Vietnam, EU Set Investment Plan for G7-Backed Energy Transition

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Vietnam and the European Union finalized on Friday a plan for mobilizing more than $15 billion of climate financing pledged last year by wealthy economies to help the fast-growing Southeast Asian nation move away from coal power.

The EU-led initiative, known as the Just Energy Transition Partnership, was announced last December and is backed by the Group of Seven wealthy nations plus Denmark and Norway.

A secretariat was established in July, three months behind the initial schedule, and countries had been working out an execution plan.

“Climate change is a global challenge and requires us to… uphold multilateralism,” Vietnamese Prime Minister Pham Minh Chinh said at the plan’s launch event on the sidelines of the 28th United Nations Climate Change Conference (COP28), which started in Dubai on Thursday.

“The whole global population is affected, and we need to ensure no one is left behind,” Chinh said.

“Vietnam is a developing country in transition with small economic skills… but taking a task akin to those of a developed country,” he added, through an interpreter. “So, we hope to have your support.”

The partnership aims to accelerate the peak of Vietnam’s greenhouse gas emissions by five years to 2030, and speed the adoption of renewables to account for nearly half the electricity generation by the same year.

This means lessening dependence on coal, the most carbon-intensive fossil fuel, which accounts for around half Vietnam’s total energy supply.

To support this shift, advanced economies have offered total of $8.08 billion in a mixture of grants, loans, equity and guarantees on terms more attractive than that of capital markets, according to the new document, which spans over 200 pages. International private financial companies under the Glasgow Financial Alliance for Net Zero have committed to at least $7.75 billion in financing.

“The transition has to be just if we want it to be successful,” Ursula von der Leyen, president of the European Commission said at Friday’s event. “We want to bring emissions down while driving economic growth up. And most importantly, we want to give people a better life and a healthier future, everywhere on this planet.”

The finalized plan is expected to get the much-needed finance flowing into energy projects. The plan identifies over 200 investment projects and 60 technical assistance projects to be considered under the partnership. They include actions like reducing coal power pipelines, deploying renewables and transforming power transmission grids. Actual public and private financial allocations to the projects will be decided through negotiations between stakeholders.

“We encourage investors and enterprises from other countries to seek investment opportunities in Vietnam and stand ready to support you,” Chinh said.

The investment plan was developed by Hanoi “with very little transparency or inclusivity, over a very short period of time, without formal public consultation” and advanced economies’ influence on it was limited, according to climate think tank E3G. It is focused on “using [coal plants] ‘flexibly’ rather than closing them early,” and is concerning, said Leo Roberts, lead researcher for E3G’s Fossil Fuel Transition team.

Hanoi’s oppression of local environmental activists, which has included jailing coal opponents, has drawn criticism from the EU as “harassment of human rights defenders.”

When the energy transition partnership was agreed, Vietnam and the partners noted that “regular consultation” with media and civil society is “required” for the transition to be just and equitable.

“The continued constraining of civil society space in Vietnam is a threat to both the robustness of the content of this plan, and more importantly, to its delivery,” Roberts said. “Without support from local business, research and academia, and wider civil society, implementing this plan will be extremely challenging.”

But hopes for the partnership are high among developing economies as a breakthrough model in paving the way for the developed world to assist emerging countries to reduce carbon while their economies grow. Similar programs are also underway in Indonesia, Senegal and South Africa, although quickly implementing them has been challenging.

Kazakh President Kassym-Jomart Tokayev signaled Kazakhstan’s interest in an energy transition partnership during a speech at the COP28 leaders summit on Friday, asking for “concrete support” to take on “the enormous challenge of coal.”

Source : Nikkei