Igniting a self-sustaining biogas market in Vietnam

Biodigesters have a significant impact on livelihoods, environment and economy, through time and money savings, manure management, a reduction in greenhouse gas emissions and rural job creation.

For many years, SNV and other organisations focused on a household based subsidy approach to increase the demand for biodigesters in Vietnam, resulting in the construction of 250,000 biodigesters to date (170,000 under the biogas project and 80,000 under spin off projects operate under the Ministry of Agriculture and Rural Development). Calculations show that with the current pace of distribution of an accumulated 20,000 biodigesters per year, it will take around 20 more years to saturate an active demand for biogas technology. A key challenge is therefore to work towards a self-sustaining biogas market and to address the weakest spot in the biogas market. Given the encouraging distribution figures and familiarity of farmers with the technology, not the demand but supply side is the limiting factor.

To accelerate the supply of biodigesters and move from a mainly passive, to a self-sustaining supply of biogas technologies in Vietnam, Energising Development (EnDev) introduced a Results-Based Financing (RBF) approach that incentivises the growth of these biogas enterprises in terms of sales, networks, and staff. The innovative RBF approach to accelerate the biogas market is implemented by SNV under the Biogas Programme, with funding from GIZ/EnDev and in collaboration with the Ministry of Agriculture and Rural Development (MARD). The project is making great strides in empowering the supply side of the biogas market in Vietnam by providing a financial incentive for each constructed and verified biodigester. The incentive received by biogas enterprises starts at 50 USD per digester and declines over time. The extra income earned by suppliers is invested in attracting more staff, increasing promotion activities, or expanding sales networks that enhances the professionalism of the actors in the supply chain.

Under the verification system, crucial for effective RBF implementation, constructed biodigesters are monitored by an online, app based tools developed by SNV and AKVO. The enterprises input data, photos and GPS data that translate to maps that are automatically updated with new information from the field. The project has digitalized the entire quality control process through online submission forms for both the enterprises and the quality check, which can quickly detect cases of fraud, and provide better insights than the traditional system based on hard copy forms.

After three years of operations, the project works with 146 active enterprises in 18 provinces, with whom they have constructed over 35,000 digesters. This achievement validates that in absence of household subsidies, the market still can flourish. Given the increase in the number of participating enterprises, the project soon expects to make a bigger leap.