Interest in green hydrogen is growing worldwide due to renewable energy demand, government support and technological advancements.
By early 2023, over 40 countries, including the EU, Japan, China and the US, had launched hydrogen strategies, with significant financial backing. The EU plans for green hydrogen to make up 13-14 per cent of its energy by 2050, while Japan and South Korea aim for 10 per cent and 33 per cent, respectively.
A Deloitte report highlights the potential for green hydrogen to support industrial growth in Global South countries like Vi?t Nam, particularly in sectors like steel manufacturing.
At present, 99 per cent of industrial hydrogen is so-called 'grey', generated from methane and contributing to CO2 emissions. Green hydrogen, produced via water electrolysis, offers a cleaner alternative but requires an estimated $9 trillion in global investment by 2050.
Vi?t Nam has recognised this opportunity and launched its hydrogen strategy in February 2024. The strategy sets ambitious goals of producing 100,000 to 500,000 tonnes of green hydrogen annually by 2030, with a long-term target of 10 to 20 million tonnes per year by 2050. These targets align with the country's broader net-zero emissions goal.
The strategy includes plans to develop both blue hydrogen (from natural gas and carbon capture) and green hydrogen (from renewable sources), serving both domestic and export markets. Vi?t Nam also plans to pilot hydrogen and ammonia cofiring in power generation as part of its National Power Development Plan (PDP8).
Hurdles
One of the most significant green hydrogen projects in Vi?t Nam so far has been in Bình ??nh Province.
Spearheaded by the Phù M? Investment Group, this project is set to begin production in 2026, with an initial capacity of 450 to 500MW, producing around 20,000 tonnes of hydrogen annually during 2026-2030. The capacity will be scaled up to 2,000MW, equivalent to 160,000 tonnes per year by 2035.
The project, worth VN?21 trillion ($827 million), will use technology and equipment from Siemens Energy and other G7 countries. However, while the project's scale is impressive, it faces several hurdles.
According to experts, the high cost of producing green hydrogen is a major obstacle. The process of electrolysing water to produce hydrogen using renewable energy is expensive compared to hydrogen made from fossil fuels. This has made it difficult for Vi?t Nam’s projects to secure financing, as investors are wary of uncertain returns and the nascent demand for green hydrogen in the country.
While regions like Europe, Australia and the Middle East have committed significant investments, reducing costs and ensuring demand, Vi?t Nam has yet to make similar strides.
“Hydrogen projects focusing on electrolysis using renewable energy are currently not financially viable due to high production costs. We are seeing major projects in Europe and Australia being delayed or cancelled for this reason,” said the President of the Vietnam ASEAN Hydrogen Club, Lê Ng?c Ánh Minh.
According to the Vietnam Petroleum Institute (VPI), by 2025, the cost of producing clean hydrogen (blue and green hydrogen) will remain high, with production costs in Vi?t Nam being 1.3 and 2.1 times higher than grey hydrogen, respectively. To enable the development of clean hydrogen, government policies are needed to ensure its competitiveness.
Government support
The Vietnamese government has recognised the potential of green hydrogen and launched a national strategy, but faces challenges like unclear investment guidelines, limited infrastructure and a lack of regulations. Experts have agreed that clear investment incentives and a regulatory framework are needed to support large-scale production and infrastructure development.
However, Minh cautioned that localities receiving hydrogen investment projects should be careful to avoid approving scattered investments that waste resources, especially in areas without proper hydrogen planning or the necessary infrastructure. Moreover, industries such as oil and gas, mining and chemicals should be involved in hydrogen production, leveraging their existing expertise.
International collaboration is also key, according to Minh. For example, partnerships with China could help lower production costs and boost competitiveness, while collaboration with the EU, US and other hydrogen technology leaders could strengthen Vi?t Nam's position in the global market.
Despite challenges, there is hope for green hydrogen in Vi?t Nam’s future. The country is rich in renewable energy resources, particularly wind and solar power, which could be harnessed to produce low-cost hydrogen. Green hydrogen is seen as essential for the global transition to net-zero emissions and Vi?t Nam could become a significant player if it overcomes internal challenges.
By the end of 2025, the International Energy Agency (IEA), along with key industrial countries and other bodies, will define low-emission hydrogen standards. This hydrogen can be produced from sources like natural hydrogen, electrolysis using renewable energy, LNG, waste, coal and agricultural by-products, while adhering to CO2 and greenhouse gas emission guidelines.
According to the head of economic consulting at Deloitte, Sébastien Doguet, this is an opportunity for developing economies to diversify exports, decarbonise their economies and boost local industries.
