Fuel Efficiency Policy and Measures in Vietnam

Context of Transport Climate Action

The global vehicle fleet is set to increase rapidly from about a billion today to as much as 2.5 to 3 billion by 2050. Almost all of this growth is to take place in developing and transitional countries resulting in an almost three fold increase of CO2 emissions of the global vehicle fleet. The transport sector has the highest growth rates of CO2 emission of any sector. The GFEI has a global target of achieving about 4 l/100km for all vehicles by 2050, and all new vehicle sales by 2030.

Vietnam, like other ASEAN countries, increasingly relies on fuel imports with very volatile prices. CO2 emissions are equally expected to rise as fuel use increases. Air pollution, although also depending on the quality of fuel and emission control devices, will also increase. Of these, particulate emissions are of concern because of their health impacts as well as their contribution to climate change.

According to the first Biennial Update Report of Vietnam, the energy sector emitted a total of 141 MtCO2-eq and transport is the third largest greenhouse gas (GHG) emitter in the energy sector, accounting for 31.8 MtCO2-eq or 23% of the energy sector emissions (2010). Due to rapid motorisation, transport GHG emissions are projected to rise to 87.8 Mt by 2020, a 76% increase in 10 years.

The total number of vehicles in the country reached 31.3 million vehicles (2010), which increased to 38.6 million vehicles in 2012 (Vietnam Register). Between 2000 and 2010, the total number of vehicles in Vietnam increased at an average rate of 17.7% per year (Clean Air Asia, 2012), while the average rate for 2010-2012 was 11.1% per year (Vietnam Register, 2013). With increasing GDP/capita, growth rates of passenger cars are picking up and expected to continue to rise. It is important that new vehicles, passenger cars and also motorcycles become much more efficient in the country.

Description

The Law on Energy Efficiency and Conservation which was passed by the 12th National Assembly on 18 June 2010 emphasises the road map of energy labelling and highlights energy labelling as an effective method to increase the use of vehicles with high efficiency, gradually removing the use of vehicles with outdated technology. As a state organization, Vietnam Register spearheaded the development of fuel economy policies in the country, particularly voluntary fuel consumption limits for motorcycles and light-duty vehicles and a fuel economy labelling program which started on 1 January 2015 for locally assembled and imported cars with up to 7 seats.

As of end of October, a total of 372 car models have published fuel economy ratings by car manufacturers or importers and 127 models have been locally verified. The tested value should not exceed the declared value of manufacturer or importer by more than 4%. According to Vietnam Register who is leading this initiative, the emission and fuel consumption test can be integrated in one test. The label includes: (a) name, address, telephone, fax of manufacturer or importer (b) trade name, mark, model, origin, technical specifications and (c) certified fuel consumption includes urban, extra urban and combined cases in l/100 km.

Implementation

Initially, the development of the fuel economy policies was led by the Vietnam Register with support from UNEP and Clean Air Asia. The fuel consumption limits for motorcycles and light-duty vehicles were adopted as voluntary standards. And the fuel economy labels came into effect January 2015.

Since the government is still interested in developing and strengthening their fuel economy policies, the Transport and Climate Change (TCC) project (Under the cooperation between Vietnam’s Ministry of Transport (MOT) and the ASEAN-German Technical Cooperation) has been supporting MOT to develop a NAMA on Fuel Efficiency Policies in the Land Transport Sector. It is envisaged that a package of policies would be covered under this NAMA, including Fuel Economy Labelling, Fuel Efficiency Standards, economic or fiscal incentives for fuel efficiency, and programmes to support technology improvements. The detailed work will be undertaken as follows:

  • Conduct the fuel efficiency policies study:
    • Collect and update any data for fuel consumption of newly sold passenger cars and motorcycles with analysis of data, including an explanation of trends and description data of gaps
    • Conduct inventory of existing policies, strategies, and plans related to vehicle fuel efficiency
    • Review and conduct gap analysis of the existing and planned fuel efficiency policies
    • Identify policy options and key consideration for advancing future fuel efficiency policies
  • Working with car manufacturers as well as other relevant agencies/departments to prepare mandatory fuel economy standards, addressing issues learnt from the voluntary phase and set up a roadmap for implementation (providing lead time for car manufacturers to adopt the new standards)
    • Extend the voluntary car labelling scheme to passenger cars with more than 7 seats.
    • Develop the MRV methodology
    • Provide public awareness campaigns
    • Fuel economy standards and labels are relatively cheap measure to influence consumer behaviour and to induce car manufacturers to produce more efficient vehicles so these would be funded by the state budget while other measures like fiscal incentives and technology improvements would apply for international funds (NAMA funds).

Challenges:

  • Data availability, lack of awareness with car/2W buyers
  • Commercial interests of car manufacturers
  • Technological limits of car manufacturers (mainly following technologies from overseas). Need to give a few years of lead time for car manufacturers to meet the standards

Benefits

The package of fuel efficiency policies and measures does not only reduce fuel consumption, but also mitigate GHG emissions due to less fuel combustion from transport activities

Sustainable development benefits:

  • Raising awareness
  • Improving air quality
  • Reduced fuel costs for consumers
  • Improved energy security
  • Noise reduction

Potential for scaling up

The development of fuel economy policies and measures varies largely between ASEAN countries and there would be an opportunity to exchange and work between the governments to develop policies to encourage fuel economy improvement for vehicles produced or sold in these countries and to improve the consistency and alignment in policies across regions.

Selected references

Dematera et al. Tracking Sustainable Transport in Vietnam: Data and Policy Review for Energy Efficiency and Climate Change 2015 http://transportandclimatechange.org/wp-content/uploads/2015/10/Vietnam.pdf

Le Anh Tu (2014). Vehicle Fuel Consumption Regulation in Vietnam [PDF document]. Retrieved from http://baq2014.org/wp-content/uploads/05-VIETNAM.pdf

PROJECT INFORMATION

Location:

Asia

Start:

2012

Finish:

On-going

Tags:

Vietnam, Mitigation, Passenger cars, Policy, Partnership

Organizer/s:

Vietnam Register Ministry of Transport Clean Air Asia UNEP GIZ

Contact/s:

Mr. Tran Anh Duong (Department of Environment, Ministry of Transport) trananhduong@mt.gov.vn Mr. Le Anh Tu (Vietnam Register, Ministry of Transport) Email: tu_leanh@vr.org.vn Mr. Tali Trigg (GIZ) tali.trigg@giz.de Bert Fabian (UNEP) bert.fabian@unep.org