[18 Oct. 2013] - Vietnam and Denmark signed a program agreement in November 2012 on the implementation of “Low carbon transition in the energy sector”. The program supports the second phase of the Vietnam Energy Efficiency Programme and consists of two components: the first supports the Ministry of Industry and Trade (MOIT) in promoting energy efficiency in the Small and Medium Enterprise (SME) sector with a focus on the brick, ceramic and food processing industries; the second provides support to the Ministry of Construction (MOC) in implementing the new building code for energy efficiency in new large buildings.

As part of the support for energy savings in SMEs, a financial mechanism shall be set up to leverage EE investments in the 3 sectors. The technical assistance and targeted budget support for the SME component of the project focus on energy audits, feasibility studies and preparation of bankable investment projects in the 3 chosen sectors.  The overall project budget is 65 M DKK over the 3 year period (2013-2015) divided between targeted budget support to MOIT and MOC, direct support for technical assistance and 35 M DKK for the financial mechanism to support specific investment projects.
 

A team of international expert and those from Economica Vietnam has been  mandated by the Embassy of Denmark (EDK) to implement this consultancy assignment. The objective is to assist MOIT and EDK/ Ministry of Climate, Environment and Building (MCEB) in assessing alternative options for channelling the investment support for specific energy saving measures in the 3 chosen SME sectors: brick, ceramic and food processing.

The study analyzes pros and cons of alternative options (loan guarantee, credit line, grant, ESCO model, green bonds, etc.) for channelling the Danish funds taking into account the needs of the three chosen SME sectors: Bricks, ceramics and food processing.  Moreover, the study shall take into account prevailing market and policy conditions in Vietnam and build on the barrier analysis work conducted as part of the World Bank study with a particular focus the three chosen SME sectors.

On this basis the study should determine the best choice of financial mechanism/setup (channeling of the 35 M DKK) to finance specific energy efficiency investments in the 3 SME industry sectors.