Unlike coal, oil, and natural gas, hydrogen is not a primary energy resource. It must be produced from another energy source. (Photo: Freepik)
The global energy transition requires a combination of renewable electricity, energy efficiency, electrification, energy storage, carbon management, and low-carbon fuels. Hydrogen has attracted considerable attention because it can connect renewable electricity with sectors that are difficult to electrify directly.
Hydrogen can be used as a chemical feedstock, reducing agent, fuel, or energy-storage medium. However, its development requires careful consideration of the energy and economic costs of converting electricity into hydrogen and subsequently transporting, storing, or converting it again.
The strategic question is therefore not whether hydrogen can replace conventional energy across the economy, but where hydrogen can create the highest value within an integrated future energy system.
This question is particularly important for Vietnam, where electricity demand is expected to continue increasing while the country develops renewable energy and pursues net-zero emissions by 2050.
Vietnam’s hydrogen policy and emerging market
Vietnam has significant solar and wind resources and an industrial base that already uses hydrogen. The country therefore does not need to create a hydrogen market entirely from zero.
Vietnam adopted Decision 165/QĐ-TTg in February 2024, approving the Hydrogen Energy Development Strategy to 2030, with a vision to 2050. The strategy targets approximately 100,000–500,000 tonnes of hydrogen production per year by 2030 and approximately 10–20 million tonnes per year by 2050.
The strategy addresses not only hydrogen production but also storage, transportation, distribution, domestic use, export, technology, infrastructure, standards, and human resources. It identifies potential applications in industry, including refining, chemicals and steel, as well as transport and power generation.
Vietnam’s adjusted Power Development Plan VIII, approved in 2025, also provides for substantial renewable-energy development and recognizes hydrogen and green ammonia as potential components of the future energy system.
The existing industrial market is particularly important. Vietnam already consumes hydrogen in oil refining, ammonia and fertilizer production, and chemical manufacturing. Much of this conventional hydrogen is produced from fossil-based feedstocks.
This creates a potential first market for lower-carbon hydrogen: replacing existing fossil-based hydrogen rather than creating entirely new demand.
However, production targets should not be confused with market demand. A commercial project requires a credible relationship between all this categories.
From production targets to real hydrogen demand
For Vietnam, hydrogen development should therefore become increasingly demand-driven rather than target-driven.
Existing industrial hydrogen consumption provides a natural starting point. Replacing conventional hydrogen with lower-carbon hydrogen could reduce emissions without requiring fundamental changes to the industrial process.
This approach can reduce market uncertainty and may also reduce transportation requirements, infrastructure needs, and investment risk when hydrogen production is located close to established industrial users.
The offtake price is a critical part of this equation. An industrial consumer will compare the delivered cost of low-carbon hydrogen with the cost of conventional hydrogen and with the economic value of emissions reduction, regulatory compliance, or a potential low-carbon product premium.
A headline hydrogen cost target of USD 1–2/kg is therefore meaningful only when its economic boundary is clearly defined. Production cost, delivered cost, transfer price, and customer purchase price are not necessarily the same.
Unlike globally traded commodities such as crude oil or natural gas, hydrogen does not yet have a globally standardized market price applicable across locations and applications.
Consequently, widely cited targets such as USD 2/kg or even USD 1/kg should not automatically be interpreted as universally achievable prices for hydrogen delivered to an industrial consumer.
For an industrial customer, the relevant economic metric is ultimately the delivered or transfer price at the point of use. This may include compression, storage, transportation, distribution, and other infrastructure costs.
The practical question is therefore not simply: “Can hydrogen be produced at USD 1–2/kg?”
but rather:
“At what delivered or transfer price can a specific industrial customer realistically purchase hydrogen, and can the complete value chain operate economically at that price?”
A pragmatic hydrogen strategy for Vietnam
Vietnam should adopt a phased and integrated approach.
First, demand should precede large-scale production. Projects should be linked to credible industrial offtakers and, where possible, long-term offtake agreements.
Second, priority should be given to high-value applications. Existing industrial hydrogen demand in refining, ammonia, fertilizer, and chemical production provides a logical starting point.
Third, hydrogen should be integrated with power-system planning. Renewable electricity allocated to electrolysis must be evaluated against direct electrification and other system needs.
Fourth, projects should be assessed using the complete economic chain. Production cost alone is insufficient. Delivered cost, transfer/offtake price, customer economics, carbon value, and potential product premiums should be considered together.
Fifth, infrastructure should develop together with production. Storage, compression, transportation, safety systems, standards, and certification are essential parts of the hydrogen value chain.
Sixth, domestic technological capability should be developed progressively. Vietnam can initially combine international technology with domestic engineering, operation, maintenance, materials research, and system integration, gradually increasing local technological capability.
The objective should not simply be to maximize hydrogen production, but to maximize the economic, industrial, and environmental value created by hydrogen.
Successful first projects can provide the technical experience, infrastructure, market confidence, and domestic capabilities required for larger applications.
Ultimately, the success of Vietnam’s hydrogen strategy should not be measured only by how many tonnes of hydrogen can be produced. It should be measured by how effectively hydrogen can create economic, industrial, and environmental value within the entire energy system.
This column is a collaboration between RECCESSARY, Vietnam Clean Energy Association (VCEA), and Truong Nhu Tung. All rights reserved. Reproduction without permission is strictly prohibited.
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