Japan Provides Energy Efficiency Program Assistance

Posted on NOVEMBER 12, 2012 
Written by VEN

(VEN) – Japan is well known for its energy efficiency programs. The beginning of pilot projects to help Vietnam’s energy efficiency programs such as the Bilateral Offset Credit Mechanism (BOCM) has offered high hopes of efficient returns.

A Vietnamese business delegation visits Mori Tower in Japan, which adopts many energy efficiency solutions

A Vietnamese business delegation visits Mori Tower in Japan, which adopts many energy efficiency solutions

From a pilot project

Vietnam has very large energy efficiency potential in every sectors (about 10 to 40 percent), of those buildings and hotels have largest energy efficiency potential. However, due to technological and financial barriers, not many organizations and units could implemented energy efficiency programs efficiently and Legend Hotel in Ho Chi Minh City is a typical example.

Accordingly, to support Legend Hotel in the implementation of energy efficiency programs, the project concentrated on energy administration and energy-using equipment. Satoshi Nakamura, Senior Consultant of Mitsubishi UFJ Morgan Stanley Group, one of the participants in this project said “to apply energy efficiency solutions at Legend Hotel, we have installed Building Energy Management Systems (BEMS), Heat-pump system and water-saving showers. It was estimated that these solutions would help the hotel save about US$100,000 a year. In addition, the project would reduce 700 tonnes of Carbon Dioxide, which then would be bought back by the Japanese Government.

Vietnamese enterprises, mostly small and medium-sized ones don’t have strong financial resources to invest in equipment that bring high energy efficiency. To resolve this problem, about US$400,000 for energy efficiency project carried out at Legend Hotel was spent through energy service companies (ESCOs) by the VietEnergy Service and Consulting Joint Stock Company (Viet ESCO). Accordingly, Viet ESCO invested the whole energy efficiency equipment and the profit based on energy efficiency revenue over a certain period of time would be divided equally for Viet ESCO and the hotel. After Viet ESCO recoups its investment capital and earns a certain amount of profit, all the equipment will belong to the businesses when the project contract finishes.

…to a suitable mechanism for Vietnam

Satoshi Nakamura also said energy efficiency project carried out at Legend Hotel was only a pilot project so that Japanese enterprises could appeal its Government to provide finance and preferential financial sources for energy efficiency projects, and more specifically the implementation of BOCM mechanism in Vietnam. BOCM is expected to bring great effects for Vietnamese enterprises which are going to deploy energy efficiency programs.

Shigenori Hara, Director of the Global Environment Partnership and Technologies Office of Japan’s Ministry of Economy, Trade and Industry (METI), said: “BOCM is a mechanism that brings benefits to both parties. It can help Vietnamese businesses implement a credit mechanism and assist Japanese businesses to attain their business objectives. In the project carried out at Legend Hotel, for example, normally it takes Viet ESCO five years to recover capital, but if it receive support from BOCM mechanism with 30-40 percent of total investment capital, it only takes three years for the project to recover capital.

BOCM is a program aimed at reducing carbon dioxide (CO2) emissions in energy efficiency programs implemented in buildings and hotels and it can replace clean fuel used for traffic vehicles. Initially, buildings and hotels are subjects that experienced first BOCM projects. To adopt BOCM mechanism and receive its supports, firstly the subjects have to reduce CO2 emissions; secondly they have to present their methodology and calculation solutions to cut down the CO2 and that methodology must be officially recognized by the Vietnamese and Japanese Governments. It is expected that about 30 buildings and hotels in Vietnam will be selected to participate in these energy efficiency projects in 2013. Participants will have the chance to find out about the equipment, train their workforce and receive financial support to operate the equipment in the most efficient ways.

Energy efficiency strategy is being implemented widely in Vietnam and with positive support such as BOCM from Japan, many barriers that hinder Vietnam from adopting energy efficiency solutions will be removed. At present, it is too early to talk about success of any projects. However, with joint efforts from various parties, especially with support from an experienced country in implementing energy efficiency solutions like Japan, Vietnamese enterprises could have high expectation of possibilities for their energy efficiency in the future./.

By Phuong Lan

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