Domestic Biogas in Vietnam Result based finance as a tool to develop a commercially viable domestic biogas sector in Vietnam Steven von Eije Hanoi, Vietnam, 10 December 2014

Content About SNV What is biogas Vietnam national biogas programme Challenges Result Based Finance as enabler of sustainable (green) growth 2

Netherlands based non-profit, international development organisation, with >45 years of on the ground experience. Local presence: 800 professionals in 36 developing countries in Africa, Asia and Latin America. Capacity development services to local public and private organisations increasing access to basic services, income and employment. Connection “leveraging critical mass” Scalability “seeking a systems change” Effectiveness “empowering local actors” Market-Based Solutions to Eliminate Poverty About SNV 3

What we do 3 sectors  Agriculture  Renewable Energy & REDD+  Water, Sanitation and Hygiene 4 3 roles  Advisory services  Knowledge networking  Evidence Based Advocacy 4 key success factors  Inclusive development  Systemic change  Local ownership  Contextualised solutions

What is biogas 5

6 The Biogas Plant 6 Biogas Bio slurry Pig manure

The Vietnamese national biogas programme Cooperation SNV and MARD/DLP since 2003 Funded by DGIS, EnDev, BMF and Carbon Credits The Program  KT model  Investment subsidy  Quality control  Training  Research and Development  Sector Development (PR) The Objective  To develop a commercially viable domestic biogas sector 7Title

Results 1668 biogas mason enterprises installing bio digesters Quality control system in place biogas technicians 159 trainers to assist training activities Vietnamese Biogas Association 8

Results and benefits 9 > digesters> people> tonnes CO2 year

Challenges Market Challenges Enterprises do not (proactively) invest in the marketing of their product to expand their business. Households do not have access to (sufficient) financial resources Households are insufficiently aware of the benefits of biogas Program Challenges Dependence on ODA funds in combination with high program costs No market driven / sustainable QC and Training available 10

Status of the Biogas Sector in Vietnam Current Market Situation asks for new and innovative approaches – the next steps towards a fully commercial market! Title SaturationMaturityGrowth Introduction Development Market Growth Time ‘90s‘03‘13 Number of digesters constructed A new Financing Mechanism ‘Business as Usual’ No Support Timeline

Result Based Finance From up front subsidy payment to RBF incentives Conditional payments for pre-agreed and verifiable results Shift risk from donors (and government) to market actors Flexible implementation RBF is temporary incentive to overcome market failures and trigger market growth Risk shifted to private sector, no delivery no RBF private sector chooses own business models Safeguards set for quality and sustainability 12

RBF in BP Objective: market based biogas sector Transferring responsibilities from government and biogas programme to enterprises Increasing ownership and capacity of biogas enterprises Payment for training and QC services Financial incentive (1.2 m VND) for the enterprise after delivering a high quality digester and providing end user training. 13

Results 14 Pilot in six provinces Implementation since may biogas masons upgraded 25 composite enterprises trained Positive reactions from all stakeholders KTCompositeTotal Constructed

First impressions and lessons learned RBF could become very successful in Vietnam: 5 provinces in 6 months have produced 28,6% of total production (9944) Qualified enterprises are more important than subsidy RBF assists development informal enterprises RBF can serve to transfer responsibilities RBF increases marketing efforts of enterprises 15

What’s next? Evaluate RBF mechanism in 2015 Scale up implementation Further development biogas enterprises RBF intervention planned to end in 2017 Fully developed market? 16

Steven von Eije Advisor renewable energy SNV Vietnam +84(0) Thank you!