Vietnam launches financing framework for its energy transition
[DUBAI] The mobilisation of capital for a just energy transition in South-east Asia is ramping up at the United Nations climate change conference in Dubai, United Arab Emirates.
At the sidelines of the conference, better known as COP28, Vietnam on Friday (Dec 1) launched a investment framework to finance its transition to a low-carbon economy.
The 200-page document, known as the Resource Mobilisation Plan (RMP), was released almost a year after Vietnam’s announcement of the Just Energy Transition Partnership (JETP) with the International Partners Group – which comprises developed nations, mainly from the Group of Seven – and 11 private-sector banks that are members of the Glasgow Financial Alliance for Net Zero.
The RMP is the equivalent of Indonesia’s investment and policy plan, which was released less than two weeks ago as part of its own JETP plans.
Similar to the Indonesia JETP, the agreement with Vietnam involves developed nations funding half of the deal, while the rest is through loans by private-sector banks.
The final deal amount has been increased to US$15.8 billion, with developed nations topping up their portion to US$8.08 billion.
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Speaking at the launch of the financing framework on Friday, Vietnam’s Prime Minister Pham Minh Chinh said the country’s net-zero commitments require it to undertake tasks akin to those of a developed country, even though it is a less-resourced developing nation.
Such tasks include building up its low-emissions or renewable energy industries, and training its workforce for the transition away from a fossil-fuel-based energy system.
“We encourage investors and enterprises from other countries to seek business opportunities in Vietnam,” said Chinh. “The government of Vietnam stands ready to provide the necessary conditions to protect your rights and interest.”
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European Commission President Ursula von der Leyen, who was also at the launch event, said the transition has to be a just one to be successful.
The RMP lays out Vietnam’s JETP targets for emissions reductions, which include reducing its total greenhouse gas emissions by 43.5 per cent by 2030, from its current level of 146.3 million tonnes of carbon dioxide equivalent.
Vietnam estimates that the implementation of its latest power development plan – which involves doubling its production capacity to 150,500 megawatts by 2030, with 51.6 per cent sourced from renewable energy – to cost US$134.7 billion.
However, it is not clear yet how much of this amount would fall under the scope of the JETP. The partnership has six priority areas of investment: power transmission grid projects, battery storage and pumped storage hydropower plants, offshore wind power development, energy efficiency, solar power, and coal power plant transition.
Of the US$8.08 billion committed by developed nations to fund Vietnam’s JETP projects, grant funding makes up US$321.5 million, and concessional loans comprise another US$2.75 billion.
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