Despite the Vietnamese Government’s ambitious hydrogen energy strategy, the country’s hydrogen sector remains in its infancy, constrained by a mix of regulatory, infrastructural, and economic challenges. The Ministry of Industry and Trade (MoIT) reports that Vietnam’s domestic hydrogen demand is currently monopolized by fertiliser factories and oil refineries, with a mere sprinkling of usage in steel manufacturing and float glass production. This limited demand has stifled the development of a comprehensive hydrogen storage, transport, and distribution system, hindering the sector’s growth.
Experts pinpoint the absence of clear investment guidelines and a robust regulatory framework as major barriers to the development of hydrogen energy in Vietnam. Le Ngoc Anh Minh, president of the Vietnam ASEAN Hydrogen Club, emphasizes the need for well-defined investment incentives to stimulate large-scale production and infrastructure expansion. He also highlights the financial impracticality of hydrogen projects focusing on electrolysis using renewable energy, due to elevated production costs—a challenge echoed in major hydrogen projects globally.
The Vietnam Petroleum Institute (VPI) underscores the cost disparity between clean hydrogen (blue and green) and grey hydrogen, with the former being up to 2.1 times more expensive. The institute calls for Government policies to enhance the competitiveness of clean hydrogen and nurture its development. Minh suggests tapping into the expertise of industries such as oil and gas, mining, and chemicals, and advocates for international collaboration to reduce production costs and fortify Vietnam’s stance in the global hydrogen market.
The Hydrogen Energy Strategy to 2030, approved by the Prime Minister, carves out a new development trajectory for Vietnam’s energy industry, aligning with global green, clean, and sustainable trends. Launched in February 2024, the strategy envisions producing 100,000 to 500,000 tonnes of green hydrogen annually by 2030, escalating to 10 to 20 million tonnes per year by 2050. These targets dovetail with the country’s net zero emissions aspirations. The strategy encompasses plans for both blue and green hydrogen, catering to domestic and export markets, and intends to pilot hydrogen and ammonia cofiring in power generation.
Several green hydrogen production projects are underway in provinces like Tra Vinh, Ben Tre, Bac Lieu, and Tien Giang, with both domestic and foreign investors expressing interest. Notable areas under consideration include Binh Dinh, Long An, Ninh Thuan, Quang Binh, Quang Tri, Soc Trang, and Ho Chi Minh City.
The sluggish start of Vietnam’s hydrogen sector presents both challenges and opportunities for markets. On one hand, the lack of a developed hydrogen infrastructure may deter potential investors, given the high upfront costs and uncertain returns. On the other hand, the Government’s strategic commitment to hydrogen energy could stimulate market growth, attracting both domestic and international players eager to capitalize on Vietnam’s long-term hydrogen potential.
The delay in hydrogen adoption also offers breathing room for markets to learn from global hydrogen projects, refine business models, and foster technological advancements. This could position Vietnam as a strategic hub in the global hydrogen supply chain, particularly if the country can leverage its existing industrial expertise and international collaborations to drive down production costs.
Moreover, the hydrogen strategy’s alignment with Vietnam’s net zero emissions goal signals a broader shift towards sustainable energy. Markets may need to brace for disruptions in traditional energy sectors and explore opportunities in renewable energy and low-carbon technologies.
To accelerate the development of Vietnam’s hydrogen sector, markets may pressure the Government to implement clearer investment guidelines, robust regulatory frameworks, and competitive incentives. Simultaneously, investors may advocate for increased public-private partnerships, technological innovations, and workforce development to overcome existing challenges and propel Vietnam’s hydrogen energy ambitions.
