At last month’s COP26 climate summit, Vietnam made its own pledge to cut emissions and reach net zero by 2050. The COP events are not new for the country; it signed the Kyoto Protocol in 2002 and has known since the middle of last decade just how devastating rising sea levels could be for a low-lying nation with a huge coastline and agriculture dependent on a river delta rice basket.

At the same time, Vietnam’s industrial ambition has been huge, to both modernise and attract industry from China and elsewhere so it can engage in manufacturing at a higher level than just the garment trade. To this end it has attracted a suite of high-end foreign companies, many American, in recent years and now has its own home-built cars, both combustion and electric.

In 2009, World Vision released a report that suggested that if sea levels rose by a metre in the next century, Vietnam could be one of the worst-hit nations, with 5% of the land and 11% of the population affected. Then, greenhouse-gas emissions were around 1 tonne per capita but still rising.

As an environmental journalist based there in 2008, I wrote: ‘Vietnam may need to think about more than long-term transitions. The recent World Bank city profile of Hanoi mentions that though Vietnam’s climate change legislation is increasingly comprehensive and sound, implementation can lag behind.

‘Sea level rise is a long-term problem and one which optimists in Vietnam hope will be stabilised by around 2050.’

Vietnam had been to the prior COP summits arguing, politely and with a multilateral focus as it likes to do, that more work was needed. Like other rapidly industrialising nations, it didn’t want to curb its own relatively small emissions at the expense of its economy.

Now it has a net-zero ambition and has also signed on to the global pledge to cut methane emissions by 30% by 2030. Its most methane-heavy industry is actually rice. Australia won’t sign the pledge, for largely agricultural reasons.

Vietnam needs power. Its growing population (97 million and counting), industrialisation, increasing middle class and large numbers of people moving to the city—if you ignore the post-lockdown exodus from Ho Chi Minh City recently—is driving rapidly expanding demand for electricity and some baseload power.

To capitalise on that demand, ExxonMobil is also looking again to develop the Blue Whale gas field just 88 kilometres from Vietnam’s coast. The proposed development sits easily within Vietnam’s exclusive economic zone, but less helpfully also within China’s ‘nine-dash line’, which claims as marine territory a huge swathe of sea. This area holds both oil and gas and fish stocks, as well as being of incredible strategic significance.

In 2019, it looked as though the US energy giant was walking away from the project, frustrated by an inability to secure gas agreements with the government, which matter in many jurisdictions when foreign players enter. As one example, the company’s inability to secure a deal for the expansion of its LNG project in Papua New Guinea has seen an entire integrated three train—the facility that processes gas to a liquid chilled to -160°C—expansion plan revised. Now only France’s TotalEnergies Papua LNG will be enlarged.

Two years ago, PNG was one of five core focuses, and somewhere like Vietnam with a tricky government, a belligerent China that had even gone after Russian gas, and the CO2 content of the field (an astronomical 30%) was essentially seen by analysts as ‘already in the sell-off tray’.

No one wanted it, and companies that could afford it and the inherent risk were Chinese and therefore a huge domestic political sovereign risk given sentiment towards China in Vietnam.

China, for its part, wants to see every oil and gas project in its Hague-discredited nine-dash line developed bilaterally with a Chinese national oil company. The implications of that are clear to everyone, though some nations take what they can get; Brunei, for example, agreed to joint exploration in late 2018.

However, now that ExxonMobil has confirmed that it is indeed headed back to project design after entering front-end engineering design, or FEED, in early 2019. FEED is one of the critical steps before a final investment decision is taken.

‘ExxonMobil continues to progress preparatory work [for] Ca Voi Xanh. We completed front-end engineering and design for the project in May 2020, and are working on the final development plan,’ a company spokesperson told S&P Global Platts early this month.

Blue Whale could address 10% of Vietnam’s electricity demand via four separate gas-to-power plants across a couple of poorer provinces far from the southern commerce hub or northern capital of Hanoi.

Vietnam has coal-fired power stations and hydroelectric dams, but both are on the wane and new versions of the former are unfinanceable. It has renewables meeting around 10% of electricity demand thanks to fantastic tariffs offered on long-term contracts by the government that were and are a near licence to print money for project proponents.

Until recently, its LNG import terminal plans were huge; in early February, the government said it planned to increase power-generation capacity from 54 gigawatts now to 125–130 gigawatts by 2030. Some 41 gigawatts would be supplied via LNG-to-power plants in the same timeframe, but that has now been revised down to a more manageable 22.4 gigawatts.

Financing for these projects has suddenly become harder under US President Joe Biden. Fewer US export banks are lining up, and the pressure exerted to rectify what Donald Trump saw as unfair terms of trade is gone. Even 22.4 gigawatts is a huge undertaking, given that the estimate for Blue Whale is 5,300 megawatts once the initial four power plants are expanded.

The new frontier for energy is offshore wind. Vietnam’s long coastline and relatively shallow littoral waters could see these farms supplying up to 500 gigawatts, according to a World Bank estimate.

The main issue is the vastly more complex technical hurdles to offshore wind over its onshore component. Vietnam has multiple wind farms. Several companies have signed initial non-binding agreements with local governments for offshore wind farms. This is a necessary step along with approvals from the central government to get onto the power development plan, the first official stop for power projects. Inclusion doesn’t guarantee that a project will be built, but omission ensures it won’t.

All this is a long time away.

And so is Blue Whale, although first gas was planned in 2023. Assuming timeline slippage of two to three years, it could still be supplying power in the second half of the decade. The issue for Vietnam will be to find a way to deal with the large carbon footprint from burning gas and somehow dealing with the many tonnes of CO2 from the reservoir.

How this will fit into a net-zero emissions future isn’t clear yet, but Vietnam isn’t the only country that lacks a clearly defined path to that outcome.