Voluntary Agreement: 'New Weapon' to Help Businesses Save Energy

But the story can be turned from another perspective, Mr. Jorgen commented. “We really need to look at energy efficiency projects as an investment in optimizing our technology chain. Energy efficiency is like the ‘cherry’ on the cake—or more simply, it’s part of the cake—when you invest, you want better products, better designs, less waste, and of course, more efficient energy use.” Clearly, integrating energy efficiency into the overall development is what businesses really care about. They don’t want to see it as an isolated factor. When faced with any change—whether it’s an operational adjustment or a technological innovation—businesses always consider: Does this fit with the overall priorities of the company? How will we make that change? Will it improve product quality or shorten production time?

If the benefit is reducing energy costs but stopping the production line for a week, then that benefit is no longer attractive. However, if the technology helps them enter a new market by demonstrating that the product is made with low carbon emissions, then the value of that is much greater than simply improving efficiency. Therefore, energy efficiency needs to bring practical economic benefits to be able to move up the priority list of businesses.

Motivation for change

Kim Lan pottery village (Gia Lam, Hanoi) is a testament to the transformation of small businesses. Eight years ago, more than 400 households were still using outdated coal kilns, causing poor product quality and low capacity. Although they knew about LPG gas kilns, they were still hesitant to invest. The turning point came when the LCEE project, supported by the Ministry of Industry and Trade and the Danish Government, committed to providing credit guarantees and expert guidance. In return, households had to strictly comply with the technical requirements set by the project.

As a result, after switching to the new technology, the energy consumption of the pottery kilns was reduced by 50%, CO2 emissions by 90%, and firing time was shortened from 10 days to two. When the project ended, the proportion of households using LNG kilns increased from more than 7% initially to 37% in 2015 and reached 95% today.

"We were surprised that many small businesses, even without bank accounts or loan history, still managed to find money to invest in similar gas furnaces. Their top priority is productivity, but perhaps part of the change is also for the benefit of the community, when people understand that old coal-fired factories located right in the village can directly affect the health of their children. Therefore, their motivation is not only based on business benefits but also on a cleaner environment for the entire village," said Mr. Jorgen.

 

Experts working with an MDF wood fiberboard factory in Nghe An. Photo: DEPP3/VAS

But for large businesses, especially in the steel and cement industries, the story is completely different. They mainly focus on business, paying little attention to other factors. The biggest pressure and also the strongest motivation for these businesses comes from the market, especially the strict requirements of international customers. The textile industry is under this huge pressure, and the seafood industry is no exception. Exporting more means they have to "race" to reduce their carbon footprint, otherwise they will be blocked from entering demanding markets such as Europe and the US.

 

In addition, the government is tightening regulations on environmental protection, carbon emissions and many other related issues. Therefore, they find that it is better to act before facing sanctions.

 

"The most effective way to do that is to save energy. Sustainable energy is not just about installing solar panels or replacing fluorescent lights with LED lights, but more importantly, optimizing energy efficiency, thereby reducing emissions into the environment," Mr. Jorgen commented.

Technical approach

Returning to the "high-hanging fruit" issue that Mr. Jorgen mentioned at the beginning, that is exactly what large enterprises are aiming for. Currently, more than 3,000 key energy-using industrial facilities in Vietnam are struggling to meet the target of improving energy efficiency by 2% per year, and improving by 8-10% in the period 2025-2030.

 

In his early years in Vietnam, Jorgen realized that people often said that it was difficult to get funding for energy efficiency projects, so his team started by building financial mechanisms for this type of project. The LCEE project in Kim Lan is an example. However, the more he worked with manufacturing companies looking to pick the “high-hanging fruit”, the more he realized that the real problem was not accessing funding but the lack of expertise and knowledge on how to develop good energy efficiency projects.

 

"Businesses cannot implement new technologies due to lack of expert support. Banks also do not provide funding because they think the projects are not good enough or have not been fully analyzed and evaluated. Therefore, over many years, we have not only built financial mechanisms but also developed technical guidelines that projects need to follow. This has turned out to be very effective, because the barrier is not that businesses do not want to do it, but that they do not know where to start," Mr. Jorgen shared.

"Finding feasible energy-saving solutions that are both economically beneficial and practical is a real challenge. To achieve large savings, you need a deep understanding of the technology, the industry and the business itself. This is not only a problem for Vietnam but also a common challenge worldwide," he added.