Proposal to establish a financial fund for energy saving: Towards building an efficient, flexible and modern energy market

Fund to promote Energy Saving and Efficiency supports businesses in investing in technological innovation and optimizing energy use.

At the 9th session of the 15th National Assembly , the National Assembly will discuss and consider passing the Draft Law amending and supplementing a number of articles of the Law on Economical and Efficient Use of Energy (SDNL TK&HQ). One of the important contents of the Draft Law is the proposal to establish a Fund to promote Economical and Efficient Use of Energy.

Presenting the report on the review of the draft Law at the National Assembly session on the afternoon of May 5. Chairman of the National Assembly's Committee on Science , Technology and Environment (KH,CN&MT) Le Quang Huy said: There are two viewpoints on the regulations on the Fund for promoting the use of energy economically and efficiently. The first viewpoint is that the establishment of the Fund for promoting the use of energy economically and efficiently needs to be further studied and must be carefully assessed and considered; research on the use of the National Technology Innovation Fund; the State Budget Law and the Civil Code have provisions on state financial funds outside the budget and social funds; there should be no provisions on this Fund in the draft Law.

Chairman of the National Assembly's Committee on Science, Technology and Environment Le Quang Huy presents the Verification Report. Photo: Quochoi.vn

The second viewpoint agrees with the above regulation to institutionalize Resolution No. 55-NQ/TW; contribute to implementing commitments when participating in the 26th United Nations Framework Convention on Climate Change (COP26) and based on international experience.

According to the draft Law amending and supplementing a number of articles of the Law on Economical and Efficient Use of Energy, the Prime Minister decides on the establishment, organization and operation of the Fund to promote economical and efficient use of energy in the direction of socialization, ensuring financial independence, not overlapping with revenue sources and expenditure tasks of the state budget and limiting the increase in operating costs, production and business for enterprises and production and business establishments.

The Energy Efficiency and Conservation Promotion Fund has the function of providing preferential interest rate loans, funding, and interest rate support for programs, projects, activities, and tasks to promote energy efficiency and conservation; Providing interest rate support or non-refundable grants for enterprises innovating energy saving and conservation technologies; Credit guarantees for loans from financial institutions; Technical support through energy service enterprises (ESCOs), and specialized human resource training. The organizational structure, management and operation apparatus of the Fund include the Management Board and the Supervisory Board. The Government regulates the capital source of the Energy Efficiency and Conservation Promotion Fund.

Regarding the initial operating capital of the Fund, it will come from socialized sources according to the provisions of law, expected to be collected from funding sources from development partners such as: World Bank (WB); Danish Development Cooperation Agency, European Union... or funds from private investment groups, or can be taken from buying and selling carbon credits, green bonds... Ms. Nguyen Thi Lam Giang - Director of the Department of Innovation, Green Transformation and Industrial Promotion, Ministry of Industry and Trade informed: "The Fund to promote energy saving and efficiency is expected to be used to support businesses as well as energy service companies to be able to borrow capital at preferential interest rates or guarantee loans to implement projects on energy saving and efficiency, to change technology as well as install equipment to increase energy efficiency at energy-using facilities."

The establishment and implementation of the Energy Efficiency and Conservation Promotion Fund is expected to reduce budgetary pressure because the current public budget system is not flexible enough to finance small and medium-sized energy efficiency projects. In addition, it will support businesses, especially small and medium-sized enterprises, a group that is under great pressure to comply with energy standards in export but lacks capital to invest in technology. Along with that, the implementation of this Fund will also contribute to promoting the ESCO market, when the Fund plays the role of guarantee, technical support and co-financing, ESCO businesses will boldly expand projects and improve service quality. At the same time, it will promote the implementation of international commitments. Improving energy efficiency is the fastest, least expensive and most effective way to achieve this goal.

International practice shows that the Energy Saving Fund model has been effective in many countries. In Thailand, the ENCON Fund operates on revenue from fuel taxes, providing multi-level support from businesses to the community. In the state of California (USA), clean energy funds operate on a co-financing mechanism and are reimbursed from savings; The funds are authorized to be independently operated by non-profit organizations. Germany also has an effective coordination model between the KfW Reconstruction Bank and technical agencies in providing green credit packages with investment supervision.

However, for this model to be successful in Vietnam, it is necessary to quickly complete the legal framework for establishing and operating the Fund, and build a transparent system for measuring - reporting - verifying energy efficiency. At the same time, it is necessary to design a mechanism for mobilizing private capital that is attractive enough to avoid repeating the current situation of "lack of input, stuck output" of many Funds.

The establishment of the Fund to promote the use of energy economically and efficiently is an indispensable step in the journey towards a low-carbon economy. Not only does it support businesses in saving costs and improving competitiveness, the Fund is also a symbol of Vietnam's strong commitment to the international community in the fight against climate change. The proposal to establish the Fund not only demonstrates concrete efforts in realizing the goals of green transformation and sustainable development, but is also a strategic step to enhance the competitiveness of Vietnamese enterprises in the international market. A well-designed Fund, operated transparently and closely linked to practical needs, will be a solid foundation for building an efficient, flexible and modern energy market in Vietnam.

Source: https://moit.gov.vn/tin-tuc/su-dung-nang-luong-tiet-kiem-va-hieu-qua/de-xuat-hinh-thanh-quy-tai-chinh-cho-tiet-kiem-nang-luong-huong-toi-xay-dung-thi-truong-nang-luong-hieu-qua-linh-hoat-va.html

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