Biofuel production in Vietnam

Biofuel production has continued to develop and is driven by government support around the world. A comprehensive analysis of biofuel production and the policy implementation is crucial for the biofuel sustainability development. The objective of this thesis is to study the energy efficiency, GHG emission savings and the economic viability of biofuels and to examine the impacts of biofuel policies on food production, welfare, and emissions in Vietnam. Chapters 2 and 3 study the performance of biofuel industry in Vietnam following the life-cycle assessment and comparative analysis and focus on three aspects of energy efficiency, emissions, and economic viability. The results show with the targets of 600 thousand tonnes of ethanol and 250 thousand tonnes of biodiesel in 2025, the emission saving would reach from 1129 to 5034 thousand tonnes of CO2e, and the energy saving would achieve 14.6 to 49.2 PJ. For the ethanol to be cost-effective, the fuel consumption of E5 and E10, in terms of L km-1 compared to that of gasoline, is not increased by more than 1.7% for E5 and 3.5% for E10 at the discount rate of 4%. For the cost-effectiveness of biodiesel, the fuel consumption of B5 and B10 compared to that of diesel should be decreased by more than 1.4% for B5 and 2.8% for B10 at the discount rate of 4%. The cost-effectiveness of using biofuels in comparison to fossil fuels depends on the efficiency of biofuel production and blended fuel combustion. For a sustainable biofuel market in Vietnam, further investments will be needed for both, improving the efficiency of biofuel production and blended fuel combustion. To meet the government’s target of biofuels in 2025, a total land area of 339,945 ha is required for feedstock production, which corresponds to 7.4% of Vietnam’s arable land in 2009. Of this, it is thought that 14% of the necessary land would come forestland, 66% from grassland and 20% from other cropland. Further achievement of energy savings and emission savings can be obtained through further investment in technologies for sustainability in agriculture, an improvement of feedstock yield, improvement of energy input efficiency, use of flexible-fuel vehicles to reduce fuel consumption levels of biofuel blends compared to fossil fuel. Chapters 4 and 5 investigate the economy-wide impacts of biofuel production and incentive policies in Vietnam on welfare, the economy and emissions of greenhouse gases in Vietnam. Under the biofuel production policy there is a decline in food production and consumption in Vietnam; however, the energy security is enhanced by an increase in domestic production of biofuel in Vietnam and a reduction in the import of fossil fuel. Under the biofuel production policy, the annual greenhouse gases emission saving in Vietnam in the year 2025 will be increased from 6% under business as usual to 25% percent. In Chapter 5, we find that an imposition of a 10% tax on fossil fuels causes the outputs of industrial goods, fossil fuel, and services to decrease as compared to the reference scenario. These biofuel incentive policies mostly affect the international trade between Vietnam and its main trading partners with a decrease in net exports by 0.4% for agricultural goods, by 0.3% for processed food, and by 0.2% for cassava and an increase in net imports by 1.1% for industrial goods, by 0.3% for fossil fuel, and by 3.1% for services. An additional introduction of a subsidy on biofuel increases the domestic production of services and slightly shifts the fossil fuel sector towards less production and more imports. Welfare of Vietnam in 2025 increases under the implementation of the biofuel production and incentive policies in Vietnam because of better allocation of resources, more local production of energy and a reduction of energy imports and redistributing tax revenues to consumers in Vietnam. For its main trading partners, the biofuel implementation in Vietnam induces changes in international trade with Vietnam, particularly reducing the export of fossil fuel and increasing import of certified emission reductions from Vietnam. Overall, there is a negligible change in the welfare in MTP. The research methodology in this thesis provides the basis for empirical studies for other developing countries. The insights of findings indicated opportunities for further achievement by investigating in advanced technology in agriculture and biofuel processing, infrastructure in the supply chain, and flexible-fuel vehicles. Though Vietnam can improve its welfare by implementing the biofuel blend mandate or a combined policy of a tax on fossil fuel and subsidies on biofuels in the context of adopting the biofuel mandate from an economic point of view; however, the political feasibility of these policies should be further considered in reality. A more governance-oriented approach for biofuel policies, which attempts to cover social impacts, environmental quality, and economic and political feasibility, should be based on setting specific targets to make the policies more feasible and effective. Public acceptance for biofuels will be the last challenge to be addressed once the infrastructures, flex-fuel vehicles and biofuel supply systems are all in the market. &nbsp