Cooking is an essential part of everyday living. While a nourisher of life, it can also have serious consequences for the environment, with carbon dioxide emissions resulting harmful amounts of greenhouse gas (GHG) – a key driver of climate change.
This is especially critical in Vietnam, one of five countries most vulnerable to climate change globally. Despite the growing realization Vietnam must reduce its GHG emissions and adopt clean technologies, it still emits significant amounts of carbon dioxide from gas fuel equipment - particularly from industrial kitchens in restaurants and hotels. According to the Government of Vietnam, the country annually consumes up to 1.4 million tons of LPG gas on average - corresponding to 5.18 million tons of carbon dioxide released into the environment or 3 per cent of Vietnam’s annual carbon dioxide emissions.
Nguyen Ngoc Dai and his company Hayen are among the first in the country to realize this challenge also presents a significant opportunity.
With the vast majority of industry cookers using low-efficiency LPG gas (65 per cent) or halogen (30 per cent), the kitchen equipment-maker set out to provide an innovative environmental-friendly solution that at the same time was accessible and affordable for customers.
Dai and Hayen’s solution is “ESCO Commercial Induction Equipment (ESCO CIE) solutions for catering in Vietnam”, a project to provide a full package of commercial induction equipment solutions to replace industrial gas cookers at food service businesses. While the project had potential to dramatically reduce LPG consumption (245,000 tons or 18 per cent of gas consumption in Vietnam) and 942,000 tons of carbon dioxide emissions into the environment, Dai and his project struggled to unlock the market.
Despite the induction cookers promising 34 per cent operating cost savings, the high initial investment proved prohibitive for most firms.
“We believed in our products, but didn’t know how to take the next step,” said Dai.
To take this important new step and turn climate challenges into opportunities for growth, Dai reached out to the Vietnam Climate Innovation Center (VCIC). Part of a global network across seven countries under the World Bank Group’s Climate Technology Program and supported by the governments of Australia and the United Kingdom, VCIC is breaking new ground in Vietnam by providing financing, mentorship and advisory services to businesses helping to tackle climate change.
Dai and his team successfully pitched their project to VCIC during its second proof of concept (PoC) competition in mid-2017 to be one of 15 projects from a field of more than 300 to receive financial support.
VCIC’s impact was immediate and proved a game-changer for Hayen.
With VCIC and its experts providing much needed technical support on business modeling, marketing, corporate governance and intellectual property as well as helping it mobilize USD 75,000 for start-up costs, Hayen developed an innovative business model to ensure its environmentally-friendly products were available to a full spectrum of businesses. It means Hayen can equip firms with induction cookers with no initial investment cost as part of an agreement to share profits from monthly fuel savings for a period of three years.
"This model has proven to be attractive to customers and is a testament to VCIC’s support in helping us overcome implementation difficulties. VCIC helped us to implement our ESCO model on a larger scale and reach more customers, thus increasing our revenue,” said Dai, whose company’s progress – with a 28 per cent rise in profits by the end of 2018 - also underlines VCIC’s effectiveness as an incubator and accelerator of domestic entrepreneurship, innovation and green growth.
With VCIC support, Hayen – with offices in Hanoi, Danang and Ho Chi Minh City – has promoted its ESCO CIE model to 10,000 potential customers, with Dai estimating customers have already reduced carbon dioxide emissions by 403 tons and LPG consumption by 134 tons.
Dai said Hayen was determined to replicate this model across the country and had set an ambitious target of converting half of all industrial kitchen equipment away from usage of environmentally harmful gases in the next five years to reduce energy costs by 44.6 per cent or USD 237 million annually.
“We can achieve this if we join hands with more enterprises. Not only is the model a winner from a business standpoint and benefiting customers, it is also making a real contribution to Vietnam’s efforts to mitigate the threat of climate change. We can be proud of that,” said Dai.
Key VCIC results to March 2019
- Created 665 new direct jobs, with 53.8 per cent created for women
- 26 enterprises raised early-stage financing of USD 1,635,831, with 13 companies beginning to raise growth stage financing of USD 1,207,755
- More than 600 enterprises received technical support
- Number of units of improved products/services sold was 241,373, reaching 175,047 customers/ households
- 2,100 tons of CO2 emissions avoided
Key Hayen results to March 2019
- 403 tons of CO2 emissions have been avoided
- 134 tons of LPG saved, equivalent to USD 166,000