Realizing the Intended Nationally Determined Contribution: The Role of Renewable Energies in Vietnam

Abstract

This study contributes to the realization of intended nationally determined contributions (INDCs) by analyzing their implications for the energy production system and the economy and determines the role of renewable energies (RE) in reducing the challenge of committing to the INDCs. The Asia-Pacific Integrated Model/Computable General Equilibrium (AIM/CGE) model was used to assess seven scenarios having the same socioeconomic development but different shares of RE in power generation. By comparing different relative reductions caused by the emission constraints vis-a-vis the business-as-usual (BaU) scenario, the mitigation costs can be estimated. Results show that the economic impact could be reduced by around 55% in terms of welfare loss (from 6.0 to 2.7%) and by around 36% in terms of gross domestic product (GDP) loss (from 3.4 to 2.1%) through the incorporation of high levels of renewable energy. Furthermore, the additional double deployment of wind and SPV to 5.4% and 12.0%, respectively, which currently comprise 43.1% of the renewable energies used in electricity generation, could reduce the GDP loss from 2.1 to 1.9% and reduce the welfare loss from 2.7 to 1.5% in order to achieve a 25.0% GHG emissions reduction. These losses are less than those in the pricing-only scenario (2.1% and 2.3%, respectively).