in January as new wind farms came online, and wind output should continue to pick up over the rest of the year as new facilities flow power onto the grid.

However, solar and wind farms generated only 13.6% of Vietnam's total electricity in 2023, and will likely struggle to push their collective share of overall generation much higher over the near term amid ongoing concerns about the profitability of new renewable energy projects.

That means power firms will remain heavily reliant on coal for a majority of Vietnam's power needs for the foreseeable future, and may continue lifting coal-fired emissions to new highs for several more years.

Sourced from Reuters