Vietnam Embarks on Biofuel Development to Achieve Carbon Neutrality by 2050

Strategic Insights -

Vietnam is racing against time to implement its plan to achieve carbon neutrality by 2050, with the Ministry of Industry and Trade identifying biofuel development as a key strategy. Minister Nguyen Hong Dien emphasized the importance of transforming energy towards green sources to respond to climate change, reduce fossil energy dependence, and promote sustainable economic growth. With its abundant raw materials and clear national energy development strategy, Vietnam has significant potential to participate in the global biofuel trend.

Key Takeaways:

  • The Ministry of Industry and Trade has determined that Vietnam will require the use of E10 petrol nationwide from January 1, 2026, except in specific areas such as defense, security, or aviation.
  • Domestic biofuel production capacity is currently only about 40% of demand, with the rest being imported. By 2024, E5 accounted for only about 21% of the market, with many localities having a lower market share.
  • The Ministry of Industry and Trade has identified several challenges hindering the growth of the biofuel market, including consumer psychology, distribution infrastructure limitations, and inadequate compliance with E5 business regulations by some private enterprises.
  • Domestic ethanol factories have faced numerous obstacles, with only 2 factories operating at around 50% capacity. The government has identified the need for stronger communication to create trust in the community, as well as improved financial, tax, and credit mechanisms.
  • Since 2026, the Ministry of Industry and Trade will study raising the mixing rate to E15 or E20 depending on socio-economic conditions, production capacity, and energy security.
  • Businesses must proactively restart ethanol projects, ensure compliance with mixing ratios, and face sanctions for non-compliance.

Statistics:

  • Vietnam's domestic biofuel production capacity currently meets only 40% of demand.
  • E5 accounted for only about 21% of the market by 2024.
  • Seven ethanol projects have faced numerous obstacles, with only two operating at around 50% capacity.
  • Vietnam has over 500,000 hectares of cassava, output of over 10 million tons/year, with the potential to create a stable output and reduce dependence on urine exports.
  • Ethanol prices have been lower than mineral gasoline, contributing to stable retail prices, inflation control, and environmental benefits.

Sources:

  • "Biofuel development in the new period - Key tasks to create a sustainable future for Vietnam" seminar organized by the Ministry of Industry and Trade on August 27.
  • Resolution 55 of the Politburo.
  • Interview with Dao Duy Anh, Deputy Director of the Department of Innovation, Innovation, Green Conversion, and Industrial Promotion (Ministry of Industry and Trade).
  • Interview with Do Van Tuan, Chairman of the Vietnam Biofuel Association.