The Glasgow Financial Alliance for Net Zero (GFANZ) has set up a working group of investors to help mobilise at least $7.75bn in private capital for the energy transition in Viet Nam.
Earlier this month, the government of Viet Nam announced it would ramp up its renewable energy efforts from 36% to 47% from wind, solar and hydro by 2030 while accelerating the phase down of fossil fuels, as well as investing in transition-aligned jobs and industries, as part of the Just Energy Transition Partnership (JETP).
The JETP includes $7.75bn of public sector finance and $7.75bn of private finance (with the help of GFANZ), a resource mobilisation plan, a reduction of the country’s planned coal pipeline to reduce its peak capacity from 37GW to 30.2GW (from around 21GW in 2020), and the closure of older coal-fired power plants.
In 2020 Viet Nam derived half its energy requirements from coal, while non-hydroelectric renewables accounted for 5%. It has a target of reaching net-zero emissions by 2050, is a member of the Global Methane Pledge (supporting a goal of reducing methane emissions by 30% in 2030 compared to 2020 levels) and is also one of the signatories of the Global Coal to Clean Power Transition statement, committing to ceasing issuance of new permits and construction of new unabated coal-fired power generation projects.
Viet Nam is the third country to launch a JETP, following South Africa and Indonesia.
To help the Viet Nam government meet these goals, GFANZ has brought together Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, Mizuho Financial Group, MUFG, Prudential Plc, Shinhan Financial Group, SMBC Group and Standard Chartered to identify barriers to sourcing the necessary private investment, advocate for the reforms necessary to address those barriers, and find approaches that could help bring in private finance at scale.
“Viet Nam has great potential to become a regional leader for clean energy,” said Michael Bloomberg, co-chair of GFANZ.
“Through public and private collaboration, we can speed up the investment needed for Viet Nam to meet its climate targets, grow its economy, create new jobs, and improve public health all at the same time.”
Light on details
Crucial to the JETP is ensuring the transition is ‘just’. As well as making sure the partnership means workers and communities benefit from the transition, some commentators are concerned the country’s suppression of environmental activists such as Ngụy Thị Khanh may undermine the accountability of the transition.
“Some lessons from previous JETPs, such as the South Africa one, have been integrated – donor coordination and secretariat, private capital mobilisation – but details on the equity and justice dimensions are very scarce,” said David Levaï, fellow for International Climate Policy and Diplomacy at the UN Foundation.
“How much grant money is channeled to retraining and upskilling workers as well as the level of involvement of domestic civil society will be critical factors for success of this partnership and it will need to be clarified sooner than later.”
GFANZ said its involvement is subject to seeing “improvements to the local and international policy”, as well as the creation of structures that can allow for private finance and a pipeline of competitively tendered projects to finance.
“A just and inclusive transition to net zero is of critical importance across Asia and the financial community has an important role to play,” said GFANZ working group member Prudential’s CEO Mark FitzPatrick.
“We will therefore look forward to supporting the Vietnamese and the IPG government partners, along with other financial institutions in Vietnam to realise their own vision of a just transition.”